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Why Hollywood Actors Should Get Training from CFOs

You shouldn’t be surprised to discover that Meryl Streep, Robert De Niro, Hugh Jackman, Gary Oldman among many other Oscar-winning actors and actresses bear a grudge against Chief Financial Officers.

It’s easy to understand why. While the likes of Streep and Oldman have achieved fame, fortune and critical acclaim, they can usually only inhabit one role at a time. They take it on for a few months and then move on to the next.

A great CFO, by comparison, is the master or mistress of multiple roles and can switch between them easily and effortlessly. What’s more, they perform those multiple roles day in, day out for weeks, months and even years.

That’s because a CFO is there to help the business owner achieve the company’s objectives by providing financial and strategic guidance to ensure it meets its financial commitments and to develop policies and procedures to ensure its financial management is sound. The Institute of Directors says the CFO is “often viewed as the member of the board who creates a solid foundation upon which a business can grow”.[1]

It’s why a typical CFO job advertisement features a huge list of responsibilities. These will often include the following and more:

  • Providing strategic financial leadership to optimize the organization’s medium to long-term financial performance and strategic position
  • Contributing fully to the implementation of organization strategy across all areas of the business, challenging assumptions and decision-making as appropriate and providing financial analysis and guidance on all activities, plans, and targets
  • Providing robust financial reporting and analysis to the Board of Directors, Finance, Risk and Governance Board and Corporate Management Team including the provision of financial support to strategic decision-making and transactions
  • Working with senior management to steer the business towards the goal of greater financial independence and sustainability
  • Providing cash management – monthly cash flow reporting and long-term strategic cash management
  • Developing and ensuring compliance with financial policies and controls
  • Presenting annual accounts to the General Meeting.
  • Risk management and reporting – maintenance of the organization’s risk register ensuring control processes are fit for purpose
  • Developing an IT strategy which supports the organizational strategy.

 

Although CFOs aren’t expected to be able to speak in an accent, swordfight or ride a horse as actors are, they are expected to have accountancy qualifications, excellent communication and interpersonal skills, the ability to manage complex stakeholder relationships and to provide strong attention to detail with commercial and strategic acumen.

 

So, as you can see, at any time during a CFO’s day, the CFO will be a sounding board/mentor for the CEO (and sometimes the only one to point out the flaws in a ‘blue sky’ idea), strategic advisor, bookkeeper, financial controller, risk management advisor, finance team leader, recruitment advisor and much more.

Being able to adapt to any one of the roles comes from experience. The CFO Center’s part-time CFOs, for instance, have all had years of experience working in large corporations. They’re used to working in complex, demanding environments and switching roles as the need arises.

Unlike actors, CFOs don’t perform as they do for applause or for a gold-plated statuette (although many would be very, very happy if you offered to pay them in real gold bullion). They do it to help business owners like you take your business to new heights of success.

What’s more, you can be sure that the CFO you hire won’t ever pull you aside before or during a meeting to ask, “What’s my motivation?” *

To discover how a CFO Center part-time CFO will help your business, contact us now on 800-919-4022.  To book your free one-to-one call with one of our part-time CFOs, just click here.

* [Note: No Oscar-winning Hollywood actor or actress was harmed during the writing of this article.]

[1] ‘What is the role of the Finance Director?’, Factsheet, Institute of Directors, https://www.iod.com, May 2017

10 Ways to Resolve Your Cash Flow Problems

Managing cash flow is critical to the success of any business. Get it right, and shareholders, creditors, and employees are happy. Get it wrong, and the company could end up on the ropes.

Cash flow problems can perplex even profitable companies, particularly those experiencing rapid growth.

So, how do you protect your company from future cash flow issues?

 

  1. Cut Costs 

Cost-cutting will have a more immediate impact on your bottom line than revenue-raising efforts. You could for instance place a freeze on bonuses and overtime payments. You could also reduce the number of employees through attrition or redundancy. You could also approach creditors to ask for better payment terms.

 

  1. Carry out credit checks

Before taking on new clients, carry out credit checks. Companies that regularly make late payments or default on payments should be red-flagged. You should also get new clients to sign contracts that include your payment terms.

 

  1. Offer early payment discounts

Encourage your clients to pay earlier than normal by offering early payment discounts. The early payment discount should only be used when the company is in urgent need of cash. Do it too often, and you will make a serious dent in your profit margins.

