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How to Avoid Sleeping Like a Baby (And Why You Should)

How to Avoid Sleeping Like a Baby (And Why You Should)

Babies, as any hollow-eyed new parent will tell you, often sleep for just a few hours at a time which is why ‘sleeping like a baby’ is a practice best avoided if you have a growing business to run and need to be on top of your game during working hours.

Instead, sleep experts recommend you look for ways to get between seven and nine unbroken hours of night-time sleep.

That’s because sleep is believed to be crucial to your physical and mental wellbeing. It’s essential for maintaining cognitive skills such as communicating well, remembering key information and being creative and flexible in thought, says Dr Justin Varney in an article for Public Health England.

Insufficient sleep has a “profound impact” on your ability to function, he says. It makes you more vulnerable to infection and raises the risk of accidents and injuries.

What’s more, studies are beginning to show a link between a lack of sleep and conditions such as high blood pressure, heart disease and diabetes.

So, what can you do to ensure you get a great night’s sleep?

Almost every article you read on the topic will fail to mention what is arguable the number 1 strategy for a great night’s sleep… They’ll tell you to transform your bedroom into a technological-free zone (so no late-night watching of ‘Peaky Blinders’ or checking your Twitter feed before you shut your eyes). That’s as much to avoid too much stimulation before sleep as it is to minimise the amount of blue light you’re exposed to from some TVs, computer screens, tablets, smartphones, and LED lighting. The blue light can keep you awake by suppressing the sleep-inducing hormone melatonin.

Sleep hygienists (the name for experts in this field) also recommend you stick to regular bedtimes and avoid consuming caffeine and rich food in the last few hours before bed, and so on.

What most ‘sleep tips’ articles fail to mention is one of the best ways you can get your full quota of night-time sleep—that is how to deal with work-related stress which is one of the biggest causes of sleep problems. As the owner or CEO of a growing business, one of the best ways you can reduce your work-related stress is to hire an experienced part-time Finance Director (FD) or Chief Financial Officer (CFO).

Take the CFO Centre’s part-time CFOs as an example. They all have many years of big business experience so that they can identify and assess the areas of risk in your business. More importantly, they can advise you on how to deal with such risks now and in the future.

Equally, part-time CFOs can highlight areas of risk that you are either unaware of or don’t know how to deal with. In other words, they’ll identify, quantify and help you to manage the risks your organisation faces.

But they do so much more than that. They will also advise, analyse and implement processes and practices to ensure your organisation performs better. They can provide strategic analysis and advisory support on every finance-related aspect of your business.

At any one time, they can be involved in all those areas of the business that have previously kept you awake at night: things such as reporting, auditing, tax planning, business planning, capital expenditure, working capital management, budgeting and exit planning. Your part-time CFO will work on your financial strategy and finance operations while also managing your tax planning, legals, compliance, outsourcing and banking relationships.

You can rest easy at night, knowing your part-time CFO will help you to improve your cash flow and profitability and provide the insight into how your business can move seamlessly to the next level.

With a part-time CFO on your side, insomnia and restless sleep should become a thing of the past.

 

How it will work

The CFO Centre’s part-time CFOs use a proven framework known as the ’12 Boxes’ to identify where the problems are within any business. They use it to review every aspect of your company finance function and identify every problem area.

They will help you to understand your company’s finances; eliminate cash flow problems; identify cost-savings and improve profits.

They can also help you and your team to understand your main profit drivers; find and arrange funding; identify your Critical Success Factors and Key Performance Indicators (KPIs), help you to expand nationally and internationally; and build value to make your business more attractive to investors or buyers.

To discover more about the 12 Boxes, click here.

Need help?

To discover how an CFO Centre part-time CFO will help your business, contact us now on 1300 447 740. To book your free one-to-one call with one of our part-time CFOs, click  here.  You can see how they add rocket fuel to any business here.

To hear what people really think about the CFO Centre’s part-time CFOs, watch these short videos here.

Identify strengths and weaknesses

Identify the strengths and gaps in your business in just nine minutes with the F-Score.

Just answer a brief series of questions, and you’ll receive an 8-page report that will reveal potential current or future pain points for your business. It will also help you to rate the performance of your finance function and uncover untapped opportunities for growth. Click here now to take the F-Score.

Got a Big Question?

If you have a burning question for one of our team of CFOs, ask it here, and you’ll get an answer within 24 hours. 

Santa: Why I Was Ghosted by Elon Musk & Faced an AI-Inspired Rebellion

Guest Blog from Santa 

Santa: Why I Was Ghosted by Elon Musk & Faced an AI-Inspired Rebellion

Phew, just back from a sleigh test flight and nearly had a collision with one of those Space X rockets as it plunged to Earth!

Talking of Elon Musk, my offhand comment back in August  about the high cost of keeping my reindeers in shape resulted in a flurry of late-night tweets from the boss of Tesla. In the first one, he offered to solve ‘my reindeer problem’ by having his engineers design an electric sleigh – ooh isn’t he a giver!

The phrase about solving “my reindeer problem” sounded a bit ominous. But I was intrigued by the idea of an electric sleigh until I realised the production delay would mean the reindeers wouldn’t be able to come with me on Christmas Eve. Can you imagine what the fallout would be like if I made the reindeers redundant (or gave them unlimited ‘gardening leave’)? The Daily Mail would be on my case for EVER!!!

What’s more, Tesla cars can only do 539 km before their batteries need recharging. Ain’t gonna cut it Musk – on Christmas Eve, I travel about 510,000,000 km delivering presents to all the girls and boys around the world, and I only have 32 hours in which to do it.

