CFO Services – 11 Steps To Growth and Cash
Many people have asked us what “CFO advisory services does a B2B CFO® provide?” The basic answer to that question is that we provide any service that is required to help you get more cash into your business. How do we do that? We follow an easy to understand system called the B2B CFOGamePlan®B. The first step in is for us to conduct a Free Discovery Analysis™, and then based on the findings within this analysis, we then work with you to create The Strategy GamePlan™. You can follow this process to improve your business performance. Should you decide to hire a B2B CFO® then we will work with you to implement the plan and make sure your company excels within your industry.
CFO Services provided within the B2B CFO GamePlan®
While the B2B CFO GamePlan® sounds interesting, we are also asked for specifics about what it is we do for our customers within the implementation stage. Here is a non-exhaustive list of 11 specific CFO Advisory Services that form a part of The Strategy GamePlan™.
Timely & Accurate Business Financial Statements
Having timely and accurate financial statements are a necessity for any business. This is the starting point for our CFO Services. Once we have these in place, we can provide all of our other services to you.
Read More about: Financial Statements
Cash. We Help You Get It!
We are often asked, "How does a B2B CFO® professional help us get cash?" There are several ways to accomplish this goal. The most common situation is that we help the business owner create and maintain a better relationship with their bank (in some case we help them find a new one)
Banks lend you money based on your ability to repay. When your financial records, including a cash forecast, demonstrate that you are in control of your business (and it is not controlling you) the bank is more inclined to support your requests. So the first step in getting more cash is to improve the quality, accuracy and timeliness of your financial statements.
One item to bear in mind is that banks are only one source of cash. They are often the best. However, there are times when equity financing might be called for. Your B2B CFO® partner can connect you with investment bankers if they are what you need. Occasionally, the situation calls for non-bankable funding. An example might be an advance against a large government contract or major purchase order. Your B2B CFO® advisor can introduce you to their network of alternative financing professionals.
Another item to consider is that there may be opportunities to get more cash from your business. An experienced B2B CFO® professional will look at items such as accounts receivable, inventory and operating costs as compared to others in your industry.
Read More about: Cash, We Help You Get It®
Banking & Lending Relationships
Strong business banking relationships and lending relationships are key to a well-financed business. B2B CFO® professionals know how to talk with bankers and lenders on behalf of our clients.
B2B CFO® professionals have, on average, worked and negotiated with lenders for over 25 years and have strong relationships with many banks and alternative financing sources. We understand which banks and other lenders will serve your company the best, based on your industry and company profile. B2B CFO®'s will help you put together the accurate and timely financial statements and pro-forma cash and financial projections that will help you secure a great financing package for your business. In addition, your B2B CFO® business financing advisor will help you determine the most appropriate mix and terms of financing to best meet your company’s needs, whether it be short term lines of credit, long term debt, leases, or working with you and investment bankers to secure equity capital.
Working with banks and lenders can take a substantial amount of your time. Our CFO services take care of much of the nitty gritty and fine detail. This will allow you to spend your time leading and improving the business and increasing sales. Your banker/lender will also feel a sense of security knowing that you have a professional CFO Service Provider helping you with your financial management and will reward your company with stronger and more attractive financing terms.
Read More about: Banking & Lending Relationships
Profit Improvement Solutions
Our professionals average 25 years of CFO services experience. We have the experience necessary to look at a company in its entirety to see if there are ways to improve profit.
Profit Improvement in most cases is not as difficult as it may seem. In essence profit improvement occurs when revenues are increased, costs are decreased, or preferably both. The CFOs of B2B CFO have significant experience in the profit improvement process and have many profit improvement solutions!
So what is the Profit Improvement process? It is a line by line analysis of your profit and loss statement that looks at each component to identify opportunities to increase revenues or reduce costs. It also means benchmarking against other similar businesses and creating a planned budget to identify variances for corrective action going forward.
Read More about: Profit Improvement
Business Financial Planning & Strategic Financial Planning
Your business deserves a high level attention to strategic financial planning. B2B CFO® provides this type of service to you. What is your business goal?. Your goal might be a certain level of revenues. This might be expressed in terms of dollars, units, hours, or other measures. Some business owners will set goals based on Total Assets or Net Worth.
Once you have determined the goal, we help you compare the various ways that these can be achieved. The options might include product mix, pricing strategies, marketing strategies, financing obligations, tax issues and alternatives, staffing levels and, compensation. The route you take with your business is reflected in the choices you have to make as you move toward your goal.
Read More about: Strategic Planning
Cash Flow Management & Projection
Our cash flow projection services can help you figure that out. If you use operating cash to pay for capital equipment, then you don't have cash for operations. If you then use your line of credit to support operations, you might be paying more for that cash than if you had financed the capital equipment acquisition.
Sometimes we help you get cash right from your own business. When sales have increased but cash hasn't, your B2B CFO® cash flow management partner will dig into the financials to see if there is something you can do internally to improve your cash flow.
Through this process of developing a cash flow statement, we will develop a great deal of detailed financial information. We can see whether cash flow shortfalls are the result of substandard profitability or because the working capital (receivables, payables) required to fund growth is significant. By looking at the drivers, we can determine what, if anything, you need to change in your business model to achieve a positive cash flow.
