Interesting article in the April 2013 Journal of Accountancy that touches on the beginning of a shift for large accounting firms to devote more to write-up work and Contract CFO services. http://www.journalofaccountancy.com/issues/2013/apr/20127002.htm Read the excerpt on page 7 "the Reality of the Virtual CFO". Now compare this article to what I have stated in the website and The Contract CFO article I have written below. Seems like the idea of a Contract CFO (which I started in January 2011) is now attractive to many service providers yet, actual CFO experience is quite lacking.
Article in Wall Street Journal regarding part-time or Contract CFO services: "For Rent: Chief Financial Officer dated 09/22/09".
Article about The Contract CFO by Yerger Lurate
THE CONTRACT CFO
By: Yerger Lurate, CPA
We have all seen or have been permanently affected by the post 2008 economic situation and how it has impacted both business income and personal income. In difficult economic times, how can a small business either maintain its financial position or position itself for growth? Many small business owners are faced with the question, “Do I hire new employees, make additional investments in the company, or just work harder and devote even more time to the business?” The answer may be easier than they can imagine.
I would like to introduce to the small business owner the concept of the contract Chief Financial Officer (C-CFO). We have all said many times “I would like to have the benefit of a certain service, but I just can’t afford the full price. I really wish there were a way to get the benefit I need and only pay for what I get.” That, in essence, is what the C-CFO can provide.
Every small business owner has three primary assets he or she brings to the company: (1) time/energy, (2) financial capital (i.e. money), and (3) a unique knowledge and skill set that distinguishes the business from the competition. Of the three, two are limited: time and money. How to maximize the knowledge and skill set while making the best use of time and money is usually the hardest decision faced by an owner. A C-CFO can assist in all three areas. The C-CFO can relieve the owner of time restraints and increase productivity so that the owner can devote the newly acquired time and productivity to maximizing his/her knowledge and skills. With the time savings and increased productivity, the owner can better lead the company, at a fraction of the cost of hiring a full-time employee.
Generally, there are three broad categories that define the small business structure of financial, accounting, management and staff (collectively, the back office):
Owner/Operator - The owner does the majority (or all) of the back office work, manages all of the large and small details of the company, has very little staff, and tries to juggle his/her time between leading the company and doing back office work.
Owner/Manager - The owner has some staff in place to handle the back office, and the company has grown over a period of time. The owner still spends time managing the back office and staff and still has to manage small details; however, the owner can see positive results when more time is spent leading the company.
Owner/CEO - The owner has staff in place for the back office, spends more time leading the company, but does not have the expertise of a CFO. The company does not, however, require a full-time CFO.
Not every small business fits into these three categories because each small business is unique. But without adequate resources to provide assistance in the areas that are lacking, the owner is left with a gap in the company that needs to be filled. A C-CFO can fill that gap.
The advantages of the C-CFO are depth of experience and relationship. Since the C-CFO has been in small business, has seen its starts, growth, diversity, and challenges associated with the preceding, the C-CFO can effectively assist small business owners in all areas. Having “been there, done that” is not just a trite saying, but an extremely valuable asset. Quite simply, when an owner needs help, he or she should get it from someone who has years of expertise as a Chief Financial Officer.
The depth of experience of a C-CFO involves many years of preparing financial statements and interpreting them, budgeting, loans and financing, audits and reviews, risk management, business insurance, contract review, cost management, filing state and federal reports, payroll, human resources and employee benefits, company policies and procedures, accounting software, bank reconciliations, general ledger, accounts receivable, accounts payable, income tax returns, and serving as point person for legal, banking and CPA issues. This is just a partial list of what the experienced C-CFO has encountered in his or her experiences in the business world. Wouldn’t a small business owner love to have access to that experience without paying for a full-time employee? Additionally, a C-CFO builds a relationship with the owner and his/her small business. From that relationship comes the intimate knowledge of how the small business operates as well as the owner’s business and personal goals. Therefore, the C-CFO becomes a valuable advocate for both the owner and the small business and is very much concerned with, and a part of, the continuance and growth of the company.
A small business owner may be thinking, “All of this is fine for another company, but how can a C-CFO help me?” The C-CFO knows that one canned product does not fit all; each small business is unique. The concept of the C-CFO is simply to provide only what is needed for the business—a customized solution. Through an evaluation of needs and desires, the C-CFO works with the owner to tailor the duties and tasks that are needed and only charges for what is provided. Whether the role of the C-CFO is large or small in the customized fit for small business, the owner still gets the expertise and the experience of a Chief Financial Officer.
The C-CFO, who is intimately acquainted with the business, is always looking out for the owner’s best interest … how to save money, maintain current financial position, and grow the business. The C-CFO is committed to helping the owner and his or her small business succeed. The C-CFO is someone who is experienced as a Chief Financial Officer, who has a trusted and advisory relationship with the owner, and who can relieve the small business owner of whatever is preventing or limiting the owner from leading the company. The best part is that the owner pays for what is needed (no full-time employee), yet still gets a Chief Financial Officer -- a valuable advocate for the small business and the owner.
Call Yerger Lurate, CPA at 601-331-6046 or email at firstname.lastname@example.org for a free initial evaluation and consultation.