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Posts Tagged ‘contract CFO’

Outsourcing Options & Solutions for Small Businesses




Small business are at a distinct disadvantage as compared to larger companies. Mr. John (Giancarlo) Meazzo, M.A. has provided assistance to many small businesses that had horrendous experiences, from the melt down of the accounting department; to falling months behind in accounting tasks; reducing costs as business volume dropped substantially, etc.  He developed a free self rating questionnaire to businesses where he can quickly respond with suggestions.

Mr. Meazzo found that the access to high end experienced and capable professionals, keeping up with new technology, understanding company needs become monumental tasks for the owner.  The typical small business operator may be excellent in his business technology such manufacturing or providing professional services.  The business owner may not be experienced in sales and marketing or in accounting and financial management.

Competition is fierce and economy has slowed and not stable. There is a need to be proactive in making business changes and decisions to navigate through these difficult times. Having the best assistance (part or totally outsourced) is key to success!


Some Problems Incurred by Small Business Owners


Owner of the company:


1.  Is investing most of his time in sales and marketing and does not have much time or experience in managing the accounting department. Is not certain if the bookkeeper or accountant is performing at a high or required level of effectiveness and productivity.
2.  Does not know if the current financial staff has the required experience to perform duties beyond the core responsibilities.  Are they able to assist executive in creating new opportunities; foresee upcoming financial problems and assist in strategic planning?
3.  Concerned about lack of internal controls.  Not quite sure of all safeguards are in place to protect the company from theft.   Are there safeguards in place to eliminate opportunities for theft? (see article of why companies fail first year: )
4.  Has various tasks for an accountant to perform, but knows that accountant is not qualified or experienced in financial management (typically performed by controller and CFO).  A good part of the work of the highly paid accountant is performed performing clerical (equivalent low pay) tasks.  How to resolve the over/under employment and/or over/under qualification problem?   Is executive qualified to know if he needs an accounting supervisor, accounting manager, controller or CFO?
5.  No support from accountant in planning and providing “think tank” advice and services.  Accounting manager has little or no education in accounting and financial management and cannot really train or manage the accounting staff.
6.  Does not understand the accounting software well and does not know how to use the data well for managing the enterprise.  What key reports should executive receive daily, weekly or monthly?
7.  Operates day to day without a strategic plan or budget.
8.  Is not certain of the break even point for the business.
9.  Does not know the types of management reports he should receive from the accounting staff  so that he can understand the ergonomics of his business, causes and effects of changes in business volume.  Does not understand how to develop and compile key performance indicators (KPI), the basis for budgeting and planning.
10.  When there is a turnover in accounting staff, has to invest time in training new temp or replacement.  Takes much time from his other important tasks.  Accounting falls behind and causes a lot of stress.
11.  Too busy and not experienced is setting a business strategic plan with goals and objectives.  Let operations run without a plan.
12.  Not certain how to flex the staff and costs depending upon the volume of business.
13.  Doesn’t have a cost reduction plan in place in the event of reductions on volume of business.



Additional example of operational problems.


Service Company: 10 employees, $10 million in revenues, $90,000 budget for Controller. Need to hire experienced controller to handle accounting department and take on the financial management needs of the company. Current accounting manager/controller left or about to leave company. Needs: (example, actual needs will vary for each company) Identify and fix problems (or develop new accounting system for start-up) with accounting/finance department.


Typical areas needing attention: Accounting system to support financial statement preparation by product lines; revenue/expense centers and divisions or area of responsibility; consolidated income statement with inter-company eliminations; internal controls; a capital and operational budgeting system; prepare break even analysis; internal audit and controls system; product finance dept. policies and procedures; evaluate business performance against industry bench marks or standards; ensure profit margins (product line and department) are reported, evaluated and managed; manage the revenue cycle insuring proper rate setting (product and service pricing) that “days in AR” are adequate; there are no “lost revenues” due to inadequate systems; eliminating payroll error factors; insuring adherence to payroll labor laws; reduce costs without effecting client satisfaction and quality of services; train managers in financial management concepts; develop key performance indicators (KPI) reporting system; ensure staff works at 100% of productivity; evaluate mergers and acquisitions opportunities; develop data mining solutions for business management; ensure adequate insurance coverage; develop corporate governance policies; succession planning; assistance in strategic planning (power of collaborative thinking)


Solution: A senior financial manager is needed to plan, manage and implement systems to satisfy the needs (partially listed above) of a typical company. When planning to hire a full time financial officer or accountant, you may want to consider outsourcing that position as many companies now do. To satisfy the above needs of a company, GMA, for example, would provide its client a high level CFO (35 or more years of multi-industry experience) for 10% of the time, a Controller for 30% and an Accounting Manager for 60%.


In some cases there may be a mix of CFO and Accounting Manager or accountant! This may total 1 full time equivalent (FTE) and most likely, at the same cost of one existing or planned FTE. This is just an example and needs would vary based upon the size and needs of the business. CEOs should evaluate their current staff and determine if the staff can provide their company with the support and financial management they need (not the other way around). It does not necessarily mean to change the finance staff. Rather, it means understanding their abilities and obtaining assistance through companies such as GMA, for whatever the company lacks in expertise.


Having one full time professional to perform all duties may not be the best strategy!. Likewise, someone who does not have the finance experience may undermine the viability of any business. The typical full time professional will either be under or over qualified and/or under or over employed. Many times an employed financial manager may not want to seek the assistance of a consultant. The reason is obvious. The financial manager may be concerned of how their superior (CEO) may perceive the option of the request of a consultant.


Relying on a senior accountant or a controller who does not have strong experience could be the downfall of a company. GMA as contract CFOs have first hand experience in these matters! If your financial manager leaves your employment, is the other staff able to continue with operating the finance department? We have seen companies fail as they grew too quickly without planning for such growth. Also, without the right supervision and internal controls, companies lost funds and became insolvent as a result of employee dishonesty.


Many of GMA’s engagements were due to a turnover in accounting staff, controllers and CFOs as well as a total collapse of the accounting and finance department. We saw firsthand what serious problems an unqualified financial manager can cause. By having this important position outsourced as in Choice 2 below, will allow continuity of services for when you experience a possible turnover, while providing the right mix of financial support and expertise.
Below is a one staff professional vs. GMA’s three tiered professional team. Which would you prefer to have?









On Choice 1, the Controller may be skilled in supervising the accounting department and preparing financial statements. The Controller most likely will not have the know how (due to lack of experience) in developing strategic plans and determining their financial effects to the company; analyzing financial ratios and their trends; calculating the break-even point; analyzing and preparing for the effects to the company of changes in the economy (e.g. inflation – recession etc); planning and implementing operational corrective actions; analyzing the budget to actual variances; bench mark comparisons; managing the revenue cycle and more.


Word of caution: companies sometimes believe that by hiring a CPA, the problems will be solved.  Acronyms are just that, abbreviations, and a CPA or MBA behind someone’s name does not mean that the job can be done. Accountants that graduate usually choose the CPA route to perform independent audits and tax services.  Conversely, an accountant may decide to stay in the area of corporate financial management where a certification of public accounting would not be needed.  There are many great CPAs and many great financial managers that are not CPAs.  Bottom line, experience is the most important factor not acronyms!


We believe that having experienced operations financial managers (CPA, MBA or not) is KEY to a successful enterprise. These financial managers will work with CPA, typically for the latter to for perform audits and tax returns. Asking for our assistance is very simple by clicking here.


Mr. John Meazzo, M.A. Principal of GMA may be contacted directly by calling 310-228-7721.


A video on one of our business solutions