What Your Accounting Dept. Can’t Tell You

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

When your company changes, your internal financial management has to keep pace. Red flags in the accounting department may be signaling a skills gap or they could be indicating a lagging, bloated or overwhelmed financial reporting and tracking system. The expertise to make specific fixes may be outside the wheelhouse of your in-house financial talent. Here are a few ways to know when you need virtual CFO services and why it’s so imperative.

  • Financial Reporting is Not Timely or Accurate – If you are reviewing the numbers one month or more in arrears, your accounting department is lagging, and under such duress, the financial reporting system itself may be faltering. Falling behind on the numbers not only impacts management’s decision-making but adds undue stress and productivity drain, impeding strategic development. A CEO needs timely and accurate information to make timely and accurate decisions.
  • Your Company Needs Experience in Working with Bankers, Lawyers and CPA Firms – Few things are more expensive than inexperience. You don’t know what you don’t know. Navigating the complexities of business and plethora of professional services requires a deep knowledge of the systems and scenarios that are unfolding in and around your company. A skilled CFO is an advocate, analyst and advisor who anticipates and translates the best course of action with your banker, lawyers, accountants and other professional service providers.
  • Your Banker Urges You To Strengthen Internal Financial Talent – If, as a CEO you find yourself complaining to your banker that your accounting department is not delivering, a banker invested in your success will urge you to make some internal changes. He may recommend a stronger accountant, but many accountants don’t have the necessary skills. An interim CFO or in-house CFO may be the precise solution for streamlining and improving the accounting department.
  • You Company is Undershooting Its Potential – When financial reporting is bloated or faulty it requires enormous time and energy from the CEO to review and interpret the numbers. This diverts his or her focus away from growing sales, which is where the energy is needed. A good interim CFO frees the CEO from minutia to focus on creating company growth.
  • Your Growth is Internal and Your Accounting Department Can’t Keep Up – Often a financial reporting system needs a tweak instead of an overhaul. A good interim CFO knows where to streamline the financial management process to keep the accounting department on track.
  • Your company is poised to acquire another company but you don’t have anyone with the requisite background to perform the due diligence. In this scenario knowledge is power, experience is paramount and the success of the acquisition hinges on specific expertise. Acquisitions are both an art and a science founded on the ability to know, use and analyze the numbers.
  • You have a great opportunity to grow the business, but your team lacks the capabilities to manage the numbers. Driving profitability and growth requires swift and accurate financial management. The current team may be unable to define and put in place key productivity ratios and financial ratios, and accurately track and report on the trending, leaving the CEO without a clear view of what is required to navigate the company’s future.
  • A Sounding Board and Strategic Partner- As a CEO it is lonely at the top. Leaders face serious responsibilities when pursuing their company’s next steps. Having a sounding board and strategic partner is not only advantageous, it is optimal. According to Nicholas A. Christakis, MD, PhD and James H. Fowler, PhD, authors of Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives, “Innovation rarely arises without the input of others. Breakthroughs are created in collaborative circles.” A skilled CFO can bring a fresh perspective to the table and strategize with you and your key managers on how to drive the business forward.

If your company is experiencing any of these scenarios, I welcome the opportunity to discuss them with you. Please feel free to call me at: 630-269-7646 or email me at jlafferty@cfo-pro.com