A Guide to CFO Services
Solid financial management practices are essential to a company’s profitability. If you are a business owner, should you focus your efforts on client deliverables or on managing your revenue well? The solution to this issue is getting CFO services.
If you hire CFO services, you accounts will carefully be scrutinized, including profits and losses. If you are so concerned with meeting the requirements of your client, then you can fall into a bad business practice of neglecting your regular account keeping. If you are to generate profits, it is indispensable to manage your funds. While your customers help in your business profitability, it is not the only thing that makes it profitable. Your profits will increase if you manage your costs, reduce unnecessary expenses, and enhancing your productivity.
CFO services provides a detailed scrutiny of your revenue sources, revenue generation methods, and costs associated with revenue generation in order to determine areas that may be leading to decreased profitability. You should be able to following questions regarding your finances. Do you regular update your account sheets and are they done accurately? Are profits and losses reflected accurate in these sheets? Are you able to identify your overhead expenses correctly? Can some of these overhead costs be removed?
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The business needs overhead though it is not really directly involved with generating profits or revenue. Some of the things that can be categorized under overhead expenses are your travel expenses, phone bills, and client entertainment. You might think that the only way to reduce cost is by controlling your overhead, but if you cut too much of your overhead, it can lead to a negative impact to your revenue stream. Professional CFO services can help you decide if you need to curtail your overhead or not, and if you do, they can also advice you in deciding on how much you need to reduce your expenses.
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When you present your client with an invoice for services rendered, it means your customer is yet to pay you. The daily invoices incurred by the business will grow before the month ends. The invoices you have represent the clients that owe money to your company. CFO services informs you about the state of your company finances and so you are better prepared to reclaim the money. When debtor age goes beyond a limit that your fix, say 30 days, you can contact your debtors and follow up on payment.
Another thing that CFO services can provide for you is information on whether your business is using resources optimally or if the rates of your services have established for your service are competitive.
A full time CFO is not necessary for a start up, or small to medium businesses. You should, however, consider outsourcing your CFO needs. Two benefits your receive from outsourcing CFO services is that you profit directly through smart financial management, combined with savings on investment costs in funding a full time CFO position.