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Top 9 Advantages of a Part-Time CFO

Top 9 Advantages of a Part-Time CFO

The quicker you want your company to achieve its goals, the sooner you should consider hiring a part-time CFO.

That’s because a part-time CFO will provide your company with the high-level financial expertise necessary to scale up (things you and your team may not even be aware you need), for a fraction of the cost of a full-time CFO.

Hiring a part-time CFO provides your company with many advantages that really help it to grow and stand out in any marketplace. But here are the top nine advantages you and your employees and stakeholders can expect when you hire a part-time CFO.

  1. Cost-saving

By hiring a part-time rather than full-time CFO, you can avoid the often-hefty recruitment and hiring costs (and the delays they inevitably entail). What’s more, you can hire a part-time CFO for a fraction of the cost of a full-time employee. You won’t have to offer a benefits package or bonuses to retain the appointee.

  1. Strategic advice

Your part-time CFO will provide you with strategic analysis and support on every financial aspect of your business. A report from the Financial Executives Research Foundation (FERF) described CFOs 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.

What’s more, part-time CFOs can highlight potential threats or risks of which you and your team may be unaware or perhaps don’t know how to deal with.

  1. Flexibility

You can use the services of your part-time CFO for what you need when you need it. That could be for a variety of different financial functions or a specific project. This means you and your CFO can tailor the role to suit your company’s needs at any time.

  1. Multiple industry experience

Although you can choose to work with part-time CFOs who have direct experience in your given industry, you can also opt to work with those that have experience across multiple industries. The advantage will be that your CFO will provide you with access to networks and multi-layered insights that you might not otherwise have.

  1. Crisis management

The loss of major contracts, customers or employees can be devastating for any business. Your part-time FD or CFO will be able to help you and your team navigate your way out of the crisis. This could include producing short-term cashflow reports, identifying costs that can be cut, producing new financial forecasts, and helping with raising vital funds.

  1. Sounding board

Running a company can often be a lonely, stressful experience for CEOs, according to the FD Centre’s Chairman Colin Mills in his book ‘Scaling Up How to Take Your Business to the Next Level Without Losing Control and Running Out of Cash.

He’s seen first-hand what pressure does to business owners.

“I’ve sat in sales meetings with entrepreneurs who had literally been brought to tears by stress and frustration and the feeling that it’s all too much.”

That’s where a part-time CFO can help. He or she can act as an independent sounding board for the over-burdened, stressed-out business owner. With their ‘big business’ experience, it’s more than likely CFOs can provide solutions to what can seem like overwhelming problems to the CEOs of growing businesses.

  1. Mentorship for your team

Part-time CFOs help to establish sound reporting systems and tools that help improve reporting metrics and communications to investors. They can also act as mentors to members of your existing finance team, guiding them where necessary and providing the advice they need to rise to new challenges.

  1. Access to a national and international network

If you choose a part-time CFO from an organisation like the CFO Centre, you’ll benefit from the expertise from all the CFOs in its worldwide network. That’s hundreds of years of experience in every aspect of finance—all for a fraction of the cost of employing a single full-time CFO.

  1. You won’t get left behind

If you’re still hesitating about whether now is the right time to hire a part-time CFO, consider the sorry tale of Kodak—a company that got left behind, despite once being one of the most powerful companies in the world.

Kodak was once known for innovation (being the creator of the Box Brownie camera, Kodachrome film and the Instamatic). Here’s what’s remarkable—a Kodak engineer Steve Sasson developed the world’s first digital camera way back in the mists of time (actually, 1975). Okay, it was the size of a toaster, took 20 seconds to capture low-quality images which had to be viewed on a TV. But still… it had the potential to disrupt the market massively.

The company poured billions into developing the technology to take photos using mobile phones and other digital devices but delayed acting on it due to fears digital technology would destroy its film and photographic developing business. It failed to act fast enough and to identify the opportunities posed by digital technology.

On January 19, 2012, Kodak filed for bankruptcy protection in 2012, then exited its legacy businesses and sold off its patents. It re-emerged in 2013, albeit in a vastly slimmed down version of its former self.

If you want to avoid becoming a post-script or salutary tale in your market, appoint a part-time CFO. He or she will provide you and your team with strategic help and advice to recognise threats and to seize opportunities—thanks to vast experience and expertise.

