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How CFO Services Can Help Your Business
If a company wants to ensure profitability, they need solid financial management practices. The important question for business owners to answer is if their main focus should be client deliverables or managing revenue well. The answer to this is to hire CFO services.
The CFO services that you hire will see to it that they have a good picture of your accounts including your profits and losses. If you are focused on meeting client requirements, it is very easy to neglect your regular account keeping. It is very important that funds be managed well if you are to generate profit. Remember that customers are just part of what makes your business profitable. If you want your business profits to increase, aside from taking care of your customers, you also need to manage your costs, reduce unnecessary expenses, and enhance your productivity.
What CFO services can profits you is a detailed scrutiny of where you revenue comes from, how you generate revenue, and the costs associated with revenue generation so that they can determine areas that may not be helping to increase your profitability. Following are questions that you need to answer about 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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Overhead is necessary for a business to function but it may not be directly involved in revenue or profit generation. Some of the things that can be categorized under overhead expenses are your travel expenses, phone bills, and client entertainment. A negative impact will be seen in your revenue stream if you cut overhead too much, if you think that this is the only way to reduce costs. If you hire CFO services, they can help you in deciding if you will cut down on your overhead or not and 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. Businesses get daily invoices and after a month, these will have increased in number. Each invoice represents customers who are debtors of your company. When you hire CFO services, you are better informed about the state of your company’s finances, and hence 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.
When you hire CFO services, you are provided with informed advice on whether you r business is utilizing resources optimally or that the rates you have established for your services are competitive.
Hiring a full time CFO is not necessary for start ups, and small and medium sized businesses. You should, however, consider outsourcing your CFO needs. When you outsource your CFO requirements you receive the dual benefit of direct profitability through smart financial management, combined with savings on investment costs otherwise spend on funding an CFO position in your company.