The business environment is constantly changing, and the CFOs parttime must also be changed to meet the new business needs.
Although it is only recently to hire parttime, the CFO has become more into fashion, which in turn reflects the companys changing needs. Parttime finance director is expected to be more than an account holder but also to be an integral part of management that contributes to the success of the business, much as a fulltime financial director.
Typically this may include active participation in planning, strategic development, capital collection, management information systems, quality management systems, exit preparation, education and so forth, and provide parttime advisory financial opportunities to work with their peers to make informed decisions that improve company performance and profitability.
For the owner of a problematic company without own financial expertise, a qualified parttime financial director should provide skills to help address the most common causes of business failure, especially when the entrepreneur is too involved in daily problems to objectively recognize that business may have gone into a period of potential terminal decline.
What are the most common characteristics of business failure? How can a parttime finance director help? Some companies fail due to exceptional circumstances, but the more often found reasons for failure are: No expert help easily available to advise the companys owner.
The owner may previously oppose appointing a mentor or finance director for parttime, consequently, the owners skills setup may be insufficient to address the companys problems and a deteriorated business position may worsen. A problem rejection phase can be experienced, but it is rarely acknowledged that the cost of being proactive is much less than the cost of resuming problems.
Debtors are slow in payments.
Good cash management is compromised and the business owner must spend more time on fundraising activities or the risk of insecure claims becomes real.
High staff turnover. If good staff can not be maintained, operating costs will increase and the lack of continuity at work can adversely affect business performance. Should the reason for high staff turnover not be fully understood by the owner, the trend should be seen as an indicator of areas of improvement within the organization. Lost customer accounts. If customer accounts are lost and the reasons for why not being established and corrective measures are taken, the business will suffer from a steady downward trend. To often lose a customer is seen as an expected event.
Sales price pressure.
Competition pressure on sales prices will always be obvious, however, the business can fail to show that it is unique in its proposal and thus only able to sell on price. In such circumstances, the business must lower its cost base to compensate for the lost revenue or suffer the downturn. which reduces the value of the company.
Resistance to change lack of competence. The current technologybased environment where companies seem to dictate that the owner must keep up to date with new technology and train staff to meet new challenges. Often there is insufficient staff training and a reluctance to acquire external expertise that leads to longterm problems.
Bad management of working capital. In addition to increased debtors, insufficient control of inventory and other current assets will increase the cost of operations and reduce the organizations liquidity. The company is growing too fast.
Rapid growth in the business can create a dangerous situation if insufficient liquidity and expertise exist in the business to be able to fulfill all increased commitments effectively. Often the business owner fails to understand the mutual dependence between the functions within the business. Rapid sales growth, if not managed and all business features that are sufficient resources to meet the increase, could potentially lead to a lack of business.
The Qualified Financial Director for parttime work can work with the business owner and help to: Take a proactive approach to management, Assess business risks, Take responsibility for preparing management information
and make informed decisions based on the fact.
The role of the party leadership will vary in different environments, but imports and the expectation that the existing one is up to date with changes in legislation and management trends, improves the appropriate skills of staff and is an active team player will be of great benefit.