The CFO'S Perspective

Never take your eyes off of the cash flow because it’s the life blood of the business.
- Richard Branson

Staying on top of your cash flow is vital to running a small business smoothly. The U.S. Chamber of Commerce cites that cash flow problems are responsible for 82% of business failures. Cash flow is critical to the survival and success of your business. Without it, you cannot hire or pay employees, buy inventory, expand your operations, or secure a line of credit or financing.

Building good cash flow management habits will help your small business weather rough terrain and double-down when opportunity strikes. To help your business avoid becoming just another statistic, here are six best practices to manage your cash flow and help you grow your business at the same time.

One of your most important tasks as a business leader and manager is mitigating risk. Understanding what kind of risk exists, planning for the impact of this risk, and executing continuity plans to keep the organization operational during a disruption is of paramount importance. The earlier risk can be identified, assessed, managed, and integrated into strategic planning, the better.

Typically, this burden falls on the C-Suite, but leaders at all levels should be included in the planning stage to ensure buy-in across the company. While it is easy to task an individual with overseeing risk management, ideally, it should not roll up to a single person. An emphasis on risk mitigation should be ingrained across the organization with alignment and compliance at every level. CFOs leading the charge can get their organizations on board to share the responsibility by taking a four-step approach to business continuity planning.

According to the 2024 Report to the Nations by the ACFE (Association of Certified Fraud Examiners), organizations lose 5% of their revenue to fraud annually. That equates to a more than $5 trillion loss to fraud globally every year. And while we tend to hope that this kind of thing is happening somewhere else instead of in our backyard, the bulk of this fraud isn’t occurring overseas. In fact, the US and Canada are responsible for 38% of all reported fraud cases worldwide, which gives them the unfortunate distinction of leading the world in fraud.

We’ve known for years now that business fraud is on the rise dramatically across most categories. According to the ACFE, asset misappropriation schemes are the most common but least costly, while financial statement fraud is the least common but most costly. Falling somewhere in the middle of both spectrums are other forms of business fraud like billing schemes, check and payment tampering, and theft of non-cash assets. But there are also far more sophisticated fraud schemes emerging these days as well. A Cybersecurity Dive article from last year revealed a new startling trend – the uptick in financial scams using deepfake technology. While this may sound more like Sci-Fi movie than a business news headline, consider the fact that a recent report by Deloitte speculated that fraud losses may hit $40 billion by 2027 due to generative AI magnifying the risk of banking fraud.

At this point, it isn’t a question of whether your organization will become a target of fraud anymore, but when. Of course, that begs the question: How are you protecting your organization from fraud?

Here’s the scenario: You’ve discovered a problem with your books. It has rippled through into your key financial reports and possibly also affected corresponding tax filings for that period. Your mind starts spinning.

How can you tell if this bookkeeping problem is fraudulent activity or just a simple mistake?

Executive Summary: Tariffs, particularly those on imports from key trading partners like Canada and Mexico, can have a far-reaching impact on U.S. businesses and the economy. While they may provide some protection for domestic industries, they also introduce significant challenges including higher costs, disrupted supply chains, and the need to make difficult decisions on pricing and profit margins. The ripple effects of tariffs can stretch across the broader economy, influencing consumer behavior and currency strength. Navigating these challenges successfully often requires the expertise of a CFO who can help businesses adapt, manage risks, and maintain financial health in an ever-changing economic landscape.

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With tariffs being recently imposed on U.S. imports from Canada and Mexico, it is important for business owners to understand the risks to their business, both directly and on the economy at large, and how engaging with a skilled financial leader may help minimize the impact.

There is a common misconception that early-stage startups and low-growth companies don’t really need executive financial leadership… not yet anyways. This misconception holds that hiring a Controller or CFO is something that comes later, after enough growth has occurred or growth is happening more quickly than before.

And while it’s true that it often doesn’t make sense financially for a small company to hire a full-time in-house CFO right away, the need for experienced financial leadership isn’t something that a company just graduates into once they hit a certain revenue benchmark. Strong financial oversight and leadership is something that every business needs, and many business owners simply can’t provide alongside their other duties. This is especially true when the business has more complicated financial needs like a complex capital structure, multiple revenue streams, deferred revenue, international operations, and/or seasonality, to consider.

Faced with both of these realities – that they can’t necessarily afford a Controller or CFO, and that financial oversight and leadership is important – they instead opt to hire a bookkeeper or accountant to manage their finances, hoping that will be enough for now as a stopgap until they can afford more later. However, a bookkeeper or accountant role may not be enough to do what they need done if they have more complex financial needs. And, if the business owner doesn’t have a financial background, they may not even realize there is a mismatch there to understand what they’re missing out on.

Executive Summary: In this article, we’ll explore why every startup should consider hiring a fractional CFO from day one and discuss how a fractional CFO can help prevent costly mistakes that could derail a business.

Launching a startup is an exhilarating journey, full of opportunity and innovation. However, the path to success is also fraught with financial complexities that can overwhelm even the most capable entrepreneurs. From managing cash flow to ensuring compliance with tax regulations, startups often find themselves navigating a maze of financial challenges. This is where a fractional CFO (Chief Financial Officer) can play a pivotal role, even from day one.

While it may seem like a luxury or an expense that can wait, having access to financial expertise from the outset is not only beneficial – it’s crucial.

Which characteristics do the best CFOs share? What should you look for when hiring a CFO or bringing fractional financial leadership on board? As a Director of Finance, which skills should you look to bolster if you want to keep progressing in your career?

Obviously, the exact skills that a CFO needs to succeed in a specific role will vary based on factors like industry, company size and growth stage, and makeup of the c-suite team, but one commonality is that they all think strategically and communicate well.