Here are answers to some frequent questions plus a few tips on better financial management.

If you don't find the answer to your questions here, give us a call, or email: info@cfo-works.com. We'll do our best to answer them.

Q: I already use an accountant. Why do I need a CFO?

A: That's a good question. Accounting records the financial history of the business and involves the preparation of reports for use by managers and external parties. A financial manager uses the financial information in making decisions about the future of the company. The scope of an accountant's compilation is to compile the information provided by management into financial statements. The CFO is part of your management and will make sure that your transactions are being posted correctly in your information/accounting system prior to sending the data to your accountant. The CFO and accountant will work together to ensure that you have accurate financial reports.

The CFO will further analysis the results provided by the accountant to manage financial resources such as cash, receivables, and inventory to accomplish higher returns without undue risk. The CFO will answer the questions when you are trying to decide which is the best investment, when you need capital financing, and how much funding do you need to operate.

An accountant will often recommend that you consider a financial manager to oversee the daily operations or to help you with a specific area of business.

Q: How do I know when I need a CFO?

A: Most companies need CFO services at some time during their growth -- often before they can afford to add a full time CFO to their management team.
There are many indicators; most are the result of a struggle: inventory problems, worries about the integrity of employees, a weakening of relationships with bankers or vendors, or the acquisition of another business. But one of the most common is cash flow. It's one of the major causes of business failure and one of the most important duties of your financial officer.

Q: My bookkeeper has been with my company for many years. Can't she provide the answers I need?

A: You're really fortunate to have such a dedicated, reliable employee. But only a trained CFO can execute the duties, provide the information and offer the counsel you need to make solid management decisions.

Q: What about confidentiality? My records are private.

A: Did you know that the ethics of my profession even prevent us from mentioning our client's name without permission? We're happy to use your non-disclosure agreement, or provide one of our own for your approval.
Click here to see a sample of our Non-disclosure Agreement.

Q: Is my company too small to benefit from CFO services?

A: The need for good financial management is not a function of size. Small companies as well as large ones benefit from the services of a CFO. But small companies usually don't need these services on a regular day-to-day basis. That's one of the reasons CFO-Works was founded: to provide a way for companies of all sizes to get the financial management they need, as they need it, without the cost of a full-time executive officer.

Q: I've heard so many disastrous stories about the dishonesty of employees. How can I detect if people are abusing my finances or inventory?

A: This is another way a good CFO can help your business. But I'd rather not post that information here on the internet. Give me a call to discuss your situation. The call is confidential and there is no obligation.

Q: Our company is located across the country from you. Is there a way I can use your service?

A: Many financial management services can be performed easily and accurately via telephone, email and overnight delivery services. Analyzing financial reports is one of them, but there are more. Much depends on you and the type of business you manage. Call me to discuss your situation. There is no obligation.

Q: I'm comfortable with my bookkeeping, but I'm not sure I'm interpreting my financial reports properly. Can you help with that?

A: Yes. This is an educational service we provide to companies across the country. We can train you and your key employees. In fact, if you'll provide a copy of your financial reports, we'll show you how to interpret them.

Q: Why can a CFO develop better relationships with bankers than other company executives?

A: We often get this question. Most bankers will feel more confident in their relationship with your company if they are dealing with a trained financial manager. They believe that the data provided to them has more integrity because it is prepared by a professional. In short, we both speak the same language.

Q: My bookkeeping system is complex and sophisticated. What do you mean when you say it may "lack integrity"?

A: There is an acronym in the computer field, GIGO: Garbage in, garbage out. In other words, you won't get good results using faulty procedures or information. The same applies to financial figures. Unless the data is handled properly and put in the correct accounts, the results will be flawed. Only a trained person can make those judgments properly and verify the integrity of those figures. No bookkeeping system can do that.

Q: A CFO is not an operations manager. How can you evaluate whether our operations are efficient?

A: There is a financial aspect to most operations. They all impact the bottom line and the use of operating capital. A business should operate as efficiently as possible. Over a period of time efficiency can be lost. Two or more employees may be performing the same procedure. Many copies of the same document may be made and filed. Some procedures are performed because "that's the way we have always done it." The procedure may no longer provide any benefit to the business. Departments may be working against each other instead of working together toward a common goal.

New employee training is timely. A written set of procedures would be helpful. Procedures, established by management, provide guidance for employees to follow and establish a basis for performance reviews.

Your operations will be improved because CFO-Works has extensive knowledge of how information should flow through a business and extensive management experience over business operations.

Q: What exactly are "due diligence reviews" and why do I need one?

A: You would only need due diligence services if you were considering buying an existing business that does not have an annual audit. A full audit is the highest level of assurance but they are extremely expensive. If you cannot justify the cost of an audit, a due diligence review will help you gain a stronger level of confidence in what you are buying. The focus of the review will be on the assets that you are buying and the results of operations that you are basis your decision upon. Know that the past sales were truly made and that you are not buying obsolete inventory and uncollectible accounts receivable. A due diligence will be planned to the specific concerns of your potential purchase.

Q: I am required by my bank to have an audit. How can CFO-Works help me through it?

A: The first thing to do is get you ready. Often the auditor will send a list of items and information they would like available. CFO-Works will assist you in gathering the requested information in an organized manner. This will speed the audit along resulting in reduced cost. CFO-Works may identify that an audit concern exists prior to the audit. Corrections may be made and the problem minimized in advance.

Discrepancies always exist on some receivable and payable confirmation. This is normal but the auditor will require that they be resolved. CFO-Works can be on site during the audit to resolve these discrepancies to the satisfaction of the auditor.

The experiences of someone that has been on both sides of the audit process can help you through any audit you might face.

Q: Why does my product sales look good but I am always short of cash?

A: Every business has a cash cycle. A cash cycle is the number of days it takes to recover a dollar invested in the product. The length of the cash cycle is one issue that affects cash flow. Analysis of your cash cycle may help resolve the cash shortage. Other cash flow concerns involve adequate financing and payable management. CFO-Works will identify how your cash flow can be improved.

Q: My Vendors all offer different payment terms. Some even offer multiple choices. Which one is best?

A: As a rule of thumb it is best to take any discounts offered but your cost of money is a factor. CFO-Works can analyze your unique situation and recommend how to maximize your cash flow and add profit to your bottom line.

Q: My sales staff keeps asking for new items to sell. How do I decide which items to invest my money in?

A: Stocking new items often come with risk. The decision needs to be made using established guidelines. Many companies have closed their doors due to carrying to much inventory instead of a lack of sales. CFO-Works can help you establish the guidelines to prevent overstocking, growing dead stock, and holding your sales staff accountable for the new items.

Q: My business is doing great. We are growing and cash is flowing. Why do I need a CFO?

A: That's great that your business is doing so well. Now it's time to make some tough decisions. Do I continue to grow or maintain my position? Do I need to do more planning and forecasting? Do I need more capital or more employees? Where is my time best spent? If you are finding yourself consumed by administrative issues that take you away from the reason you're in business, give us a call.

Click here to learn more about Debra Hendrix, CPA, CFO