Read More about: Cash Flow
Working Capital Improvement
Working capital is a financial measurement that represents a company's operating liquidity. It is not uncommon for a company to have significant profits or sales but be short in working capital. This shortage in working capital can cause a company to not be able to make payroll or pay vendors, notwithstanding significant profits or sales. B2B CFO® professionals provide services to make sure that this doesn't happen to your company.
Working Capital - The Precursor to Cash - Working capital management is arguably the most important management activity in emerging and mid-sized companies because of the significant financial impact that it has on the company's well-being. While most CEOs and business owners have heard and accept that "Cash is King," working capital, the precursor to cash, is often the least understood and most poorly managed area of companies when they first visit with one of our partners. This is true even though the definition and calculation of working capital and working capital ratios are widely understood and seem to be simple enough at the personal checkbook level.
When working capital is not adequately managed, the deterioration of cash flow critically affects a company's ability to fund operations, reinvest in the business and, ultimately, to survive. With adequate working capital management, cash flow supports a company that thrives in the marketplace.
Read More about: Working Capital
Gross Profit Evaluation & Optimization
Gross profit (total sales revenue minus direct costs) is what is left over after costs associated directly with the sale of a product or service, such as materials and direct labor, are paid for. This is an extremely important number for every business to manage, as it impacts both the likelihood of reaching breakeven and the amount of profit that is earned beyond breakeven. In other words, it directly impacts risk and return.
Companies should be aware of the factors that will impact gross profit margins and pay close attention to them. B2B CFO® professionals help companies find a benchmark for gross profit margin using competitor data and industry averages to provide a targeted goal. In addition, it is important to be aware that the factors impacting gross profit margins may change over time. For instance, costs may increase due to inflationary factors that may necessitate a compensating annual price increase. We work with companies to track gross profit margin over time to ensure that it does not slowly deteriorate and lead to cash flow problems.
Read More about: Gross Profit Evaluation
Two of our favorite words at B2B CFO® are goal clarity. Accordingly, our expense reduction services start with your clear and concise goals about where you are taking your business in order to help you manage all of your company's expenditures.
With our expense reduction services our first approach is to identify every activity cost that is directly driven by your revenues. In many cases, these line items or expense categories will be your cost of goods or services sold. Cost of goods/services is by far the most critical group of expenses to monitor but the most difficult to manage. That's because expense reduction is not a matter of simply reducing costs. Instead, 1) work processes may need to be significantly re-engineered or entirely eliminated and 2) vendor/supplier cost reductions may need to be creatively re-negotiated. In both cases, we have proven track records to help you accomplish both of these strategies if the underlying costs are out of hand.
For all of your costs directly driven by revenue, our expense reduction specialists analyze how those costs or activities behave as sales change and we develop meaningful reporting tools to monitor those cost drivers. Our expense reduction specialists can develop daily, weekly, and monthly reporting to compare planned with actual activity drivers. Such reporting helps us to figure out the root cause of the expense problems and take action immediately.
Our next expense reduction specialists approach is to understand the purpose of all of your fixed costs. We also determine which fixed costs are discretionary and which ones are non-discretionary. In this exercise, we can 1) determine which costs if any can be pared back, 2) identify which costs may not be in alignment with your core business infrastructure, and 3) help you develop a strategy of evaluating 2 to 3 fixed costs per month and how to take action if these costs should be reduced or even increased if they can have a positive impact on earnings and cash flow.
After our expense reduction specialists have analyzed your direct and fixed costs, we can take your sales projections and model your business over the ensuing 12 to 24 months. Afterward, each month, we compare your actual costs and actual cost drivers to those planned in the business model. We help you to evaluate the significant negative variances between actual and plan and assist you in carrying out corrective actions to bring costs back into line.
The modeling described above also allows our expense reduction specialists to calculate your break-even point in terms of units sold, dollars sold, hours billed, or any other revenue driver applicable to your business. This insight helps you to know your minimum sales goals by day, week, month, and even by year.
• Read More about: Expense Reduction
Increase Business Sales
Business owners can usually increase business sales significantly if they are allowed to spend time in what we at B2B CFO® call "Finding Activities." Finding activities are those events that allow an owner to be a visionary, idea generator and a catalyst for change. These activities usually allow an owner to spend time building relationships and ideas to bring future sales into the company.
We offer sales improvement consultation services and we are seasoned at assisting a company improve its infrastructure to allow an owner to escape from many of the administrative and operating activities to be able to spend more time in finding activities. Typically, a significant increase in sales results from this effort.
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Business Exit Strategies
Business exit strategies can take many forms. However, there are really only two primary objectives in any deal. One, the buyer wants to MINIMIZE the consideration paid relative to the after-tax cash flow of the purchased assets or operations, and two; the seller wants to MAXIMIZE the after-tax cash proceeds from the sale. Since both objectives are essentially opposite, having the right business plan exit strategies put the business owner in the driver's seat. It will not matter if the deal is an asset sale or a stock transaction, as long as the entrepreneur has contemplated and implemented the best business exit strategy.
Read More about: Exit Strategies
Get Your Free Discovery Analysis™
If you would like to see how B2B CFO®
can take companies to a higher level of success™ then complete the Free Discovery Analysis™
form and a B2B CFO®
partner will contact you.