Small business and startup owners are often unsure whether they need a CFO or not. After all, how can a CFO add value to a young company? There is a perception that CFOs are expensive and are for billion-dollar corporations only. However, the truth is, financial accountants and bookkeepers Melbourne can add a significant amount of value to a growing business through strategic advice that can help improve cash flow, forecast performance and provide insights to profit levers.
SMEs need strategic advice but unfortunately, most tax accountants don’t always have the capability to provide this because they are focused on tax and saving you money (letting you know what you can or can’t claim). They specialise in structuring to protect your assets and ensure tax compliance. Whilst these are all very important, businesses also need a commercial minded CFO or financial manager who will focus on driving the business’ financial performance. You should understand the needs of your business to know if having a CFO is a worthy investment.
What does your business need?
The most basic need of a business is bank balance accounting where income and expenses from bank statements are tallied for tax filing. It’s easy and inexpensive but as your business grows, you would then need an accrual based bookkeeping. Aside from bank balance accounting, accrual based bookkeeping will allow you to use financial data and structure them for analysis. Do you know that bookkeeping is more than an administrative function? It actually supports the finance of the entire business.
Once your data and transactions are properly accounted for, your financial manager will help you understand the financial drivers of your business. If all your business data such as sales, operations, marketing and staff information are centralised, you would be able to understand trends and improve your business performance. These reports are different from your year-end financial report and should come monthly for decision making purposes. Make sure your bookkeeping is done correctly, otherwise these reports will be of no use.
Your CFO can then use your business’ historical data to forecast and analyse performance, budget and cash flow. This could be critical for startups. A budget can quantify your business goals and build accountability on what you want to achieve every month, quarter or year. With all the data, your CFO can give you strategic operational and financial advice which can cover funding, pricing, capital, acquisitions and so on. On top of all these, you have to make sure that your accountant knows your business model and industry so he can maximise all tax deductions and incentives available to your business.
Specific requirements may differ per business type so it’s best to speak with your accountant or bookkeepers Melbourne. If finance is not your business’ core competency, it might be best to outsource your CFO. Highly experienced and capable CFO and financial managers cost at a fraction of a full-time employee. There are virtual CFOs who specialise in specific industries.
If you’re looking for a CFO, make sure they are an expert of your industry and business model so you can leverage their knowledge and experience relevant to your business.
It is ideal to outsource your bookkeeping to a professional early on so your bookkeeper can completely understand your business before it even grows. Delegating can prove to be much cheaper than doing it yourself. Bookkeeping should be done no less than every week so you can measure results and decide based on the numbers.
Cloud technology is a business game changer. There are now plenty of accounting software tools and systems which automate the process but if you are not an accountant, you might still find it complex. Doing it yourself might even cost you more money than just paying a professional.
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
You can click here to speak to business experts and bookkeepers Melbourne. We would love to help you formulate investment strategies and streamline your processes to take your business to the next level. Our goal is to help you grow your business, find ways to invest more and increase your productivity.
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