CFO Matters

DON LITTLER Is Founder and Principal of CFO on Tap

They say the most difficult period for a business is during the startup phase. I believe there is a more difficult period that a business must endure; a period in which significant growing pains will be experienced…the Transitional period.

During this period the business will probably be experiencing rapid growth and may be transitioning from a small to medium sized business.

Typically at this point the business can start to outgrow the business owner and their internal accounts team, or the business owner is too stretched on operational matters to keep track of the finances. Unfortunately at this point in time, a lot of businesses fail unnecessarily.

So what are the options? • Soldier on and hope the business can get by with the current manpower and intellect • Employ a full time Financial Controller (FC).

The conundrum is the business can’t afford a full time FC at this point. So what happens? Invariably the business owner takes option one and soldiers on. This is a fatal mistake that leads to hundreds of businesses going broke every year.

An alternative option many businesses are unaware of is outsourcing.

So how does it work? • The Outsourced Financial Controller (OFC) is engaged on an ‘as needed’ basis. • They typically come in on a monthly basis and perform two main services:

Manage the Finances ○ Take the financials prepared by the

internal accounts team and convert them into a professional financial report. ○ The report would include the standard suite of financial statements, commentary on the results,

KPI reporting and key Financial Ratio analysis. Help manage the Business ○ The OFC attends a meeting with the business owner on a monthly basis to run through the financial report, discussing operational and strategic issues. Action items are followed up at the next monthly meeting.

What are the benefits of an OFC? • The business gets access to the finance and business acumen of a FC. • The service is a fraction of the price of a full time FC. • Allows the business owner to focus on working on the business. • Provides the business owner with peace of mind, knowing the business is growing in a controlled and profitable fashion.

When do I engage one? • When the business is experiencing high growth. • When it’s transitioning from a small to medium sized business. • When the business owner realises they either don’t have enough time to focus on the finances and/ or understands that they simply don’t have the knowledge in-house to manage the finances properly. • Consider today whether you have the necessary skills in-house to manage the finances of your business.

ABOUT THE AUTHOR Don Is Founder and Principal of CFO on Tap (your Outsourced Financial Controller) and BizLogic (your Small Business Adviser). A Chartered Accountant and an accomplished senior executive, he is an expert in the field of building successful businesses. Don has spent the past 15 years in Senior Financial Management roles in high growth, medium sized businesses.

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