Cash flow provides a true reflection of a company’s health. It represents the cash a company generates through business activities, financing, and investments, after costs.

Well managed cash flow ensures a business can pay expenses, fund activities, make investments, repay investors, avoid to much debt, and grow. Poorly managed cash flow can lead to increased interest and bank charges, missed opportunities, poor relationships with customers and suppliers, low morale, increased stress, and even insolvency.

Cash is the Lifeline of Any Business

Any company will find it difficult to conduct routine activities without cash. They will struggle to pay suppliers and employees, buy materials, repay investors, and cover fixed expenses such as rent, utilities, insurance, taxes, and loan payments.

Without sufficient cash, a business must take on debt. Too much debt can lead to greater control of a company’s activities by debtors and in some cases, a divergence from the company’s vision.

Every business needs to grow to survive, and poor cash flow affects opportunities for growth and investment. A company may not be able to buy equipment, expand to a new location, invest in infrastructure, or commit to additional costs such as marketing and promotion. Ultimately, poor cash management can stop business growth and threaten business survival.

Finding the Right Balance

Companies need to balance how much cash they need for their daily operations against leaving cash sitting around that could serve them better. For instance, idle cash can be used for investments that generate additional earnings.

Handled improperly, a business may need to liquid assets to generate cash or borrow and pay interest. However, it is possible to eliminate large gaps between cash inflows and outflows through cash flow management.

Cash flow management monitors, analyzes, and optimizes a company’s net cash receipts less its cash expenses. This is especially important for business that are undergoing rapid expansion since they need to spend more on employees, facilities, equipment, etc.; however, good cash management is also important for start up companies, business with seasonal cycles, and business going through economic downturns.  All companies can benefit from cash flow improvements such as improved inventory, accounts receivable and payable procedures.

In-Depth Information Drives Growth

Most businesses use an accounting program and are capable of generating a cash flow report. However, these numbers only provide a general overview. They do not provide the insight a company needs to manage cash better.

As a business grows, it is inevitable they will need in-depth data and expertise to plan for the future, improve profits and performance, measure risk, and secure financial health.

CFO Expertise

Luckily, it is no longer necessary to bring a full-time Chief Financial Officer onboard to provide these insights. Companies can avoid this huge financial commitment through outsourcing.

With an outsourced CFO, your business will not pay employee benefits, commissions, bonuses, and profit-sharing incentives. However, they will benefit from the expertise of an accredited, experienced CFO. Services are also scalable to minimize expenses.

A CFO spots weaknesses, recommends improvements, and capitalizes on your strengths. They also develop and implement KPIs so your business meets its performance and growth objectives.

An experienced CFO also looks towards the future. They forecast, budget, and translate in-depth financial data into actionable information that help you make better business decisions.

Finally, a CFO ensures your business maintains accurate, secure data and meets compliance. Their independent oversight and best practices minimize risk and unnecessary headaches such as fines, fraud, and cash flow issues. With an outsourced CFO as your business partner, you can have the peace of mind that your financial house is in order.

If you’re interested in exploring outsourced CFO services, contact us for a free consultation. Let us help you manage your cash flow and grow your business.