Article written by Scott Nabozniak, CPA at Mowbrey Gil, in the Quarterly Canadian Update, a newsletter published by
Canadian member firms
of
Moore North America
. This article on the financial expert is part of our mission to become the partner of choice for your success by keeping you up to date.
As the owner/operator of a small or medium-sized business, you have many roles to play, especially when a company is growing rapidly. You’ll manage the company’s operations, sales, human resources and finances. You’re an expert in some aspects, but not in all. You don’t have to be an expert in every field to run a successful business, but with growth comes difficulty, and it can be hard to keep abreast of everything that’s going on, especially in an ever-changing world.
What can you do when you notice that something isn’t going right in your company, but you can’t put your finger on it? Just like when a child or pet is sick, you can see that something is wrong, but they can’t tell you where it hurts. Companies can also go through periods of “ill health”. How can you tell if they’re sick? After all, they can’t tell you what’s wrong either… or can they?
Companies can talk to you, but numbers are their language. By analyzing their financial information, you can examine and diagnose problems.
However, not everyone masters this language. It takes years of training, experience and professional development to become an expert in this type of interpretation.
This training and experience comes at a cost. Financial experts, unlike sales or operations staff, generally do not generate income for a company. Despite the importance of the accounting function in a company, can’t it be handled by a bookkeeper?
The answer to this question is “no” if you feel that something is wrong or that your company is not reaching its potential. Having materially correct, synthesized financial information that can provide you with accurate information about the essential parts of your business can help you make timely decisions which, in turn, will help you navigate this ever-changing world. Although a financial expert doesn’t generate revenue, he or she can help you avoid pitfalls when your business is in trouble, and develop strategies for growth even when things are going well.
However, your business may be growing and could benefit from the input of a financial expert, but you may only need this help for a few days (maybe a week) a month, and you’re not yet at the stage where you can justify the financial cost of the operation. What if there were options for hiring someone full-time? After all, it’s common practice to outsource other administrative functions, such as information technology (“IT”).
What about accounting?
Increasingly, you can find a financial expert, such as a management controller or a financial director (“FD”), who will offer you his or her services in a short space of time.
time. They are able to generate a market rate by dividing their compensation among several customers. In addition, some professional services firms may offer these “fractional management controllers/DFs” as part of their range of services. In fact, the advantage of a large firm is that, as a member of a large bank of experts, you also have access to expertise in specialized fields that may be difficult to offer to individuals.
How can a fractional FD/Controller help your company?
Management Controller :
- Develop, prepare and interpret monthly reports to support your company’s work;
- Ensure that your company is compliant with regulatory authorities (usually in tax matters, but it can also be useful to submit documents to sector-specific regulatory authorities);
- Develop processes and monitor transactions to reduce the risk of fraud;
- Prepare and file the necessary bank reports; and
- Develop and coordinate budgets and forecasts.
Chief Financial Officer (CFO)
- Establish financial relationships, usually with banks, but there are other forms of financing that FDs can help you obtain;
- Analyze and recommend changes in business processes to help you achieve industry best practices;
- Helping to analyze business opportunities – entrepreneurs are generally creative people looking for opportunities to grow, but their
risk assessments are not always accurate. The DF can analyze these opportunities and highlight which are valid and which are not; - Contribute to the development of growth strategies. What is your company’s position in your industry? What are reasonable growth targets for your company? A DF can help you find answers and choose a path to growth; and
- Helping you prepare your business for sale, or guiding you through succession to the next generation.