After the 97th Tweet from dear Elon, I asked my Finance Director, David, for his thoughts about an electric sleigh and whether it made sense to investigate options. David’s the part-time FD we hired from the FD Centre—the one I mentioned last year.

He said an electric sleigh would need recharging over 946,000 times during my journey and given that each charge would take about 30 minutes, it would take me over 50 years to deliver this year’s presents. I don’t think any child, no matter how nice, could wait that long for Fingerlings Untamed Dinos or Lego’s Harry Potter Hogwarts Express, do you?

I sent a message to Mr Musk explaining that unfortunately his electric sleigh wouldn’t be practical in this situation. I was a bit worried about how he’d take the news—would he unleash a furious Twitter storm? What would he say about me?

As it turned out, I needn’t have worried because he never responded, He didn’t reply to my subsequent messages either—David said Mr Musk had obviously ghosted me!

Talking of delivering presents, it looked like the whole thing would have to be cancelled for the first time in hundreds of years. No, not because of climate change (well not yet, anyway) but because of the European Union’s new privacy law, the GDPR.

David asked me at the start of the year if I was “GDPR-compliant”. I said I was easy going but no push-over. Then I admitted I didn’t know what GDPR was, so I couldn’t say for certain. He explained the GDPR and told me it meant we needed to have the permission of every child in Europe and the UK to keep their personal details on file.

How I wondered. We have a decent budget—thanks to David helping us sort out our cashflow and expenses—but it doesn’t extend to a massive house-to-house campaign across Europe and the UK and beyond. Once again, David came to the rescue. He suggested I write to the children because, under GDPR, we don’t need permission to send a letter.

“For  once, you’ll be the one writing to children to ask them for something,” he said during our weekly Skype chat. “Quite a turnaround!” That made me chuckle!

So did the BBC reporter who rang to ask what I thought about Brexit.

“Let me begin,” she said, “by asking you whether you’re a Leaver or a Remainer?”

“Am I A. Lever or A. Remayner? No, I’m S. Claus,” I said. “That’s ‘S’ for Santa, as in Santa Claus. I thought you knew that.”

She tutted and then asked in a very frosty tone, “How will Brexit affect your Christmas deliveries, Santa? Will you have to apply for visas for every European country post-Brexit?”

“No need,” I told her with a chuckle. “I have a Santa passport which allows me visa-free travel to every country in the world.”

The workshop elves were just as icy later that week when I passed on David’s recommendation that we outsource some of the gift-wrapping and parcel sorting.

The atmosphere in the room was positively glacial as I explained that outsourcing would save time and funds.

“Are you going to bring robots in to do our jobs?” shouted one of the older elves, rolling up his sleeves as if getting ready for a rumble.

“No AI at HQ OK,” yelled someone at the back. Others in the room began to mutter, and I feared things were about to turn ugly.

I quickly told them what David had told me, that the money we saved from outsourcing those tasks would make us more efficient and allow us to increase their salaries and improve their accommodation.

That’s when the elves began to thaw.

Heartened, I carried on. “Mrs Claus didn’t like it when I told her David wanted us to hire a trained accountant.”

“’But I like doing the books,’ she said. ‘I’ve been doing them for over eight hundred years.’

“I know my dear, but I think we need to modernise.” I hadn’t meant to say the next bit, but it tumbled out before I could stop myself. “It’s time we went digital.”

That didn’t go down at all well.

“’Digital?’ It came out as a screech that made my ears ache. ‘Where will it end? Next you’ll be telling me that children can send you letters via WhatsApp. It will ALL go downhill from here; you mark my words, Mr Claus! Digital indeed.”

I decided not to tell her that children have been sending their Christmas wish list via text messages rather than letters for years. Here’s one I got a few minutes ago from a young man called Colin. “Santa RUOK? I’m GR8. B4N Colin” with a winking emoji and a link to his Amazon wish list . Google Translate says it means “Santa, are you okay? I’m great. Bye for now. Colin.”

It took some time to change Mrs Claus’ mind about going digital. But thanks to David (who patiently explained to her why doing several million data entries by hand wasn’t the best use of resources) Mrs Claus now appreciates that as a “scaleup” charity we need to be efficient, and for that to happen we need professionals to handle our finances, our Human Resources, our strategy, and so on.

I’ve hardly seen Mrs Claus since the accountant arrived. She’s out every day and most evenings making the most of her spare time—choir practice one morning, volunteering at a local elf hospital on another, reading to seniors, Zumba classes as well as evening classes in Tango, Esperanto for the Elderly and Car Maintenance for Non-Drivers.

As you can tell, hiring David as our part-time CFO has more than paid off. He’s helped us in countless ways… saved us enormous amounts of money, made us more efficient, and helped quell a rebellion from Mrs Claus and the elves. He even saved me from an electric sleigh and an uprising from the reindeers, not to mention a mauling on social media.

Why and How You Should Scale Up Your Business

Why and How You Should Scale Up Your Business

If you consider what sets companies like eBay, Alibaba, Netflix, Google, Starbucks, Apple, Cisco and Dell apart from other companies, their ability to continuously innovate and create high growth will probably come high on your list.

So should the fact they’ve all successfully transitioned from start up to scale up status without losing their ability to be dynamic and entrepreneurial.

Then there’s the fact they’ve helped create thousands of full-time and part-time jobs throughout the world. Twenty-three-year-old eBay, for example, employs 14,100 full- and part-time employees while Google’s parent company Alphabet Inc. has 88,100 full-time employees.In his book, Scale Up!, the FD Centre’s Chairman Colin Mills defines scale ups as companies which have grown by 20% a year for a minimum of three years and which started the three year period with a minimum of 10 employees.

