Why and when do I need a CFO?

By Jon Orr, Managing Director, Optimas Financial & Accounting Solutions

If all you see from your accounting department or accountant is numbers without analysis, you’re not getting the information you need to run your business. For example …

  • Did you make more or less money this year over last year? Why or why not?
  • Which costs are higher this year? How do they compare to last year? Why?
  • Which products or services are most profitable? How can you make them more profitable?

There’s a story to be told with every financial statement, and you need someone who knows how to show you that story. If you’re not getting detailed information beyond the standard financial reports, you’re not getting enough.

Precisely what you need will vary with every business. You might need to see your data monthly, weekly, or even daily. For example, if you run a restaurant, each morning you need to know what yesterday’s sales were. How many customers did you serve? What was the average bar tab? Average food tab? What were the margins on the sales? How does this compare to last month, and the month before that? And if you have multiple restaurants, one P&L statement for all of the restaurants will not be enough. You need this information for each location!

Say, for instance, bar sales at one restaurant are increasing but food sales remain flat. The reasons behind this change could be very interesting, so you need to know why this is happening. This is where the CFO comes in. The CFO will…

  • Analyze the financials to identify potential revenue and cost items that vary from other restaurants.
  • Investigate these variances – for example, perhaps by talking with the manager at the location in question. This might reveal that the bartender there is doing an exceptional job of chatting with and engaging the customers, or maybe the manager has experimented with a higher staff-to-customer ratio in the bar.
  • Identify what’s driving the positive change. This allows you to share this information with the managers at your other locations, so they can replicate that success across the entire organization.

In other words, a CFO doesn’t just look at what’s happening in your business. A CFO asks why those things are happening. By uncovering the story behind the numbers, you gain the information you need to steer your business in the right direction and enjoy more successes.

It’s important to note that this doesn’t mean you need to rush out and hire an expensive full-time CFO. In fact, your business may not be big enough to warrant a full-time CFO. Fortunately, it’s possible to outsource CFO services on a part-time basis. This gives you the best of both worlds – access to high-quality expertise to give you analysis and advice when you need it, but without a huge hit on your budget. And the best part? By outsourcing your CFO services, you’re now freed up to focus on those areas that bring true value to your company: servicing your customers and growing your business.

© Optimas Financial & Accounting Solutions

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Optimas provides cutting edge accounting services, professional financial analysis and advice to small and mid-sized businesses, turning their accounting and finance departments into profit centers. We offer business accounting and CFO services using the latest technology and economies of scale to lower costs and increase the quality, amount and timeliness of valuable financial information. Our CFO services also provide the expert financial analysis, insight and advice to accomplish each client’s strategic objectives and increase their profitability.