Financial management consists of critical elements for success. They include:
- Planning: take the time to plan out your early budget and strategic plan. These tools will be your guide for how to run an effective business or nonprofit. Without this necessary step, most do not know how to operate the day to day costs of their business which makes decisions much more difficult.
- Monitoring: this crucial step allows you to see how you are operating vs your projected goals. If you spent more on marketing in one month than budgeted, will that eventually catch up or will you need to reallocate your spending and reduce another line? Monitoring each part of your budget, cash flow and finances is the most important step to success.
- Operations: you need the staff and tools software in order to run an effective business. The financial staff can set up your planning and monitoring and then report back to the business owner or CEO for any changes.
- Oversight: this can be done through a board or the owner. But oversight of the finances allows an important step of checks and balances.
Why do I need a CFO?
You didn't start your business or become the head of an organization because you are a financial expert. You are there to grow and succeed. The accounting, bookkeeping and financial aspects of your business are important to how you run your company, but it is time consuming and if not done properly, can lead to more headaches down the road.
Keeping track of your bookkeeping and your financial statements is time consuming and difficult to manage. But most frustrating is understanding and interpreting your financial picture from reports. CFOs are responsible for timely and accurate presentations and financial reports in order to capitalize on your growth.