Scale ups disrupt and revolutionise entire industries, according to a Deloitte & THNK report. “They embody ingenuity, innovation, and foresight,” its authors concluded after studying 400,000 enterprises worldwide.

There’s a common misconception that only start ups can be innovative, dynamic and entrepreneurial. Yet as scale ups like Google and Alibaba illustrate, that’s far from the case.

Perhaps start ups attract more attention because there’s so many of them: it’s estimated that there are 300 million start ups globally. By comparison, only a tiny fraction of start ups ever survive long enough to make the transition to scale up, according to the authors of the Deloitte report.

“Our research shows that the chances of a new enterprise to ascend as a scale up are around 0.5%, which means that only 1 out of 200 surviving new enterprises will become a scale up. ‘Unicorns’ make up the even smaller subset of scale ups; only 104 start ups are valued over $1 billion.”

Those companies that do become scale ups help to boost local, national and international economies. They provide direct, ongoing employment and that, in turn, creates more consumer spending which in turn stimulates the economy and expands the tax base.

Or as business guru and venture capitalist Daniel Isenberg says in Scale Up!, “One venture that grows to 100 people in five years is probably more beneficial to entrepreneurs, shareholders, employees and governments alike, than 50 which stagnate at two years.”

Contrary to what many policymakers believe, start ups don’t help economies to flourish or cause per capita income to rise.

“The relationship between per capita income and entrepreneurial activity is generally negative, rather than positive as is often believed,” wrote Scott Shane, Professor at Case Western Reserve University, in Entrepreneur magazine. He referenced a Gallup Organisation survey which compared per capita Gross Domestic Product (GDP) with the fraction of the population that reported being self-employed in 135 countries. It showed that the self-employed fraction had a negative linear relationship with the log of GDP.

“That is, self-employment rates are lower in rich countries than in poor ones.”

But growing a company past the start up phase is not without its share of challenges, whether they are related to employees, sales and marketing, operations, administration, or finance. Most importantly, if growing companies don’t have the right infrastructure to support their expanded operations, those challenges can become increasingly severe.

“While on paper, they may have the revenue, the manufacturing base or customer reach of a substantial business, the culture, the controls, the processes, the personnel and the leadership remain those of a much smaller business that they were a short time before,” says Mills in Scale Up!.

“Worse, they haven’t yet accumulated the resources to build and maintain that infrastructure.”

If the situation is not resolved, the business will outrun itself (cash reserves will dwindle as it tries to meet the expanded demands) or get stuck (as the owner and employees find themselves unable to cope with the problems).

But if you revise your business model, you can overcome these challenges or even avoid them altogether.

“You need to consider your whole business model, because if you have a terrible business model, then the last thing you want to do is to start scaling it,” says Mills.

The CFO Centre’s part-time FDs or CFOs help clients revise their business model using a framework known as the ’12 Box’ approach.

It has three levels:

  1. Operational
  2. Strategic
  3. Business Support

Operational

This refers to finance operations and focuses on two key aspects: cash and profitability. There are four boxes: Cash Flow Management and Profit Improvement (which generate money), and Internal Systems and Reporting (which generate time for management).

Strategic

This involves your finance strategy: how are you going to finance the business to achieve future cash and profits? The four boxes in this section cover: Risk Assessment, Strategic Funding, Strategic Activities and Exit Planning, and an Implementation Timetable.

Business Support

This involves crucial tasks such as compliance, tax planning and legal issues, banking relationships and outsourcing. In the case of The CFO Centre’s CFOs, they don’t carry out the tasks but instead, manage the work on a client’s behalf. They’ve built relationships with the right people in each country where they operate so that they can connect clients with the right supplier at the right cost when they need it, and then manage the work on their behalf.

Take the F Score: Find Your Future Challenge Areas

To help you identify which one of these 12 areas is a potential current or future pain point for your business, the CFO Centre has created a quick assessment form known as the ‘F Score’. (It will only take nine minutes to complete.)

The F Score features a series of questions built around the 12 Boxes, designed to identify your areas of strength and those which represent a gap. When you’ve completed the questions, you’ll receive an eight-page report which will reveal your current or future challenges. It will not only rate the performance of your company’s finance function but also uncover untapped opportunities for non-linear growth.

To discover how the FD Centre will help your company to scale up, please call us now on 1300 447 740 or contact us here.

Free 1-1 Finance Session

Do you have a burning question about any of the following:

  • Cash flow management
  • Funding
  • Profit improvement
  • Exit planning
  • Reporting
  • Getting the most from your bank?

Book now for your complimentary 30-minute finance breakthrough session with one of our part-time CFOs. Get the answers you need to scale up your business.

Ask the FD

If you’ve got just one finance-related question and you’d like us to send it across to our team of top CFOs, please let us know, and we’ll get back to you within 24 hours.