The CFO Centre offer the services of part-time CFOs with big business experience who can use what they know to help your company achieve rapid yet sustainable growth. What’s more, they’ll help remove fear, confusion and stress from the entire process.

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

How it works

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 and not only eliminate cash flow problems and identify cost-savings but also to 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 find out 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.

What people are saying

People are talking about what they really think of the CFO Centre’s part-time CFOs. Find out what they’re saying on these short videos here.

Where are you going wrong?

You can identify strengths and weaknesses in your business in just nine minutes with the F-Score click here now. 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?

Have a burning question for one of our team of CFOs? Just ask it here, and you’ll get an answer within 24 hours. The question must be finance-related (sadly, they can’t predict who will win Wimbledon).

Where to Find the Cash You Need

Where to Find the Cash You Need

A lack of cash can not only stall your company’s growth but also place its very existence under threat.

It doesn’t matter how profitable the business may be; cash flow problems can place it under severe pressure, according to the CFO Centre’s Chairman Colin Mills in his book ‘Scaling Up How to Take Your Business to the Next Level Without Losing Control and Running Out of Cash.

“You might think you’re immune from danger because your business is experiencing a high level of growth, but you’re wrong: expansion can exacerbate the problems caused by poor cash flow management,” he said.

“You almost always have to make investments and bring certain expenses on ahead of achieving the higher revenue and cash flow that comes with successful growth.”

It is the oxygen every business needs to survive.

“The stark truth is, without cash your business will be unable to meet its payroll obligations, default on payments to suppliers and creditors (payables), and ultimately cease trading.”

Fortunately, there are ways to find cash both from within your business (by improving processes, cost-cutting and selling off unused assets) and from traditional and alternative external funding sources such as banks, invoice factoring companies and crowd-sourcing platforms.

Getting the cash your company needs earlier rather than later can not only save you and your employees from unnecessary stress but also help you to achieve more rapid growth as the following example illustrates. One of the CFO Centre’s American clients had over-hired which caused it to run into cash flow problems.

But with the help of the CFO Center, the company was able to survive the blip and then attract one of the ‘Big Three’ automobile manufacturers in the US—Chrysler—as a client.

“They were really bumping up against their credit line of $US500,000,” recalled the CFO Center’s Boston Regional Director in ‘Scaling Up. “We came in, restructured their financing and their forecasts, and in a couple of months we were able to get them a new line of credit for $2 million,” he said. “That effectively allowed them to invest in the growth of the company.

“A year after we were engaged, the client won a massive deal with Chrysler. Chrysler conducts vendor analyses on the financial position of its vendors, and this company got a green light across all areas that Chrysler reviewed them on.”

Look within your company first

While many business owners automatically look to external funding sources, it pays to look closer to home first.

“Most entrepreneurs don’t realise there is often considerable funding to support growth from within their own business,” says Mills. “That’s because the collection of customer receivables can often be improved through strong credit control and the level of stock holding reduced through improved systems and processes. In some instances, poor negotiation of supplier payment terms means less funds are available within the business to support scaling up.”

So before you pick up the phone (or click your mouse) to apply for external funding, consider the following methods for freeing up cash within your business.

Declutter

If the business has machinery, equipment or large amounts of stock that is idle, consider selling it or renting it to other businesses.

Remove unnecessary overheads

Look at all your overheads to see if they can be lowered. For example, consider reducing staff numbers, or not replacing employees when they leave or moving premises to get a more favourable lease.

The head of the Australian CFO Centre recalls how one part-time CFO was asked to help a fast growth branding business that had got into trouble with cash flow. Most troubling was a looming $AUD 500,000 tax bill.

At the company’s headquarters, it was easy to see why the company was struggling: the carpark was crammed with ‘flashy’ company cars.

A conversation with the owner revealed he did not have a good grasp on his financials. He didn’t know how to improve his margins and had no idea how much his product was costing to produce.

So he was advised to sell the cars and make half the staff redundant.

“We were really hard with the guy; we took a firm line with him, but he did all the things we suggested he do to get his business back in order,” the part-time CFO said. “That was three or four years ago, and today his scaleup growth has delivered the cash flow and sustainability, to where he should have been if he had the financial nous beforehand.”

