Any bookkeeping, business or tax article contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor can it be used to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

Intelligent Insights: A CFO’s Strategic Methods for Cost Controls

As your business grows and becomes more dynamic, your company faces more complex financial decisions. That’s the time the need for a financial expert becomes critical. A CFO has the relevant skill sets and business intelligence that can strategically drive profitable revenue improvements with focus on increasing your business value. More importantly, you get the professional help to design an integrated profitable program for business growth.

However, most small businesses still perceive CFO service as another unreasonable expense and some might have never thought of having the need to hire one. But that shouldn’t be the case anymore. Because nowadays, to even qualify in a tight market competition, a small business owner should step up his game and be financially competitive in order to be prepared for the long run of his business.

 

How does it work?

First off, you should know that there are three major roles a CFO can perform to help improve your business performance. These are financial forecasting, cost-benefit analysis and funding acquisition. Now, let’s break down the profitable returns you will score for taking qualified professional help from a CFO you can trust.

 

  1. Business Planning and Budgeting

Methods for Cost Controls

As the saying goes, “if you fail to plan, you plan to fail.” Working with a CFO, you can develop a strategic business planning and budgeting process, then implement. A business lacking plan and budget could potentially fail and it will be difficult to boost the financial performance. If you’re not ready to fail in your business, it’s the best time to start planning and budgeting. The key to your success is control – financial control.

If you have a CFO on your side, your expenses are strategically controlled within your financial capabilities and within the best financial interest of your business while making sure your business is adapting to the changing economic and market landscapes.

 

  1. Cash Flow Forecasting

Methods for Cost Controls

What you must understand is that your cash flow forecasting is the one metric that can crash your business if done wrong. Cash flow is the life-source of all businesses particularly small businesses and startups. That’s why it is important that business owner prepares cash flow projection to plan ahead in case of future cash deficit.

A CFO’s responsibility isn’t just limited to the past and present financial situation of a company, he or she is also playing an important part in a company’s financial future. In other words, anticipating the best way for a company to be successful. If your cash flow forecasting is accurate, you are better equipped to make sound business decisions and improve your business performance.

 

  1. Costing (job order costing, process costing)

Methods for Cost Controls

Effective and efficient costing rests heavily on strategic CFO skill. And you must learn to control your cost to make more profit. Consider that even with increased sales, if you don’t manage to control your expenses, all your profit will dry up.

Cost estimates are used to determine the budget. So, if you don’t know bookkeeping, it is wise to leave costing to the professionals who fully understand the standard costing system. Because it is necessary to analyze the variance between the standard and actual cost to improve your company’s operational efficiency.

 

  1. Break-even Analysis

Methods for Cost Controls

Break-even points and analysis are the most important metrics for small business owners to understand. Essentially, it tells you how much money you need to make in order to keep the doors open after paying fixed operating expenses like leases, equipment, vehicle expenses, employee costs and more.

That being said, you will have to analyze your cost structure, gross margin and overhead requirements in order to prepare for a more profitable future. With the help of a CFO, you will know your break-even point so you can plan accordingly.

 

  1. Labor Cost Management

Methods for Cost Controls

Through proper labor cost management, you can fully understand the cost of staff and make more informed hiring decisions. This analysis includes how much of the budget is consumed and whether your business is still on target to achieve predetermined goals. With the help of a professional, you’ll know exactly when to hire and the manpower budget.

 

  1. Debt Planning and Reduction

Methods for Cost Controls

Debt will drown your company if you let it. The sooner you can pay off business debt and start building the wealth, the more confident you will be about the future of your company. Besides, paying off business debt is extremely rewarding. With business debt planning, you’ll receive an analysis of your debt, creditors, and payment plans but also a customized plan to pay off your debt sooner than you might have imagined.

These are the functions that should be taken charge by experienced professionals. If you find tracking your own numbers is taking too much of your time already, hiring a part-time CFO is the smartest solution you can do. Part-time CFOs who can do as good as a full-time CFOs without the costs of an overwhelming yearly pay and benefits are out there waiting to be hired. We can help you with that. Schedule your Free Consultation by filling out our contact form or by calling us at 832-437-0385.

Methods for Cost Controls

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Methods for Cost Controls