8 Guaranteed Profit Drivers for WA Legal firms – Part 3

8 Guaranteed Profit Drivers for WA Legal firms

Over the last 2 weeks we have explored these 4 Profit Drivers;

  • Keeping Costs as Low as Possible
  • Highly Structured and Efficient Billing and Debt Collection
  • Marketing and Business Development Activities
  • Strong Cashflow Management

This week – let’s look at;

  • Retaining Quality Staff
  • Strong Financial Management

RETAINING QUALITY STAFF 

  1. In an ideal world, you would like to have the best quality staff all around in every dept in your practice. (Cause that is what your marketing says, isn’t it?)  Unfortunately, the best may be unaffordable, at a higher price tag.  Compromise is necessary.  It’s a balancing act between what would be considered the best by our clients, what we consider the best, and what our firm can afford.  There is that Return on Investment discussion, once again.
  2. Productivity of staff should be reviewed and discussed at least monthly, measuring performance against targets for both billing and time charged. Are these targets based on charge out rates and hours billed expectations or on a multiple of wage?
  3. Monthly recognition for those achieving target is encouraged.
  4. Make sure these targets are kept up to date at increase time, adhoc in year increases and other changes within staff. Its important that your staff feel they are measured against accurate up to date targets.
  5. To help reduce staffing costs: regularly review the option of outsourcing, in the areas of Transcription, IT support, HR, Payroll, Marketing, Admin support and Finance.
  6. For those growing firms who do not have the need or budget for a full-time highlevel CFO person, the part time option is a viable choice.

STRONG FINANCIAL MANAGEMENT 

  1. Strong financial management includes ticking of as much as you possible can of the 8 Profit Drivers. In some cases, even just a regular conversation on that topic is necessary.  Financial management is awareness. Aware of our strengths and weaknesses which will eventually affect our bank account.
  2. Monthly Finance/BOD meetings should be held (after or before Debtors meetings – see previous profit driver) discussing at least:
  3. 5-9 KPI’s in the areas of the past months:
    1. Productivity for staff – Billing, Time: Highlighting high performers and concern areas
    2. Profit and Loss performances
  • Debtors and WIP iv. Departmental performance
  1. Projections to the rest of the financial year and after that
  2. Updates / Plans relating to staff which could affect productivity, billings or efficiency of staff.

Taking steps to action these 6 profit drivers could be “just too hard” or “too time consuming”.  For many these are beyond the capabilities of your bookkeeper, and may not be the area of expertise of your office manager/practice manager.

The best compromise could be a part time CFO, who specializes in customised financial support based on your budget and needs.  The cost is relative to a junior staff member, and the benefit can span expertise in many areas of business finance, ranging from:

  • Reporting and profit improvement,
  • working capital management,
  • cashflow management
  • planning and systems implementation
  • and maintaining or improving banking facilities.

You can find out more here: https://www.cfocentre.com.au/, where there are some great short animated videos providing additional support to grow your practice in many of the profit drivers mentioned in this series.  You can also contact us for a short 15-minute phone conversation to discuss your unique situation.

8 Guaranteed Profit Drivers for WA Legal firms – Part 2

Last week we explored

  • Keeping Costs as Low as Possible
  • Highly Structured and Efficient Billing and Debt Collection

This week let’s look at

  • Marketing and Business Development Activities
  • Strong Cashflow Management

MARKETING AND BUSINESS DEVELOPMENT ACTIVITIES

  1. Generally, this function is considered a soft skill – and not something you may consider a “finance” area of focus. But as you know every area of business has some impact on the money, sometimes directly or indirectly.
  2. Do you know how much you are spending to recruit new clients (or even keep existing clients), and how does that compare to what your competitors are spending?
  3. Do you know which area/s of your marketing give more bang for your buck? Are you actually tracking it, or is a best guess? Is it networking, your static website, SEO and Google ads, or is it the alliances and referral partners that give you the best value for money.  Next question is; by how much?  Make sure you don’t have a “all your eggs in one basket” approach.  Spread your marketing focus.
  4. This may be a small part of your monthly finance meeting, but it’s a really important discussion, especially when looking at cutting costs (see previous article). Unbeknown to you, you need to avoid “biting the hand that feeds you”.

STRONG CASHFLOW MANAGEMENT

  1. As we all know, Cashflow is (absolute) King in business – especially legal firms with lumpy inflows, and especially those that work in the Personal Injury sector.
    1. Depending on the size of your firm, cashflow forecasts need to be updated and reviewed either weekly or monthly.
  2. Continuous, reliable up to date forecasts are absolutely imperative.
    1. These include short term: Family Law & Personal Injury Deferred payment cases settling dates and values as well as reasonable expectations relating to PI cases. (These require continuous communication and should include the staff member handling these cases)
    2. Long term: Reasonable expectations relating to increase in productivity as hourly rates increase or staff changes take place, matched with relevant outflows.
    3. Forecasts should be updated for at least 12 months in advance – even though the next 2-3 are the most reliable for cashflow forecasts. It important that these cashflow forecasts are updated based on what is actually taking place in the firm – not what we want to happen.  There is often a big difference between our target and what actually happens.
  3. The Silly season is an especially challenging time of year with billing generally low. Do your best to encourage staggered annual leave during the year (for legal / billing staff), especially between the mix of staff with school going children and without. Be prepared with a “money buffer” to withstand outflow commitments during this time.  What else can you do? If this won’t make enough of an impact to billing over those months, make sure start the conversation with your bank manager early, to avoid the last-minute bank account squeeze.
  4. Be particularly aware of the delayed BAS period for December payable in Feb, and the March quarter payable only two months later.
  5. Avoid the Tax-Man-Catch-up game, with regular check ins with your Tax accountant regarding tax expectations. Rather be “on the front foot” with tax saved during the year, and avoid those nasty year end shocks!

Taking steps to action these two” financial” profit drivers and the two from last week could be “just too hard” or “too time consuming”.  For many these are beyond the capabilities of your bookkeeper, and may not be the area of expertise of your office manager/practice manager.

The best compromise could be a part time CFO, who specializes in customised financial support based on your budget and needs.  The cost is relative to a junior staff member, and the benefit can span expertise in many areas of business finance, ranging from profit improvement, working capital management, cashflow management and maintaining or improving banking facilities. You can find out more here: https://www.cfocentre.com.au/ .  If anything, just a small 15-minute phone conversation could lead to driving more profit.