 

  1. Reduce your payment terms

Cut your payment terms from 60 or 90 days down to 30. Think of it this way: when you allow customers to pay in arrears for your products or services, you’re essentially giving them short-term unsecured loans

 

  1. Lease rather than buy

Consider leasing rather than purchasing cars, property, office furniture, machinery, and IT and telecommunications equipment. The benefit of renting rather than buying is that you will only have to make small monthly payments. This should help your cash flow. You can also claim on the lease expense.

 

  1. Raise your prices

Companies are often reluctant to raise their prices for fear they’ll lose valued customers to competitors. But even a small rise in costs can chip away at your profit margins. You can overcome customers’ resistance to a price rise by offering bundled products or services.

 

  1. Issue invoices promptly

Many companies don’t issue invoices quickly enough or chase late payments. Think of it this way: every sale has already cost the company in some way, whether that’s the purchase of raw materials, warehousing, labor, sales and marketing, and distribution. If you don’t collect what you’re owed, you’ll be worse off than if you never made the sale.

American entrepreneur Nolan Bushnell says a sale is a gift to the customer until the money is in the bank.[1]

 

  1. Use invoice financing

Hire a company that provides invoice financing (either invoice discounting or factoring) to receive an immediate cash injection. Such companies provide funding against your unpaid invoices for a fee.

Usually, you will receive up to 85% of the value of the outstanding invoice within 24 hours. You’ll then receive the remaining 15% minus the broker’s fee once your customer has paid the outstanding invoice.

 

  1. Get external funding

You could approach banks or lending institutions for a short-term loan or use other funding sources such as self-finance, partners, investors and alternative finance like peer– to–peer lending.

 

  1. Hire a part-time Chief Financial Officer

A part-time CFO from The CFO Center will look for all the things that pose a threat to the company and work with you to resolve them. Your CFO will look for ways you can meet your most pressing financial requirements and review all incomings and outgoings to find where improvements and savings can be made.

You’ll be encouraged to use regular cash flow forecasts. Such forecasts will alert you to possible cash shortfalls in the near future. You can then make arrangements for additional borrowing, for example. It will also make decision-making over whether to hire new staff, raise your prices, move premises, find new suppliers or tender for a large contract.

 

Put an end to your cash flow problems now by calling The CFO Center today on 800-919-4022. To book your free one-to-one call with one of our part-time CFOs, just click here.

[1]Finance for the Non-Finance Manager’, Siciliano, Gene, McGraw-Hill Companies, Inc., 2003

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Our CFO Saved Christmas, Reveals Santa Claus

Santa Claus, now in his 1,747th year, reveals for the first time how his part-time Chief Financial Officer helped Christmas Inc. claw back from near-disaster.

Last year we were hit by so many problems. Money problems. Health and safety issues. Capital funding problems. Bad PR. The lot.

Fake News

“Someone posted a story on Facebook last August that said I hated mince pies and was allergic to milk. Dreadful business. I had bags and bags of letters from angry dairy farmers and retailers. And emails from worried parents asking what they should leave out for me on Christmas Eve if I didn’t want mince pies and a glass of milk. Some got a wee bit personal, a tiny bit sarcastic, which wasn’t nice. That went on for several weeks.

Not long after that another story appeared that said I mistreated reindeers. Someone started a Go Fund Me page for Rudolph and the rest of the gang and children across the world were urged to donate their pocket money. Luckily, the authorities tracked down the culprit before any money changed hands. That man was definitely Number One on my Naughty List last Christmas. Those two stories were really damaging. It wasn’t a happy time at Christmas HQ while all that was going on.”

Elf and Safety Issues

“Then we had a scare with compliance. One of the elves in the workshop slipped on some wrapping paper and broke his leg. We hired a Health and Safety inspector to help us prevent more accidents and she found that the workshop wasn’t fit for purpose. It’s a very old workshop and needed to be updated. We’d just added bits on as we grew so it was a bit higgledy -piggledy but we loved it all the same. Getting it modernized cost a fortune.

The Health and Safety Inspector hit the roof when she discovered that some of the elves were sleeping underneath their benches. I tried to explain that they do it because they love making toys and have such fun at work they don’t want to leave. But she said that it had to stop immediately. She insisted on staying in the workshop until we’d dismantled all the tiny beds and wardrobes. Some of the elves, who’ve worked with me for more than 1,000 years were heartbroken. They’d created little homes away from home underneath their workbenches.

