The CFO'S Perspective

Financial Risk Assessments - What Are They & Why Your Company Needs One

Risk isn't just for actuaries! As a business owner, there are risks everywhere, and a financial assessment can help identify areas where your company might be vulnerable to risk, determine your company's attitudes towards risk, reinforce your strengths, and ensure that you are able to take advantage of valuable opportunities.

The key focus of a financial risk assessment is a deep dive into a company's financial preparedness and it includes pieces of other areas as they relate to financial stability. The assessment can point out areas that are working and those that are not, in time to make necessary course corrections.

Every business owner should think about performing a financial risk assessment of their company on a regular basis. The cadence is different for every industry, size, and type of company, but at a minimum once per year.

The results of a financial risk assessment will feed into the strategic planning process and budgeting. A consistently profitable company who is not worried about potential risks may still be missing something that could either blow up or cause them to miss opportunities.

Topics: Analysis Risk Management Assessment

Before & After... Hiring a Part-Time CFO

The thought of needing to hire a CFO often doesn't come before there is some sign of trouble. Most companies try to operate using the “bank account formula” for as long as possible and then make a change only when the pain becomes too great. “Let me look at my bank account… if I have money, I must be OK!”

Fortunately, this no longer a black and white choice. The most successful businesses are built on a collaborative foundation, and a growing number of companies are embracing the concept of hiring a part-time CFO. Instead of being just a sunk operating cost, this move is now widely viewed as a smart business investment that is delivering positive returns.

Topics: CFO Hiring Planning Analysis

Low Profit Margins – The Perils and Potential in Manufacturing

As a CFO, one of the common reasons I am brought into a manufacturing organization is to solve the mystery of “Why our sales are growing, but profits low?”  Most of the companies I work with have rigorous quoting processes that they assume will protect them financially, but in the end their actual monthly profit margins often fall short of quoted (and anticipated) profit margins.

Before diving into an examination why profit margins lag behind sales growth projections it is important to take a look at accompanying financial reports. These are categories from a simplified manufacturing income statement:

In this article we will discuss materials, direct labor and manufacturing overhead as they relate to gross profit.

Topics: Analysis Budgeting Manufacturing Profit Margin

Business Drivers - Monitor, Measure & Leverage for Future Performance

What senior manager hasn't looked into the future to plan the growth of their business? The forces that drive the market acceptance and commercial success of your organization are going to vary depending on the nature of your products and services.

Whether you're in a traditional industry or a new one, business moves faster than ever today. Every millisecond a new app is download from Apple's online store. Walgreens now offers a walk-in one-minute flu shot, and customers can drop off their Fed Ex packages in the process. Any organization that wants to ensure its future must first figure out how to measure its past performance and then leverage that information to inform current decisions that impact their ongoing success.

Topics: Planning Analysis Financial Projections

Critical Information Financial Assessments Should Deliver to Business Leaders

Most small to medium-sized companies are owned and run by business leaders who are highly skilled in some key aspect of their business - such as technology, sales, or manufacturing - but are less savvy in financial matters. Financial performance measures are essential because they indicate whether a company's strategy, implementation, and execution are contributing to bottom-line results.

Whether it is your company's number one goal or not, the notion of turning a profit is sure to be in your top five short and long-term objectives. The only way to know if you are achieving your financial goals is to regularly assess your business. Are things running smoothly? If not, where are the bottlenecks? What parts of the business are acting as growth catalysts? Many of these questions can be answered by reviewing regular financial reports.

Topics: Analysis Financial Reports