Keep an eye out for next week’s profit driver “bites” as we look into Retaining Quality Staff  And Strong Financial Management.

8  Guaranteed Profit Drivers for WA Legal firms

8  Guaranteed Profit Drivers for WA Legal firms

Overall, WA legal firms have had a slow and disappointing recovery from our mining boom days.  Legal practices Australia wide have shown signs of industry pressure in areas such as automation, outsourcing and the continual client pressure to adjust billing models, while still maintaining revenues and the pressure to improve profit.

With the average revenue growth spanning anything from 18% in Queensland and 10% in NSW, WA skimmed through, only just missing the not-so- “lucky-last” placing with a 6% revenue growth, just in front of South Australia which maintained revenue averages.

Unfortunately for our legal partners, revenue and revenue growth is not the only component to a successful firm and more importantly, money in the bank.  It’s a balancing act between profit and the ever changing lumpy cashflow commonly experienced by legal firms.  In fact, stats show us that in terms of profit growth, Western Australia came a definitive last in the profit growth race, with profitability actually being slightly worse than the year before.  Performances in profit growth ranged from 9% in ACT to a whopping 25% for NSW legal firms.

So, are we still being haunted by those high boom wages, with the added client pressures to price more competitively?

And what can our WA legal partners do to improve profit and reap short and long-term rewards of a hard-working legal career?

Macquarie Banks Benchmark industry results report indicate 8 Profit drivers to a successful legal firm.  These include the “touchy feely soft skills” as well as 6 other drivers that can be (and should be) regularly practiced and quantified.  The softer skills include;

  • Managing and developing client relationships,
  • And Excellent customer service

The other 6 profit drivers have a financial spin to them, and should be regularly reviewed by the firms finance team and CFO.  They include:

  • Keeping Costs as Low as Possible
  • Highly Structured and Efficient Billing and Debt Collection
  • Marketing and Business Development Activities
  • Strong Cashflow Management
  • Retaining Quality Staff
  • Strong Financial Management

 (You may be thinking how is a marketing function categorised with a financial spin?  And how do we talk numbers when “Retaining quality staff”.  Let’s explore these later….)

Unfortunately for those firms not considered “Top-end” and fit into the less than 50-60 staff, it is totally unpractical to employ a $160-$200k finance person to give support with these remaining 6 drivers!  So, what do these growing firms do?  How can they fulfil these while still supporting staff, handling cases and balancing the bank account?

For consistent support, let’s look at these in bite size chunks and explore what can be done.

KEEPING COSTS AS LOW AS POSSIBLE

  1. Do not leave the “where did our profit go” conversation to year end with your accountant? By that stage the horse has already bolted!  Past and future spending should be reviewed and discussed at least monthly or bi-monthly (depending on your firm).
  2. What is your mix of support staff wage to legal staff wage? How do you compare to legal profession benchmarks?   By reducing your spend in the human element, you may need to increase your spend in technology to improve efficiency.  With that in mind;
  3. How does your IT spend compare to your competitors? What is your sweet spot in the cost of technology and staff.
  4. To help reduce costs: regularly review the options of outsourcing, in the areas of Transcription, IT support, HR, Payroll, Marketing, Admin support and Finance

HIGHLY STRUCTURED AND EFFICIENT BILLING AND DEBT COLLECTION

  1. Highly effective systems are the key to an efficient billing cycle. Whether you are still billing mostly by hourly rate / moving towards fixed fee billing and/or retainers – you are still billing a value in exchange for the time for your staff.  Disciplined billing and debt collection is vital!
  2. A WIP & Debtors meeting should be held at least once a month between the partners / a partner, the CFO and the support staff member/s who play a role in Debtors follow up.
    1. Do you split your billing cut offs? Legal firms are renowned for lumpy inflows – by splitting some depts billing mid-month and others end of month – it should also spread out the inflows of receipts from debtors over the next month/s and relieve some pressure on your bank account.
    2. Are you actively tracking deferred payment cases for family law cases and keeping an eye on how many you are taking on?
    3. What about Personal injury cases? These projections should be updated at least once a month.

(These are important discussion points at your monthly Debtors meeting – as they can severely affect your cashflow projections, which we will cover later)

  1. Do you handle bad payers in house or is this outsourced?
  2. How do your average debtors’ days (time is takes on average to recover fees billed) compare to your competitors? (There is no need celebrating high billing months when your bank account is continuously crying to be topped up!)
  3. Be aware of the traditionally low billings of December / January, and how are you preparing for it now?

Taking steps to action these first two” financial” profit drivers can be “just too hard” or “too time consuming”.  For many these are beyond the capabilities of your bookkeeper, and may not be the area of expertise of your office manager/practice manager.

The best compromise could be a part time CFO, who is in the business of customised financial support based on your budget and needs.  The cost is relative to a junior staff member, and the benefit can span expertise in many areas of business finance, ranging from reporting and profit improvement, planning and systems implementation, maintaining and improving banking relationships and more. You can find out more here: https://www.cfocentre.com.au/ .  If anything, just a small 15-minute phone conversation could lead to driving more profit.

Keep an eye out for next week’s profit driver “bites” as we look into Marketing and Business Development Activities and Strong Cashflow Management.

What to Expect from a Part-Time CFO

What to Expect from a Part-Time CFO

The idea of hiring even a part-time CFO may seem to some SMEs a bit OTT—like paying Quentin Tarantino to make a 90-second home page video or booking Wembley Stadium for the company’s five-a-side friendly football match.