Negotiate better terms with vendors

Ask for more favourable payment terms from your suppliers. This doesn’t necessarily mean asking for reduced prices but could be as simple as requesting an extra seven days for your payment window.

If your suppliers refuse your request, look for other suppliers who can offer lower prices or better payment terms for the same quality of product.

Resolve late payment issues

Make your payment terms clear to minimise the possibility of late payment issues. Try to keep to the same terms for all your customers (for example, a 30-day window for payment of the invoice). Get agreement to your payment terms from all your customers or clients. Carry out credit checks on all new customers or clients. Ensure that invoices are issued promptly. Ideally, you should issue invoices by email on the day of completion of the job or project and ensure that overdue payments are pursued.

Get deposits for large projects or orders. Build a deposit (of anywhere up to 50% of the total cost) into your contract for large projects or orders. This is especially important if the projects or orders are likely to involve a lot of resources and time.

That way if the customer decides to cancel the project or fails to pay the balance on the project or order, you have at least recovered some of the cost of the resources and time you’ve already invested in it.

Look for External Funding

You should also consider external funding sources to help ease your cash flow challenges. There are a dizzying number of sources to consider, both traditional and alternative (which is why you should use the services of a part-time FD or CFO to identify the best method for your company and help you navigate your way through any such process).

Apply for a bank overdraft

A bank overdraft has been the traditional form of funding for many businesses. But these days, banks are more likely to try to steer their clients to other forms of debt that provide the banks with more security.

While overdrafts are usually quick to set up, they have a major drawback, and it’s this: banks can call them in on demand.

Request a bank loan

The advantages of bank loans are that they are for a set term with regular repayments and that the banks can’t call the money back on demand. The downside is that banks will demand strong security for the loan such as a personal guarantee secured on the assets of the business or even the owner’s personal assets.

Use asset financing

Using your assets as collateral for the loan is one of the easiest ways your growing business can get access to quick cash. However, there is a drawback: not all assets are considered equal.

Typically, lenders will only consider assets that they can sell quickly if you default on the loan. Therefore, they usually want high-value assets with a low depreciation rate or high appreciation rate, and which are easy to convert into cash.

Get alternative financing

The alternative finance market includes a wide variety of financing models including peer-to-peer lending, crowdfunding and specialist finance providers offering products such as selective invoice finance and invoice trading platforms.

The benefit is that since they have greater flexibility than traditional funding sources they can often offer a faster turnaround on the right deals.

Invoice Discounting

The advantage of invoice discounting, in which banks and invoice discounting companies lend money secured against your debtors/receivables, is that you can borrow up to 80% of the invoice amount within 24 hours. So you get the cash flow benefit and the rest when the money is collected.

The disadvantage is that it can cost more than overdraft or loan charges so it may have a bigger impact on your profit margins.

Peer-to-peer (P2P) lending

P2P platforms match lenders directly with borrowers so that you can borrow money from individuals. The huge benefit of this is that the rates are favourable and often much better than any other type of lending method. The disadvantage is that you will still have to undergo a credit check and possibly pay an application fee.

Equity-based crowdfunding

The way it works is that people come together on the crowdfunding websites to pool money towards a particular venture or idea in return for an equity share in your business. The issue with crowdfunding though is that it’s not as easy as some people make it out to be, as it requires months of planning and lots of marketing in order to get people excited enough about what you are doing to contribute money towards it. There’s also the risk that you don’t receive the amount you’re seeking, in which case any finance that has been pledged will usually be returned to your investors, and you will receive nothing. If you’re successful, there’s the risk you give away too much control in your company. This could have an impact later when you decide to sell the company.

The easy way to raise cash

Of course, you can make the finding or raising of cash a much easier process by engaging the services of a part-time CFO. For example, The CFO Centre Hong Kong offer the services of part-time CFOs with big business experience who can use what they know to help you uncover or obtain the cash you need to help your company achieve rapid yet sustainable growth. They will help remove the fear and confusion from the entire process.

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

How it works

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 and not only eliminate cash flow problems and identify cost-savings but also to 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.

Where are you going wrong?

To identify strengths and weaknesses in your business in just nine minutes with the F-Score click here now. 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.

Scale Up: How to Take Your Business to the Next Level Without Losing Control and Running Out of Cash’, Mills, Colin. BrightFlame Books, 2016

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