CFO Management Support Services
Management support is a roll-up-your-sleeves-and get-dirty function that includes responsibilities typically provided by a corporate CFO, but on a temporary or project basis. Providing professional resources can bring sanity to the chaos and illuminate what is behind the numbers. Numbers are the most honest critics of the organization and understanding what they are saying keeps the business owner focused on the goals and the results.
Effective management support requires evaluating the health of the business, looking at the tools and reporting available, assessing the operating environment, systems, and personnel functions. When evaluating operations it is important to have input from staff to understand their job functions, responsibilities, and insider assessment of operations. If management is considering an exit strategy, help may be needed to prepare an accounting department for pre-acquisition due diligence.
If accurate financial statements are not available by the tenth of the month following a close, there is a problem that needs to be addressed immediately. Working with staff to create timely financial reports and reliable sales analysis tools is a core support function. Information is essential in decision making and owners need the tools to ask the right questions, understand what happened in the past, and make informed decisions about the future.
Every business should be generating daily or weekly flash reports to provide timely snapshots for Sales, Accounts Receivable, Accounts Payable, Inventory and Cash.
Results compared to budgets are the measuring stick for owners, investors, and banks. Working with business owners to create realistic budgets creates an expectation and a goal and well as providing credibility. A realistic budget is a key element in managing any business. Sales people by nature are optimists and desperate owners want to believe, what under closer examination, are fairytale forecasts. However, if the revenue forecasts aren't achievable and costs to support that forecast are fixed the business owner has positioned themselves for trouble. Looking behind the numbers will allow a realistic assessment of what can be achieved or what costs may not have been reflected to achieve the revenue targets.
Cost Structure Analysis
Identify opportunities for cost savings involves reviewing every line item on the income statement and identify a way to reduce costs. Competitive bids should be obtained for every significant project and all current vendors should be advised you will be considering alternative providers and ask them to proactively review their rates.
Detecting fraud is difficult because the methods for concealing fraud are so numerous and ingenious that almost anyone might be defrauded. It is much easier to avoid being the victim of fraud by establishing internal controls than to catch the fraudster after the fact. The perception of controls is often as effective as having controls in place. Camera’s overlooking parking lots deter theft, even if they are not monitored. The cheapest and most effective controls are segregation of duties and consistent review of transaction audit reports. A small business will never be able to provide the level of control of their larger competitors, but understanding where there is exposure and establishing mitigating controls can significantly reduce risk.