That meant I had to create sleeping quarters for the elves and didn’t know where the money was going to come from to finance the whole thing. But then Mrs Claus read a blog about how you could hire a part-time CFO for the same amount you’d pay an office junior. She said he could help sort us out. I’d never heard such a thing but decided to try it.”

Our Part-Time CFO

“Hiring our part-time CFO David was the very best thing we’ve done. David helped us find funding for the elves’ sleeping quarters. And he sorted out our cashflow. This is the first year, for example, that we haven’t had a cashflow crisis. Every year, we employ thousands and thousands of elves to help make presents and that’s always thrown our budget so by January, the cupboard has always been bare. David stepped in and helped us arrange funding and so for the first time, we’ll be able to look forward to January. No more living on baked beans in January for Mrs Claus and I, I’m happy to say.

He’s also helped us move into new markets and made sure we had all the licenses we need. And in April this year he stopped a Mr Grinch from stealing our Christmas market franchise. That was the same naughty fellow who wrote those fake news stories last year. That’s all behind us now, I’m very happy to say.”

No Exit Planning

“David and I get on extremely well but there’s one thing we disagree on and that’s exit planning. David has been trying to convince me that I should start looking for a successor and thinking about an exit plan. But I don’t want to stop doing this. It’s what I was born to do. Retirement isn’t for me. Besides, Mrs Claus wouldn’t like me sitting around the house all day, making cups of tea and eating mince pies. So, David and I have agreed to disagree on this one matter. So, you can look forward to me popping around on December 24th for many, many years to come. Ho ho ho.”

Hat

The Spies Inside Your Company

Hear the words ‘corporate espionage’ and you might think it’s only something that corporate giants need to worry about.

But that’s not the case. Corporate espionage is something that can affect companies of any size. And despite what you might believe, the threat is highly likely to come from within your organization.

The corporate spy could be a dissatisfied or disgruntled employee, a manager, or a supplier, according to Rick Orloff, CSO at Code 42, a leading provider of cloud-based endpoint data security and recovery.

Case in point: an employee of Siemens, a leading European manufacturer, was arrested in the Netherlands last month on suspicion of leaking patents and other company secrets to a Chinese competitor, according to Reuters news agency.

“Individuals can easily syphon off sensitive corporate information and pass it to unauthorized third-parties,” writes Orloff in Info Security magazine. “Systems can also be infiltrated by those that wish to do your business harm or gain a competitive advantage from your data.”

And it’s a huge mistake to assume you only need to protect your company from cyber-attacks, according to Bruce Wimmer, G4S’s Senior Director and Leader of Counter Business Espionage.

He warns that business spying that doesn’t involve cyber intrusion is on the rise and is one of the greatest security risks to businesses, dwarfing the threat from cyber-attacks.

G4S’s corporate risk service division estimates the cost is as high as $1.1 trillion annually. By comparison, the impact of business-critical data being stolen remotely is estimated to be $400bn a year, G4S estimates.

“Many businesses consider the threat of a cyber-attack to be their biggest security concern and at their peril they ignore the threat of data loss where corporate spies uncover serious shortcomings in physical security arrangements,” says Wimmer.

“Disgruntled employees, competitors, foreign governments, and suppliers can act as an insider threat, over short and long periods of time, with little chance of detection if the business is only focusing on external cyber threats.”

The corporate spy will home in on weaknesses, knowledge gaps and human frailty and there’s little point in monitoring systems if your company doesn’t also monitor the people who can access them.

“While a cyber-attack can bring down a company’s systems or access confidential information, there are many more ways that competitors or other corporate spies can attack a business,” warns Wimmer.

Worse, these methods can make an in-depth cyber-attack possible.

How to Protect Your Company’s Sensitive Information

Wimmer recommends doing the following:

  • Conduct a security audit of your premises. Identify and test the rights of access and rights of way for all your employees as well as service providers (cleaners, engineers, IT professionals, etc.).
  • Assess the processes you have for new employees, external suppliers and visitors. Share the information with relevant employees.
  • Instigate a Clean Desk Policy and make sure it’s always enforced.
  • Establish a process for the secure and timely disposal of sensitive printed material.
  • Introduce a policy to protect sensitive information that covers how it is shared (or not) in conversations, meetings, telephone calls and paper documents.
  • Ensure business executives who travel to meetings or conferences stay vigilant.

