‘Finance’ is one of the crucial factors to decide the overall credibility of the business in the current marketplace. And why not when it’s an essential source to fuel operational processes, maintain a good office infrastructure, and meet the other digital needs of the business?
All such factors bring a business closer to a CFO (chief financial officer). A CFO is an essential resource who shines a light on different financial aspects of the business. It includes maintaining a seamless cash flow, taking financially strategic steps, ensuring steps for better profitability, and much more.
Maybe that’s why almost all businesses in Australia believe in joining hands with a reliable chief finance officer right from the start. This approach has saved many businesses across Australia from facing financial crises even in pandemic times. Now that must be enough to showcase the importance of maintaining the right financial balance.
The thought of hiring a CFO for your venture –
When it comes to collaborating with a CFO, entrepreneurs are common to think about their financial state and explore if they really need this resource or not. Many entrepreneurs consider their business to be too small to hire a chief financial officer.
All of these are merely myths.
You can join hands with a chief financial officer whenever needed. All you need is to brief your business’s financial state in advance.
What does a CFO do?
An experienced financial officer is ideal for formulating and validating the strategies leading to better viability and growth in the marketplace. This gives most business owners the impression that CFOs are financial controllers. Here, you need to come out of this misconception as a financial officer is something more than a financial controller, in general.
It won’t be wrong to refer to a financial officer as the financially-oriented voice of the business. s/he focuses on understanding the ‘business drivers,’ overall risk factors for the venture, and what adds financial value to the business.
A financial officer is not a ‘bean-counter’ but a professional who collaborates with the CEO to navigate the profit-growing mediums and effectively eliminate the risk factors. The basic purpose is to take the business to the next level.
How does a CFO assist in better management?
1 – Being more strategic – You may have a team of business analytics and advisors, but you need an industry specialist when it comes to being more financially strategic. A CFO is entitled to –
- analyze different opportunities
- develop a more strategic business approach
- evaluate the financial market growth rate
- Consider different parameters like competition, geographical factors, the demand of products and services in the marketplace, and much more.
2 – Manage the risk factors – If not earlier, the global pandemic of COVID-19 must have made you understand the importance of managing your business finances. It’s something you should monitor and evaluate consistently to avoid financial crunches. This is ideal for saving businesses from falling for obvious financial risk factors.
Maybe that’s the reason why many businesses remain in contact with a Virtual CFO Melbourne throughout the pandemic. Additionally, such professionals help you process business finances keeping the updated government regulations in mind.
If you are still wondering if you should seek the help of a financial officer to look into your business finances, let’s take you through its benefits in detail.
1 – Cash flow management – Such financial professionals are entitled to effectively maintain and control the cash flow. The process begins with understanding the use of cash at different business activities, source of income, maintaining the integrity of funds, and much more. Here, the professional may need to work on establishing new accounting policies for the organization to uniform the financial processes for collection and credits.
The cash flow should be analyzed considering the financial obligations, bill payments, purchase orders, etc. Also, it’s the CFO’s responsibility to disburse the organization’s monies and overall securities.
Infographic created by Clover, a POS system company
2 – Organization’s performance – Understanding the business models to generate the customer’s value proposition is one of the measures deciding the company’s performance. This professional is the company’s scorekeeper analyzing the dashboard, scorecard, financial statement ratio, accurate financial performance, etc.
3 – Business’s liabilities – The next step after evaluating and maintaining the cash flow is to understand the business’s liabilities. A company is common to hold different legal contracts, tax obligations, statutory, hidden liabilities in the form of –
- Insurance summaries
4 – Financial relationships – A financial officer’s complete responsibility is to develop and maintain healthy relationships with financial analysts, investment bankers, stakeholders for a smooth transition of information and funds within the organization. Such professionals are required to look upon –
- Different administer banking arrangements
- Maintaining the adequate source of funds for the company
- Loan agreements
- Complete procurement of debt
- Meeting the financial needs
- Finding alternatives to fetching funds from different sources
5 – Shareholder relations – Your CFO should evaluate the shareholder procedures, relationship policies, information programs, interim reports, and much more.
6 – Raising capital – When it comes to pressing organizational problems, the chief financial officer is supposed to establish and implement schemes. The proposed plans are for the provision of funds required in the company.
Generally, this includes – procurement of debt, equity funds, maintaining the overall financial arrangements, negotiating the procurement of debt, etc. This is done in consideration of the company’s long-term plans. Furthermore, s/he should assess the financial needs implicit in the proposed programs.
7 – Department monitoring – A financial professional acts as an accounting supervisor, especially in the case of a small-scale organization. As far as fortune 500 companies are concerned, s/he may be given more responsibilities revolving around financial reporting and functioning. This is based on the company’s particular requirements.
The concluding words –
Strengthening a business to face the real-time financial crunches and other corporate world challenges is the base to stand firm in your marketplace. From dealing with unexpected business scenarios to upgrading your business operations, a businessman needs to be proficient in all departments. Above all, stabilizing the financial state requires seeking a financial professional’s recommendations. The safest choice is to settle for a CFO looking into your commercial finances closely.