3 key signs an outsourced CFO is right for you
1. Your finance team is struggling with their workload
We see this a lot in small regional aged care providers where the finance team is struggling to deliver on their day-to-day duties. Or perhaps your general manager is resource strapped and can’t manage all of the finance oversight themselves.
2. Your organisation is considering a major investment decision
This could be an acquisition of another business or a major capital refurbishment project. A virtual CFO can provide your board independent advice on financial risks that they need to consider before making a decision.
3. You’re a startup scaling up
You may be a startup operator who’s scaling up your business and want to tap into a part-time CFO resource. Your virtual CFO can ensure the appropriate setup of new accounting systems, finance policies, and procedures, and address financial risk management including prudential management.
How a virtual CFO can help you
While virtual CFOs offer many advantages, there are key areas where they can benefit you most.
Sophisticated monthly finance reporting
A virtual CFO can enhance your monthly finance reporting process, setting up automated reporting through programs like Power BI or Futurely. This moves you away from and beyond excel spreadsheets and lets you incorporate KPI tracking on both lead and lag indicators.
We are experienced in helping organisations develop a reporting process focused on the balanced scorecard with KPI tracking – not just in finance, but also in the customer areas. This ties in Net Promoter Scores from customers’ Google Analytics, internal processes such as your clinical governance piece, and learning and growth areas where you’re focusing on the the critical resource, staff.
Rolling quarterly forecast
With all the financial constraints aged care providers face, you can greatly benefit from having a virtual CFO develop rolling quarterly forecasts. This provides a more dynamic approach to the static budgeting of the past. Instead of setting up setting a budget in April or May each year, the forecast approach lets you update the forecast with actual results throughout the financial year to more accurately assess what financial performance you’re likely to achieve for that year. This in turn strengthens your monthly variance reporting.
The forecast also looks out more than one year so it can give management and the board a bigger picture view of the the financial sustainability and drive critical actions if required – such as do we stay and grow? Or do we do we sell and go? It’s also used to do stress testing for risk management such as assessing liquidity and prudential risks. For example, one of the key areas around liquidity risk for aged care operators is that landscape where residents who’ve paid Refundable Aged Care Deposits (RADs) are departing and people replacing them are staying for shorter periods of time and not being able to sell their home to pay the RAD. This causes an immediate cash strain on the operator and real risk for those operators who have spent depleted cash with major capital refurbishment.
Strategic support for strong decision-making
A virtual CFO can also provide strategic support to an organisation considering key investment decisions. For example, we’ve assisted many accounting and tax due diligence processes where acquisitions of other operators facilities are being considered. Financial feasibility analyses can also help determine whether a project will be value-enhancing for the organization. Part of that is development of a financial forecast model to derive investment metrics such as MPV. A virtual CFO will present this in simple terms to the boards, potentially helping with business case development for proper governance processes around those decisions.