“Business executives are extremely vulnerable to spying when travelling,” says Wimmer.

“Travel security programs address terror threats, criminal threats, potential political instability, even health and natural disasters, but they rarely cover business espionage threats – even though the business espionage threats almost always pose a more serious adverse business impact.”

Managing All The Threats and Risks To Your Business

Of course, corporate espionage is just one of the security risks your company might face. Besides security risks, there are risks involving finance, legal and regulatory compliance, operations, reputation, service delivery, commerce, internal and outsourced projects, safety, stakeholder management, strategy, and technology.

It’s no wonder that business owners and CEOs get overwhelmed when it comes to managing risk. Fortunately, we can help. The CFO Center will provide you with a highly experienced senior part-time CFO with ‘big business experience’ who will work with you to understand the risk profile of your business and of the shareholders.

By managing the company’s risk profile and the risk profiles of the shareholders the whole business can be brought into alignment and can operate as a unit rather than as a set of individual parts.

This is actually one of the most critical roles in any business and your part-time CFO will support and guide you through the process.

We have an intimate understanding of every conceivable risk growing businesses face.

This means that we can help you build a much stronger business by knowing how to navigate through the growth stages of the business cycle confident that you are equipped to meet the challenges as they present themselves.

Lower Your Risk Today

Let one of the CFO Center’s part-time CFOs help you with business risk analysis. You can download a free report on Business Risk Assessment here or you can book a free one-to-one call with one of our part-time CFOs—just call us now on (800) 919-4022 or go to: https://www.thecfocenter.com/financebreakthroughsession/

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The Simple Way to Dominate Your Market

Want an easy way to outsmart your competitors and dominate your market? One that doesn’t involve an investment of time or funds in social media, Google AdWords, email marketing, SEO or any of the usual suspects.

Nor will you have to employ a swathe of graduates from Harvard, Oxford, or Cambridge to carry this one out on your behalf.

It’s one that will give your organization a distinct and profitable advantage over the majority of SMBs, no matter your industry or specialty.

So what is it?

Well, you may be surprised to discover that it’s the oh-so-humble business plan. Yes, that often dismissed document can indeed give your company a distinct competitive advantage over the rest of your market. (If you’d like to find out more about how to create and use an effective business plan/implementation timetable as a working document to keep your business on track to achieving your desired objectives, you can download a free report now by clicking here.)

Our experience, and just about every survey you read, shows that SMBs who have and use a business plan are consistently more successful and more profitable than those that don’t. A survey commissioned by business and finance software provider Exact, for example, found companies with a business plan were consistently more profitable (70%) than those that did not (52%).

So why don’t all SMBs have a business plan, one that details the company’s operating and financial targets, its strategic direction, and tactics? Apparently, many don’t consider it necessary. Or their entrepreneurial owners like to keep everything ‘in their head’. That’s probably fine for a start-up but fatal for a growing company.

There are so many benefits to having and using a well-constructed business plan. It will help you and your management team to:

  • Clarify objectives and develop suitable strategies
    • Understand your market
    • Identify and overcome internal and external threats
    • Seize opportunities
    • Organize the company
    • Raise external funding
    • Obtain raw materials
    • Develop new products or services
    • Generate sales
    • Comply with regulations, define job duties, etc.

There’s a catch however. While having a business plan is mission-critical, creating it can be arduous, which is probably why so few SMBs have one.

After all, thinking through objectives and likely outcomes which may occur many years down the line is, by nature, challenging. But it is the hard work up front which makes for lighter work down the road as all of our team of part-time CFOs will attest to.

It’s the case that most CEOs and Managing Directors just don’t have the time to spend on quality strategic thinking and to document and communicate that thinking in a way which allows the whole business to buy into the vision.

Likewise, they don’t have the time and specialist knowledge to manage such a business plan.

That’s unfortunate because a business plan provides CEOs, Managing Directors, and management with an ability to foresee threats and opportunities and course-correct when necessary.

Not spending quality time on strategic planning usually leads to a chaotic working environment. Opportunities get missed. Threats aren’t identified until it is too late. Small wonder that the business owners who reach out to us often talk about ‘not feeling in control’ and ‘not really knowing what is coming around the next corner’.

Business planning and getting it right brings a real sense of clarity and direction to a business – this is where an experienced CFO or Finance Director (FD) can make a significant contribution. They can help you to create and manage a highly-effective implementation timetable.