But for companies whose ambition is to get into and survive the coveted scale-up phase, hiring a part-time CFO makes perfect sense. They know that they’re getting a finance veteran, someone with big business experience, who can provide the guidance they need to grow rapidly and help them to avoid the costly mistakes that so many ambitious SMEs make as they attempt to move into the Big League.

As Colin Mills, the Chairman of the CFO Centre, said in his book about scale-ups, “The reality is that there is great value in having someone from the next level if you’re aspiring to get there.”

Companies who hire part-time CFOs understand that today’s CFOs are capable of delivering far more than bookkeeping or accounting services. They provide the kind of strategic business that fundamentally alters the performance/profitability and long term potential for a business. They can work with your board of directors and external stakeholders such as your bank or investors. They can also advise you on mergers and acquisitions. Besides strategic analysis, they can provide operational support on everything finance-related in your business.

Their responsibilities might cover business planning, capital structure, risk management, auditing and reporting, tax planning, capital expenditure, investor communication, R&D investment, working capital management and company budgeting.

Companies that don’t hire CFOs are often unaware of the opportunities and profits they’re missing out on. When asked why so many SMEs don’t hire CFOs, Matthew Bud, Chairman of the international Financial Executives Networking Group, said business owners are either unaware of their need for a CFO or reluctant to spend the money.

What many entrepreneurs don’t realise is that they’re already spending that money in lost profits and misspending,” he told Inc.

“They’re not seeing the dynamics of the business from an educated financial perspective. You can’t always go with your gut in making financial decisions, which is what a lot of entrepreneurs try to do.”

So, what can you expect from a part-time CFO?

Well, the role a part-time CFO will play in your company will depend on factors such as the size of your business, your expectations, your industry, and your corporate strategy and business goals. But a good CFO will work on your company’s finance strategy and finance operations and manage areas such as compliance, tax planning and legals, outsourcing and banking relationships.

To achieve success in these different roles, a CFO will need outstanding hard and soft skills.

If you’re a CEO, the CFO will be your strategic partner, providing financial insight and strategy and helping you to improve profitability and cash flow.

A good CFO won’t, however, be a ‘Yes’ person, someone who rubber-stamps every initiative without due diligence. On the contrary, they will challenge you and your vision for your business asking the kinds of questions which leads to transformation as opposed to incremental improvement.

Charles Holley, CFO-in-residence at Deloitte and former Walmart CFO, says good CFOs are independent-minded yet supportive of their CEO.

My CEOs counted on me to be the truth teller, to form my own opinions on important company decisions and to speak up. At the same time, they expected my support for execution.”

Great CFOs challenge the business, he says. They point out problems and propose possible solutions to “spark the debate”.

CFOs are in the best position to call attention when the numbers aren’t supporting the strategy. For example, CFOs can push the business to change capex priorities when the underlying ROI assumptions are no longer supported by the numbers.”

Besides being a trusted advisor and sounding board, a good CFO will help to raise efficiencies, identify opportunities, manage risk management, and manage capital structure.

Since they speak the language of financiers and understand what they are really interested in, CFOs can also liaise with financial institutions, investors, and auditors on your behalf.

In other words, a part-time CFO can help you to manage the transition into the scale-up phase more smoothly and ensure you reach your growth targets sooner.

How it works in practice

The FD Centre’s part-time CFOs use a proven framework known as the ’12 Boxes’ to identify where the problems are within any business. They use it to review every aspect of your company finance function and identify every problem area.

They will help you to understand your company’s finances; eliminate cash flow problems; identify cost-savings, and improve profits.

They can also help you and your team to understand your main profit drivers; find and arrange funding; identify your Critical Success Factors and Key Performance Indicators (KPIs), help you to expand nationally and internationally; and build value to make your business more attractive to investors or buyers.

To discover more about the 12 Boxes, click here.

 Need help?

To discover how an CFO Centre part-time CFO will help your business, contact us now on 0808 164 8902. To book your free one-to-one call with one of our part-time CFOs, click  here.   You can see how they add rocket fuel to any business here.

To hear what people really think about the FD Centre’s part-time CFOs, watch these short videos here.

Uncover strengths and weaknesses

Identify the strengths and gaps in your business in just nine minutes with the F-Score.

Just answer a brief series of questions, and you’ll receive an 8-page report that will reveal potential current or future pain points for your business. It will also help you to rate the performance of your finance function and uncover untapped opportunities for growth. Click here now to take the F-Score.

Got a Big Question?

If you have a burning question for one of our team of  CFOs, ask it here, and you’ll get an answer within 24 hours. Please note the question must be finance-related (sadly they can’t give horse-racing or fashion tips or relationship advice).

 

What A Finance Director Can Do for Your Company

What A Finance Director Can Do for Your Company

You might think a Finance Director’s role is confined to traditional finance activities, but today’s CFO can do so much more than count beans.

In the past, an CFO’s responsibilities might have been confined to high-level accounting such as providing timely financial statements and monthly management reports, managing investments and expenses, monitoring cash flow, and managing risk. But as the business landscape has become more complex over the past decade, the role of an CFO has changed.

That change is due to factors such as the global financial crisis—the biggest since the Great Depression of the 1930s, disrupted and volatile markets, the rise of big data, and the impact of digital and social media.

As a result, CEOs and their Boards expect so much more from CFOs, according to a KPMG report.

“CEOs are increasingly looking to their finance leaders to help drive wider business strategies,” says Simon Dergel, author of ‘Guide to CFO Success’.

They expect CFOs to make decisions and shape their plans based on the company’s ambitions, he says. As the keeper of the company’s data with an understanding of every department’s objectives and performance, they can play an active role in refining and aligning business strategies.

