Financial management in a company is not the role of the company’s accountant.
Small and medium-sized companies choose to hire an external finance manager who oversees all financial matters of the company and serves as the right hand of the CEO in financial and business matters – someone who’s responsible for all aspects of managing the company’s finances. Unlike the company’s CPA, who prepares financial reports at the end of the year, the company’s finance manager prepares various reports for the purpose of improvement, optimization, and ongoing control over the company. Many companies in need of a finance manager refrain from hiring one due to the high cost. Outsourcing financial management allows tailoring the scope of the position to the company’s needs and gaining significant benefits from the extensive knowledge and experience accumulated by the finance manager in various companies.
Responsibilities of an outsourced Chief Financial Officer (CFO):
Budget
Building a budget for the company based on profit centers + continuous monitoring and monthly reporting on performance compared to the budget.
Benefit: The company sets business goals, determines expenditure frameworks, and through continuous monitoring ensures that it achieves its goals. Additionally, presenting various profit centers provides important information on sections that are losing, thereby reducing losses.
Banks
Credit acquisition and ongoing communication with banks.
Benefit: The finance manager knows how to speak the “language” of banks and thus manages to achieve higher credit for the company and prevent conflicts with the bank in ongoing work.
Cash Flow
Building monthly or daily cash flow forecasts for several months ahead.
Benefit: The company manages its cash flows rather than being managed by them. This prevents an unexpected cash shortage that could delay salary payments and payments to suppliers.
Inventory
Continuous monitoring and management of inventory levels.
Benefit: Reducing inventory to a size suitable for the company’s operations. Every dollar reduced in the inventory means a dollar less in bank credit.
Operational Efficiency
Examination and control of company expenses and their adjustment to company operations.
Benefit: Significant financial savings.
Customers
Analysis of customer profitability, ongoing reporting on credit levels to customers, and the quality of ongoing collection.
Benefit: Identifying unprofitable customers thereby increasing the company’s profitability + improving the company’s cash flows.
Various Economic Analyses
Conducting various examinations for the company’s CEO such as examining entry into a new market or marketing a new product.
Benefit: Professional and accurate examination for making the best decisions.
External Factors and Institutions
Serves as the contact person in the company for all financial matters with suppliers, customers, and institutions.
Benefit: A professional entity that knows how to promote the company’s goals with various external factors.
Management of the Finance Department
Responsibility for all financial matters in the company and management of the accounting departments.
Benefit: Relieving the CEO for his tasks and professional management of the finance department.
Typically, a finance manager who is an employee deals with a wide range of issues unrelated to the essence of the role, unlike an outsourced finance manager who focuses on goals for which he is hired.
