Finance, Accounting, Credit, IT, and other vital departments have long been labeled as “cost centers” or “overhead” and burdened with the stigma of being necessary evils.
In my view, this is a shortsighted perspective that fails to recognize their potential to substantially impact your business’s profitability.
Let’s challenge that outdated thinking by examining how to turn those cost centers into profit centers.
To begin with, let’s set our measure of success as annually realizing “unexpected” revenue to offset or exceed the annual cost of that cost center.
Here are 5 ways your CFO can do exactly that.
1. Financial Reporting.
The foundational contribution your CFO delivers is financial reporting. Good financial reporting achieves the following:
- Timely and Accurate Financial Statements: Financial statements and management metrics at your fingertips, precisely when you need them. With this real-time data, decision-making becomes much easier.
- Insights That Drive Profit: No more deciphering complex financial jargon. Your CFO can provide insightful information that empowers you to make savvy, profit-boosting decisions.
- A Vision for Success: Who says finance is all about looking backward? Your CFO can paint a forward-looking picture that guides your business toward future triumphs while gleaning wisdom from past victories.
2. Financial Management.
Effective financial management helps the business maintain liquidity, meet its financial obligations, and justify growth opportunities.
Your transactional accounting data holds the key to untapped potential – but only if it’s accurate. Your CFO ensures its integrity, making sure that data entry and data management processes are sound.
Your CFO can also identify under-utilized or surplus investments in inventory, rolling stock, and facilities. These can then be rationalized or disposed of to increase profitability.
3. Strategic Decision-Making.
Use your CFO as a partner in formulating strategy.
Your CFO can guide you through the labyrinth of financial implications, evaluate investments, and lead you to wise capital allocation.
They can also help you harness the immense power of “Big Data” to uncover trends, spot gaps, and seize growth opportunities across your organization.
4. Managing Outside Stakeholders.
Your CFO can forge strong alliances and drive profits through effective management of external connections such as banks, trade creditors, and shareholders.
They can help you renegotiate and optimize contracts with key suppliers – securing better pricing and payment terms.
Your CFO can also drive higher levels of electronic payments from your customers for smoother transactions.
5. Improving Processes and Supporting Strategic Initiatives.
Selectively embed a finance/accounting team member within your operational teams.
They’ll help you uncover inefficiencies, champion improvement processes, and implement performance management to maximize returns on investment.
Your CFO can also support initiatives to provide a superior, cost-effective, and customer-centric experience across your organization.
A family business is a collective effort.
Every team member, whether from Cost Centers or Profit Centers, can collaborate to improve your enterprise’s profitability.
And a good CFO can lead this charge.
If you’re ready to create a harmonious and collaborative environment within your business, we’re here to help.
Let’s begin the journey toward unparalleled profits. Book a call with one of our advisors to get started: Book a Call