By Tyler Garrett, executive assistant to Randy Russon, founder of TOP CFOS
Who needs CFO services? Well, you’d be surprised to learn that every business on the planet needs CFO services! Whether they’re big or small, every business needs an effective CFO to provide top-of-the-line financial guidance.
But why? Well, as you’d expect, those businesses that don’t value the careful oversight of their finances usually experience business failure. In fact, here are four articles that cite poor financial management as one of the main contributing factors to business failure.
Poor cash-flow management: “The poor management of cash flow is the main reason that small businesses fail. It is possible to have a paper profit but still have problems simply because there is insufficient cash flow to pay creditors. Poor cash flow may arise from significant increases in stock levels, inadequate credit control, increasing debtor days, bad debt incurred, poor accounting practices including late invoicing, inaccurate forecasting by management, and failure to plan for capital and/or exceptional expenditure.”
Poor accounting: “You cannot be in control of a business if you don’t know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common—and disastrous—misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the chief financial officer, one of the many hats an entrepreneur has to wear until a real one is hired.”
Financial neglect: “Cash is the lifeblood of any business, and there will be no business once that runs out. Therefore, it is imperative that small business entrepreneurs practice strict financial record-keeping so that every penny is duly accounted for. Knowing exactly how much money is going in and out of your business will correctly guide every decision you make.”
Personal spending: “When new owners are working eighteen hours a day, the line between their businesses and personal lives is sometimes blurred. Entrepreneurs sometimes see their business revenues as personal cash reserves. Failure to keep business and personal finances straight, and separate, can lead to heartache, liquidation and some very difficult tax challenges. Business advisers call it poor financial management, bad math, or inadequate accounting, but a root cause of small business failure often boils down to spending business income and funds on personal needs.”
As you can see, the common denominator among these articles relates to the poor management of finances. At TOP CFOS, we firmly believe that if business executives put finances first, they will stay in business. When executives put finances first, they end up knowing where they stand financially at all times. They are not flying blind, and they know where things stand. That’s where we come in. Having a good, affordable CFO at your side is incredibly helpful for any business executive, and that’s exactly what we offer.
We hope you’ve enjoyed our blog. Remember, TOP CFOS offers the finest CFO services to companies that want to take their businesses to the top. We love being the catalyst behind firms’ soaring profits, and we’d love to be a part of your team. Our contact info can be easily found on our website, so feel free to reach out anytime.
Our next post will come from the Finance category and is titled “Funding Sources.” Thank you for joining us!
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