It’s a familiar scene within many executive meetings: During a C-suite meeting, the CMO, for example, might ask the CEO for a budget infusion to promote the company’s new partnership with a social site catering to its market.
The CEO might nod this way or that. Then she will look at her CFO, but not necessarily utter anything.
They proceed to have a mind-meld regarding the wisdom of allocating more money to the marketing department. The CEO may fudge the answer during the meeting. Afterward, when the CEO and CFO huddle about new expenses the CEO may endorse the marketing funding, but, more often than not, the CFO gets the final call.
The scenario speaks to the tremendous clout CFOs yield among businesses large and small.
CFOs don’t just crunch the numbers and allocate budgets. They also keep the financials steady, pay close attention to outlays and utilization and make sure that managers not get easily seduced by shiny new digital toys circulating throughout the marketplace.
However, for boutique and smaller PR agencies, hiring a CFO is a luxury, or at least a huge expense. But it shouldn’t be. It’s a smart investment in boosting your agency’s profitability, valuation and strategic planning.
Hiring a part-time CFO can make a significant difference for your firm at both the micro and macro levels.
Here’s a few examples how:
> Maintain books and records. A part-time CFO will get your chart of accounts in conformity with industry specs. This is imperative because the chart of accounts is the underpinning for your general ledger and, ultimately, your financial statements. Having a proper financial statement format becomes critical when preparing to sell your firm.
> Billing, Utilization, Proposals. The part-time CFO will monitor billing rates and utilization/productivity. She will track write-offs of time to put utilization percents in perspective and give them real meaning. The CFO will determine the baseline hours and the available client hours for each staff member. What is more, the CFO will price out proposals based on the work projected and the billing rates of the staff to the account team.
> Budgets. A part-time CFO can create budgets that will be the basis for the firm’s fee quotes. She will prepare a “rolling budget” that is updated monthly, accounting for new hires, new business, lost business and infrastructure investment needed.
> Cash Management. Effective cash management is a necessity to sustain and grow any PR agency. A firm may show high profitability, but still be insolvent (the profits may all be in the receivables). The CFO will ensure that the receivables are collected timely and, if not, recommend appropriate action, such as stop work, collection agency or sue.