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6 Step KPI Improvement
Financial & Tax KPI Improvement – 6 Steps
1. Treasury control and optimization (improve Financial Operations)
a. Many companies don’t want to pay a Treasurer, a strong virtual CFO can take on this function to ensure international bank accounts and banking relations are maximized which ultimately helps the business obtain cheaper credit while making money on its money and reducing risk.
2. Working capital management (improve Financial Operations)
a. All growing businesses have bottlenecks and challenges with working capital as they wait for current customers to pay them but are serving new ones. The virtual CFO manages working capital to avoid last minute panic calls to the bank, vendors….and investors. Additionally, managing inventory optimally raises sales and managing receivables optimally increase cash in. Pays for itself.
3. Risk reduction (improve Operations and Financial Operations)
a. The CFO acts as the Chief Risk Officer – not only for tax & compliance, but also working with the CEO and Board to manage HR related risks (“Me-too”) as well as other operational risks such as IT.
b. Many firms gloss over their insurance coverage – and are both overpaying and underinsured. The CFO reviews the insurance policies for both cost and forgotten risks. Pays for itself.
4. Tax Strategy (Create and develop a true Strategy)
a. Reducing taxes (income, SALT, international, etc.) and avoiding penalties (failure to file Texas franchise tax returns) requires much more than just the preparation of the annual and quarterly tax returns by a CPA. Tax strategy needs to be both strategic (corporate and investor structure) as well as tactical (tax credits). Pays for itself.
5. Balance Sheet optimization (Create the capital structure financial strategy)
a. Maintain sufficient & adequate retained earnings and owner capital to optimize lines of credit, bank loans etc. for minimum cost and best terms.
b. Maximize ROI / Return On Investment and ROA / Return On Assets, which increases net profit.
c. Long term CAPEX planning to directly fund and support the business strategy.
d. Evaluate risk / benefit of Off-Balance Sheet liabilities.
6. Budget and Forecast / Projection (plan Operations and Financial needs)
a. Control money and demonstrate to the Board, banks, and potential investors the business growth strategy and the plans to execute it.
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