When does a company need a Financial Director?
Your business is growing, even surpassing your expectations. You reach the moment, however, when you ask yourself the question "How far can we go?", and not simply "Can we grow?"
The clients become more, the team grows, you realise record turnovers, you receive timely financial statements, but are they enough for you to make a decision?
Once the turnover is already in the millions, it is not enough to know what happened in your business yesterday, and what leads is to foresee what can happen to it tomorrow.
Accounting records the past, and the CFO charts the future.
Accounting answers the questions, what the revenues are, what the expenses are and how much the profit is and how much tax we have to pay.
The CFO gives an answer to the following questions:
Why is the profit like that?
Why do we have revenue, but we have no money?
From which product do we earn and from which do we lose?
How much can we invest and when?
How do we increase the value of the company?
If you have no answer to these questions, it is time to think about whether one of these 7 signals has not already knocked on your door.
1. Turnover is growing, but the money is never enough for you.
This is a basic problem of a growing business. And it is precisely here that the Financial Director can give you an answer to the question – Where is the money? – When the P&L statement shows a profit, and the bank account is empty. The money may be in the warehouse, in receivables from clients, in advance payments to suppliers, or the business is simply growing too fast, and your margin is too low to bear this pace.
One CFO never asks - Where is the money? And simply knows how to free it.
Turnover is growing, but the money in the bank is not enough? Stop wondering where your capital is blocked.
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2. Your business decisions are still based on intuition, and not on real data.
When we start a business, we are often quite enthusiastic about what a brilliant idea we have and how successful it will be. At that moment everything is based on our intuition. But when our decisions are already in 7-digit sums, intuition is not enough.
Then the CFO turns the ideas into scenarios, financial models, KPIs and tracks them measurably.
Intuition remains important, but it is now backed by data.
3. Your budget has nothing in common with reality? And why?
The budget should not be an Excel file. It should be a clear model that gives an answer to the following questions.
What did we plan?
What happened?
Where did we make a mistake?
Where did we succeed?
Why is there a difference and what is it due to?
What do we expect to happen at every moment from now until the end of the year?
What do we need to change now?
This is called proactive management. Because we model the future ourselves, through our decisions today.
Your time is the most expensive resource of the company. Stop spending it filling in Excel tables and return your focus to growth.
Delegate the finances to an external CFO
4. You have a profit, but do you know where it comes from?
Even when your business is in profit, some products are more profitable than others, and some can even eat the profit.
The situation with the clients is no different. Not every client is worth it at any cost.
The CFO has to make an analysis of which product has the highest gross profit.
Which client has a good turnover, but does not pay?
Which market is growing as a result of excessive marketing expenses?
The CFO's aim is to build management reports, on the basis of which management takes the important decisions.
5. However good Excel is, it starts to turn into a problem.
Excel is an excellent tool when the business is run by one person.
When, however, you have different departments such as sales, accounting, production and others, and each of them has its own Excel and each of them shows different figures, the result is misleading information, wrong decisions and results that rely on luck.
The CFO builds infrastructure, manages the implementation of ERP, accounting software and BI. That way the basis for decisions is always one, and the results can easily be measured and evaluated.
You need a financial director, but not the expense of a full-time position? Get the highest level of expertise from Space2F
Request an individual offer for an external CFO
6. It takes you too much time to answer the questions of banks, investors or partners.
The moment has come in which you feel that you can grow more. The money, however, is never enough for you. Then comes the need for bank financing, for capital or new partners.
Every source of financing is welcome when there is an idea and business development. Then, however, it is not enough to show one financial statement. This is the moment when it is time for talks with the banks, so that you find the most suitable loan for your ideas, find the most suitable partner and the path along which you can grow most sustainably.
It is time to find the right financial director, so as to dress your ideas in a vision. The CFO's main task is to translate the business into the language of capital, and it is precisely that story that answers at what price you will receive financing, under what conditions, and how you will build the future of your business.
What will the cash-flow forecast be tomorrow?
How will we service the debt?
What will happen if salaries increase by 10%?
And what will happen if the dollar's exchange rate falls against the euro?
What return do we expect from the investment and how long is the payback period?
You want to receive a bank loan, but the banks politely refuse you, without giving you a meaningful explanation why?
Why can I not get a bank loan?
7. The CEO is already a CFO for more than half of their working time
This is the strongest signal. When, instead of taking care of the development of the business and the sales, the manager starts spending hours analysing expenses, planning the cash flow or budgets that never get realised.
When the owner or the manager says to himself, I can best manage the money of my business? Yes, that will always be so, the manager has the best feel for the development of the business, but the financial function requires time and again the manager will be the person who takes the final decisions. But the financial director will allow the decisions to be taken in an informed way, without the CEO losing valuable time in analysis.
When the CEO's time is occupied with financial management, the company already has a financial function, but still does not have a CFO.
Then it is time to judge, can we already afford a CFO? And how much does it cost you that you still do not have one? How much money do you lose when your most expensive resource, namely the CEO, performs a financial function.
Today there are many opportunities for effective and flexible solutions, such as a financial director as a service.
When you do not know how useful this role can be, you can try with a small investment of 20, 40 or 60 hours a month. And feel the effect yourselves and answer the question, is it worth it?
Your business is ready for the next step, but are your finances ready for banks and investors?
Build your financial model with us
This is the important change in modern business. CFO expertise no longer comes with yet another full-time C-level position.
The interim financial director model lets you receive expert financial support for days, weeks or months. The service is very useful in the everyday life of a fast-growing business and especially needed in conditions of restructuring, investment or a need for financing.
That way the company receives the needed financial support without changing its structure.
The opinion is often encountered that a company needs a CFO when it has problems. The fact is, however, that when a company has large financial problems, it has usually been late to engage a CFO and the money has long been flowing out of it.
The need for a financial director appears when a company has grown, when there are more opportunities in front of it than it can finance, and when we already have an alternative cost of capital.
Then it is time for finance to be not simply a function, but a responsibility. Because Finance inspires the future.
At Space2F we help businesses from different industries not simply to structure and understand their financial statements, but to turn them into a strong weapon with which to conquer the world.
Space2F - Where finance powers the future.