CFOs often possess a different, albeit complementary, set of skills to CEOs/Managing Directors. What’s more, they can act as devil’s advocate to ask the right questions and help to steer the company in the right direction. Meanwhile, you can get on with what you do best. This 3-minute video explains the part-time CFO/FD model in a little more detail.

Now, if you’re like many SMBs, you probably don’t have the resources or the need to employ a full-time CFO. So what can you do? You can try to manage the entire process on your own. Or, you can make it easy on yourself and your management team by hiring a part-time CFO to manage the entire process for you.

The CFO Center will provide you with a world-class CFO with ‘big business experience’ for a fraction of the cost of a full-time CFO. It’s the business equivalent of having an Olympic coach to help your business thrive.

To get started, just book your free one-to-one call with one of our business planning experts today—just click here now.

Colin Mills – Founder & Chairman

How to Seduce Your Bank Manager

Given that the bankers are often ranked in the top 10 of the world’s most hated professions, the prospect of seducing your bank manager is probably not high on your bucket list.

It’s fair to say that you’ve probably never thought about doing it. But if you want your company to grow then it’s something you not only need to think about but act on.

Unfortunately, seduction, in this case, will rely almost entirely on the allure of your company’s numbers rather than your ability to deliver snappy one-liners, a bunch of hothouse flowers or the promise of a candle-lit dinner. That’s because the average bank manager is a risk-averse creature who will demand far more from you than the average romantic date!

And it will be down to you to do the running—because if you need to fund your working capital or if you’re looking to fund investment in the business and to grab an opportunity, you’re likely to need external funding.

In other words, you need your bank manager far more than he or she needs you. That’s because access to finance will be a key determinant in your company’s growth and if you’re like the vast majority of SMBs, you’ll approach traditional banks for funding (in the form of an overdraft or loan) before looking at other funding options. So you’ve got to be at your persuasive, most charming best.

And it will take preparation—masses of it. Think weeks, even months of preparation.

That new finance might be for working capital/cash flow or capital expenditure such as investing in new machinery or property or improving existing buildings. Or you might need it to enter new markets, develop new products/service or even to refinance the business.

Whatever your reasons for seeking external finance, if you’re going to approach a bank, you need to know the best ways to win over your bank manager. You also need to know what approach is going to trigger an immediate slap-down (an outright ‘No’) or the offer of a substantially smaller amount than you’ve requested. To download our full report on how to get the best out of the relationship with your bank manager click here

Why do bank managers rebuff applications?

Banks won’t always provide you with the reasons they’ve turned down your loan or overdraft application. But here are some of the reasons they’ve offered companies in the past few years:

  • The company is experiencing declining sales/profitability
  • The company is over-leveraged
  • The bank has changed its lending policy. A new feature of the new ‘normal’ financial environment means there’s been a reduction in the availability of longer-term debt (for loans with terms stretching over five years), according to the CBI.
  • The company has insufficient security
  • The company has no experience in the new product/service or market
  • The bank considers the company’s business sector or trading environment too risky
  • The bank is not prepared to lend the full amount
  • The company has a weak balance sheet.

How to boost your chances of a ‘Yes’ response

So how do you get your risk-averse bank manager to happily rubber-stamp your loan or overdraft application?

Be prepared

Your bank manager is likely to demand you provide fully audited accounts, financial cash-flow projections, security information and guarantees and full business plan details. You might also be asked to provide evidence from order books.

Companies who’ve gone through the application process in the post-recession years have noticed that it’s become a lot more stringent. They found there was a higher level of due diligence, sales and market reporting, security and guarantees and that the process took longer than was expected. This was particularly the case when they approached banks with which they’d had no previous dealings.

Improve your credit rating

As well as having all the required paperwork in place, managing and making efforts to improve your company’s credit rating will help your chances of getting a ‘Yes’ response from your bank manager.

That means making payments on time, maintaining regular contact with creditors and banks and ensuring you offer maximum financial transparency.

Enhance your internal resources

Hire an experienced Chief Financial Officer who has experience with accessing various forms of bank debt finance and can put together, for now, the business plans and financial projections the bank will want to see. Here’s the thing: you can now hire a part-time highly experienced Chief Financial Officer for less than you’d pay a full-time junior staff member. You can find out more here

 

Conclusion

Seducing your bank manager is going to take time and lots of effort but if you’re successful, it will provide your company with the financial fuel it needs to grow and reach its full potential.

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