Matt Clarke-Bruce’s Post

Beware the Fake Fractional CFO!!!! (I hear them say). Seems there are plenty of self-appointed “gun” Fractional CFOs on LinkedIn spruiking their opinions on what a CFO should be doing for clients. Normally included is a subtle warning against engaging with “questionable” Fractional CFOs who have no right to “invade and crowd” this space because they don’t have the required capability or service offering. Honestly, I may have been a little guilty of that myself in the past, but these days I believe all Fractional CFOs have immense value to offer to the right client. So long as they are promising something they can deliver to a high standard, then it’s just about getting the match right with the client needs. Commonly, the spruikers will be posting content about the differences between a financial accountant, a financial controller and a CFO. It feels like they do this to discredit the Fractional CFOs they see as operating more in the accounting and controlling spaces and position themselves as the real deal, game-changing CFO who takes care of business. But unlike big business, small to medium sized businesses don’t have all of these positions in their finance team. In most cases, a Fractional CFO will be a blend of these roles and be able to switch hats as required. A Fractional CFO capable of adding high quality financial accounting and financial controlling to a business previously only with bookkeeping can add significant value by providing better management information to business leaders. From my experience, this is where the biggest need is, and where a Fractional CFO can make the biggest difference. Conversely, a high-level CFO won’t be able to add much value if the fundamentals of accounting and controlling are not up to scratch. The numbers must be right, and be presented right, before the CFO can assist the business leaders to optimise right. I feel qualified to comment because I have been assisting businesses for the last 18 years as a Fractional CFO, after starting CFO For Hire back in 2006. While I am now focused on assisting small to medium business leaders with strategic financial management, much of my work is still associated with making sure the accounting and controlling is where it needs to be for the business. It’s the fundamental and non-negotiable base for the CFO level work that I do with business leaders. So let’s flip the subtle warning. Beware of those high and mighty Fractional CFOs that see the accounting and controlling as out of scope. Unless you have the appropriate expertise in your business taking care of these areas, chances are you’ll be better served by a Fractional CFO with a bias towards accounting and controlling. Ultimately, business leaders should look for someone they feel comfortable with, can build trust with, and enjoy talking business with over a coffee. Someone who becomes their commercial copilot and makes them a better business leader. #FractionalCFO #FinanceBusinessPartner

The Fish Story in “This is Water” by David Foster Wallace goes something like this: There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says, “morning boys, how’s the water?” And the two young fish swim on for a bit and then eventually one of them looks over at the other and goes “what the hell is water?” The point is merely that the most obvious important realities are often the ones that are hardest to see. Adapting that story to make another point: There are these two business leaders walking along and they happen to meet a big business leader walking the other way, who nods at them and says, “good morning, how’s your strategic financial management?” And the two business leaders walk on for a bit and then eventually one of them looks over at the other and goes “what the hell is strategic financial management?” The point is that most small to medium business leaders have not been introduced to best practice strategic financial management and don’t understand how big businesses are using it to lead the optimisation of financial outcomes. They simply don’t know what they are missing. Implement, or don’t implement, but know what it is, how it may help, and what your options are. Are you a business leader who can relate to the question “what the hell is strategic financial management?” If so, let me show you by taking you through a case study during a one-hour discovery session, where you will: • Be shown a simplified financial reporting format that tells the full financial story. • Hear about how the actions of the leadership team unintendedly impacted the financial outcomes and caused cash flow issues. • See how the leadership team were engaged with the key numbers and areas of focus to optimise the financial outcomes of the business and significantly improve cash flow. • Hear about the improvement initiatives agreed by the leadership team (strategic financial management). • See the financial plan that the leadership team committed to and will report and measure against (strategic financial plan). At the end of the session, you will understand what best practice strategic financial management looks like and know if you have an opportunity to add value to your business. Contact me to schedule a discovery session or visit my website (www.cfoforhire.com.au).

From recent discussions with people in my network and also prospective clients, it seems I haven't done a great job of clearly and simply articulating the problem I solve for clients. This marketing caper isn't really my go, but after brushing up with some further reading on the subject I've come up with this ..... You know how most businesses are not big enough to employ a full-time CFO, and therefore go without altogether? Well, I'm a consulting CFO who guides these businesses to get their financial management to where it should be, so that they can optimise their business, which feeds into their quality of life. What do you think?

In my last post I suggested that a quality CFO should ensure that the numbers are right, and being presented right, so that business leaders can optimise right. So how might you know if your numbers are right or not? Well, sometimes you will just know that your monthly numbers can’t be trusted and relied upon. But if it’s not that clear cut, then here are a few things to look at that might provide some clues. Margins – While I’m not suggesting we should always see consistency month to month, you should be able to explain the anomalies. Unexplained inconsistencies in your monthly accounts and large swings in your profitability are good indicators that your monthly numbers are not reliable. The best way to explain this one is to show an example (see below). Check out the Gross Margin and the Net Margin. I wouldn’t be making any decisions based on these numbers. Even if we ignore the monthly inconsistencies, the full year result must be questionable due to the large monthly swings. Accountants Adjustments – A long list of adjustments from your accountant after they have finalised the annual financials and income tax return is a strong sign that your monthly numbers are not reliable. Look at these adjustments to see which are genuine year-end adjustments (such as tax, dividends, loan accounts) and which are correcting profit inaccuracies that should have been included in your monthly accounts. Note the total profit impact of these adjustments to gauge the extent of the problem. This test will only be valid where your accountant is close enough to the business to make the required profit adjustments. Balance Sheet Reconciliations – Commonly the balance sheet is neglected. Ask to be talked through the balance sheet reconciliations to get comfort that your accounts are well kept. The reconciliations will show what each account in the balance sheet consists of and should provide enough detail that you can be satisfied that each balance is correct. Any unexplained, unreconciled or “suspense” accounts in your balance sheet should be cause for concern. If your balance sheet is wrong, then your P&L is wrong. If it becomes apparent that your numbers aren’t right, don’t look to blame anyone, just consider adding the appropriate level of financial leadership to ensure they become trusted and reliable. If you would like to know more or would like to understand options around improving the financial leadership in your business, then please reach out to me to chat further. For the first 3 business owners that contact me I’d be happy to conduct the review process suggested above free of charge. Please pass this on to someone you think might be interested in an opinion. #businessmanagement #financialmanagement #strategicfinancialmanagement #financialleadership #cashflowmanagement #businessoptimization

I highly recommend taking a look at this, it is game-changing! I recently completed some extensive training with Alan Miltz and Joss Milner around financial storytelling with a focus on cash, and engaging management teams with the critical numbers, including the levers available to increase profit and improve cash flow and business valuation. A simplified approach that demystifies the numbers and significantly elevates financial leadership in a business. I’ll say it again, it is game-changing!