“Perhaps the biggest change in terms of the CFO’s role in business today is that their advice is not only valued—it is necessary,” says Dergel.

“Businesses are currently dealing with a wave of disruptive competitors and fast-changing customer expectations, while also managing a global talent shortage and volatile financial conditions. The wisdom and experience of finance leaders make them indispensable in the boardroom as companies look to tackle one of the most uncertain economic periods in decades.”

Most importantly, CFOs are delivering on these expectations. The new breed of CFOs are now much more forward-looking. They wear three ‘hats’ at any given time: financial expert, active management team member and leader of the finance function.

Given the opportunity, they can perform multiple roles within a company, working both on and in the business. Not only can they direct financial performance and protect the financial integrity of the company but they can also drive strategy.

This is borne out by James Riley, the Group Finance Director and Executive Director of Jardine Matheson Holdings Ltd., who says, “A good CFO should be at the elbow of the CEO, ready to support and challenge him/her in leading the business.

“The CFO should, above all, be a good communicator—to the board on the performance of the business and the issues it is facing; to his/her peers in getting across key information and concepts to facilitate discussion and decision making; and to subordinates so that they are both efficient and motivated.

“Other priorities for a CFO are to have strength of character, personality, and intellect. I take it as a given in reaching such a position that an individual would have the requisite technical knowledge and financial skills.”

How Start-Ups and Scale-Ups Benefit

Most start-ups and early-stage growth companies don’t need and can’t afford the services of a full-time CFO. But that doesn’t mean they can’t benefit from all that CFOs offer. They can access the skills of highly qualified CFOs by engaging them on a part-time basis.

Part-time CFOs can provide enormous value in terms of strategy and planning for early-stage or scale-up companies. A report from the Financial Executives Research Foundation (FERF) went further: it described their role as “critical to the success of start-up and early-stage growth companies” since they provide key insights.

It found CFOs play key roles in not only managing a young and fast-growing company’s finances but also in setting broader strategic goals and establishing and achieving financial and non-financial milestones.

When the company is at a stage when it needs external investment, the part-time CFO can manage the process to ensure it raises the right type of funding from the right sources. The part-time FD can also provide more comprehensive reporting as well as manage the relationship with the external investors, whether they are venture capitalists, private investors or banks.

Part-time CFOs also help to establish sound reporting systems and tools that help improve reporting metrics and communications to investors.

They also play a key part in setting and monitoring company strategy and maintaining a balance between investing in growth, building market share and preserving capital for future opportunities.

As they grow, the need for a part-time CFO’s financial and strategic acumen becomes more acute, FERF found.

The CFO Centre’s part-time CFOs bring these skills to every client at a fraction of the cost of their full-time counterparts. For instance, its part-time CFOs can:

  • Provide you with an overview of your company so that you can make sound decisions about its future.
  • Help you to understand your company’s finances.
  • Eliminate cash flow problems.
  • Identify cost-savings within your company.
  • Improve your profits.
  • Create a realistic business plan and so make better financial decisions.
  • Help you and your management team to manage your finances with ease.
  • Develop clear strategic objectives.
  • Identify your Critical Success Factors and Key Performance Indicators (KPIs).
  • Find and arrange funding.
  • Understand your main profit drivers.
  • Identify your best customers.
  • Sort out your tax position.
  • Introduce timely, easy to follow management reports.
  • Facilitate expansion in your country and into other countries
  • Build value to make your company more attractive to investors or buyers

 

To discover how an CFO Centre part-time FD or CFO will help your business, contact us now on 1300 447 740. To book your free one-to-one call with one of our part-time CFOs, click here.

Why Hollywood Actors Should Get Training from FDs

Why Hollywood Actors Should Get Training from FDs

You shouldn’t be surprised to discover that Meryl Streep, Robert De Niro, Hugh Jackman, Gary Oldman among many other Oscar-winning actors and actresses bear a grudge against Finance Directors.

It’s easy to understand why. For although the likes of Streep and Oldman have achieved fame, fortune and critical acclaim, they can usually only inhabit one role at a time. They take it on for a few months and then move on to the next.

A great CFO, by comparison, is the master or mistress of multiple roles and can switch between them easily and effortlessly. What’s more, they perform those multiple roles day in, day out for weeks, months and even years.

That’s because an CFO is there to help the business owner achieve the company’s objectives by providing financial and strategic guidance to ensure it meets its financial commitments and to develop policies and procedures to ensure its financial management is sound. The Institute of Directors says the CFO is “often viewed as the member of the board who creates a solid foundation upon which a business can grow”.

It’s why a typical CFO job advertisement features a huge list of responsibilities. These will often include the following and more:

  • Providing strategic financial leadership to optimise the organisation’s medium to long-term financial performance and strategic position
  • Contributing fully to the implementation of organisation strategy across all areas of the business, challenging assumptions and decision-making as appropriate and providing financial analysis and guidance on all activities, plans, and targets
  • Providing robust financial reporting and analysis to the Board of Directors, Finance, Risk and Governance Board and Corporate Management Team including the provision of financial support to strategic decision-making and transactions
  • Working with senior management to steer the business towards the goal of greater financial independence and sustainability
  • Providing cash management – monthly cash flow reporting and long-term strategic cash management
  • Overseeing the preparation of VAT and other statutory submissions
  • Developing and ensuring compliance with financial policies and controls
  • Presenting annual accounts to the General Meeting.
  • Risk management and reporting – maintenance of the organisation’s risk register ensuring control processes are fit for purpose
  • Developing an IT strategy which supports the organisational strategy.

