Recessions and volatile markets can leave behind net losses, bad cash flow and bankruptcies in their wake. At the same time, more fortunate companies emerge unscathed. What factors separate those that made it through tough challenges from others that did not?
After working with hundreds of companies, we believe that the survivors all have one thing in common: a mature and disciplined finance function that has protected them from the worst storms by providing key data, information and insight to guide management decisions.
Business is always subject to external forces — from competition, weather (e.g. hurricanes), regulation, labor strikes, etc. Having financial tools to address inevitable crises is fundamental to survival… yet so many companies lack vital financial skills and insight.
So what is “financial discipline” and what makes a company financially mature? Three indicators of financial maturity are key to weathering the next storm — economic or otherwise:
Every business owner recognizes that success is measured in dollars, yet not every business bothers to keep track of this singularly important resource. This is like saying the company needs sales but has no sales people. This mistake is not size or age dependent. We’ve have seen long-standing and multi-million dollar companies that hobble along without an accounting department… until they run headlong into a financial crisis that bankrupts the company.
Many companies tell us that they have a CPA who does their taxes, or a bookkeeper that balances the bank statement. While necessary, neither taxes nor bookkeeping will keep your business running in times of trouble.
A mature finance function is one that helps management understand the financial results. Knowing what the results mean is so much more important than just knowing what the results are. A “mature accounting function” has answers to questions such as: How (and how fast) can we grow? Is our product pricing correct? Is the company profitable? Is working capital sufficient to survive the next challenge?
The right person makes all the difference in every job, but so many CEOs have trouble judging the skills of a finance person. A tax CPA is not generally skilled to help the company forecast, budget, set pricing, or even help management better understand the financial results. It takes a specific skill set to put financial results into a business context and drive rational decisions. Finding the right person with the right set of skills is key.
How mature is your finance function? If your business is stalled or faltering, and if you are ready to take the business to the next level of growth, now is the time to commit to building a mature financial function.
FuseCFO provides business owners with knowledge and guidance to make better business decisions. Our virtual finance and accounting staff can cover the gaps in your organization to help your financial function mature.
Dedicated to your success,
FuseCFO
FuseCFO’s dedicated accounting team provides financial discipline to hundreds of clients and can help you too. Contact us today for a free consultation.
8326 Pineville Matthews Rd #407
Box #473831
Charlotte, NC 28226
Phone: (980) 819-0510
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