Although CFOs aren’t expected to be able to speak in an accent, swordfight or ride a horse as actors are, they are expected to have accountancy qualifications, excellent communication and interpersonal skills, the ability to manage complex stakeholder relationships and to provide strong attention to detail with commercial and strategic acumen.

So, as you can see, at any time during a CFO’s day, the CFO will be a sounding board/mentor for the CEO (and sometimes the only one to point out the flaws in a ‘blue sky’ idea), strategic advisor, bookkeeper, financial controller, risk management advisor, finance team leader, recruitment advisor and much more.

Being able to adapt to any one of the roles comes from experience. The CFO Centre’s part-time FDs, for instance, have all had years of experience working in large corporations. They’re used to working in complex, demanding environments and switching roles as the need arises.

Unlike actors, FDs don’t perform as they do for applause or for a gold-plated statuette (although many would be very, very happy if you offered to pay them in real gold bullion). They do it to help business owners like you take your fledgling business to new heights of success.

What’s more, you can be sure that the FD you hire won’t ever pull you aside before or during a meeting to ask, “What’s my motivation?”

To discover how an FD Centre part-time FD or CFO will help your business, contact us now on 1300 447 740. To book your free one-to-one call with one of our part-time FDs, just click here.

The Rising Power of AI in Financial Services

The Rising Power of AI in Financial Services

Artificial Intelligence (AI) is already transforming the way in which financial service companies are doing business.

More and more of them are using AI to process information on their customers, cut costs, save time, monitor behaviour patterns, assess credit quality, automate client interactions, analyse markets, assess data quality and detect fraud.

A pwc Digital IQ 2017 survey found that 72% of business decision makers believe AI will be the business advantage of the future. About 52% said they’re currently making “substantial investments” in AI, and 66% said they expect to be making substantial investments in three years.

Franck Coison, Industry Solution Director, at international IT services company Atos says the four main types of AI are facial and voice recognition, natural language processing, machine learning, and deep learning. They can be used in chatbots, document analysis, process automation or predictive analysis, he says.

Although robotic process automation (RPA) is increasingly common in financial services, it is usually used for quite simple, repetitive tasks, says Coison. “In contrast, AI can be used to automate more complex tasks that require cognitive, or ‘intelligent’, processes.

“While RPA is appropriate for back-office and accounting processes, when it is combined with AI, any process including customer-facing activities can be automated.”

That means it has great potential in areas such as customer service, sales and customer intelligence, IT services, fraud prevention, and cyber security, he says.

The pwc survey found that adoption of practical machines that think is widespread in the financial services sector. Some banks use AI surveillance tools to prevent financial crime, and others use machine learning for tax planning. Many insurers use automated underwriting tools in their daily decision making and wealth managers offer automated investing advice across multiple channels.

A provider of next-generation investment analytics Kensho Technologies has for example developed a system that allows investment managers to ask investment-related questions in plain English, such as, “What sectors and industries perform best three months before and after a rate hike?”. They receive answers within minutes.

AI is proving popular among banks too. Lloyds Bank, for example, has invested $5.3billion on its digital transformation initiative, which includes using AI to “simplify and progress modernisation of its IT and data infrastructure, as well as other technology-enabled productivity improvements across the business”.

Terry Cordeiro, Head of Product Management at Lloyds Banking Group says AI has “completely transformed how the finance industry works, with the vision at Lloyds being to use smart machines for extending human capabilities while using data to respond.

“Automating processes means better opportunities to reduce costs for better decision making, and intelligent products mean that our customers are able to do much more,” Corderio says.

Earlier this year, NatWest Bank introduced ‘Cora’, an AI-powered ‘digital human’, which converses with customers in its branches. Cora can answer more than 200 queries, covering everything from mortgage applications to lost bank cards.

The plan is to develop Cora so it can answer hundreds of different questions, as well as detect human emotions and react verbally and physically with facial expressions. As well as being put in branches, Cora could be used by customers at home on their laptop or PC and, in the long run, on smartphones.

Finance departments are also benefiting from AI. The insight into data that it can provide will be a competitive advantage, according to Matthias Thurner of the Corporate Performance Management and Business Intelligence solutions provider, Unit4 Prevero.“For this reason, AI will become integral to finance functions in every industry,” he says.

As technology improves, AI will become faster and smarter at providing analysis, he says. Companies that don’t use it will be at a competitive disadvantage.

“Businesses don’t want to replace their employees, but they do want to make better financial decisions, and AI will allow them to do that faster and cheaper than a whole team of humans.”

It will enable skilled office workers to spend more time on their core competencies rather than maintaining data, he says. This will help organisations to reduce costs and the time spent on manual tasks or the classifying of data.

Likewise, FDs will benefit from AI data analysis, says Thurner. That’s important since there’s an increasing expectation for FDs to be a source of business insight. Boards want more frequent reports that contain more context and detail. Fortunately, they will be able to deliver more detailed and more frequent reports thanks to AI, he says.

But it’s unlikely an FDbot will appear in finance departments any time soon. “We can expect machine l   earning to powerfully augment human expertise and experience in the near future even if that’s not a reality today,” says Thurner. “AI can provide data back-up and make suggestions to help the human decision-maker, but it’s the CFO who ultimately has to decide what to recommend,” says Thurner.

With so much potential in key areas of business, it’s no wonder that AI is being hailed as the Fourth Industrial Revolution.

“AI will have an impact as big as electricity and will transform every single industry,” predicts Cordeiro of Lloyds Banking Group.

To discover how a part-time CFO will help your company, please call the CFO Centre on 1300 447 740 or visit our website now.

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