Fractional chief financial officers (CFOs) use various tools to achieve strategies, goals, and objectives for various purposes, such as cash flow management and budget optimization. In addition, these tools help a CFO tackle other challenges, such as cutting down high expenses and financial remodeling.
Thus, if you’re a business owner looking to reduce your expenses while maximizing returns, getting a fractional CFO can be helpful. There are various fractional CFO firms available today. Your business partners may make recommendations for a particular one. However, it’d be best for you to check out fractional CFO companies in your area and ensure you hire one whose services and tools meet your specific needs.
With increased technology, CFOs continue to access more automation tools to enhance their financial strategies and improve efficiency. Below are some tools currently available for fractional CFOs.
1. Spend Management Tools
The spend management process allows a fractional CFO to manage and evaluate data regarding your procurement spending. It helps regulate such activities as supplier and inventory management and product sourcing and development, ensuring you reduce your procurement costs while improving efficiency, workflow, and compliance. All these activities can be taxing and time-consuming.
However, spend management tools help automate this process, thus, reducing time spent analyzing and evaluating spending habits. Furthermore, spend management tools help improve budgeting, spend visibility, and compliance. These tools also reduce wasteful spending, which can affect overall returns.
2. Payment Processing Tools
At the end of a business period, every business owner expects a percentage return depending on business operations. However, pending payments and receipts can significantly affect the profit margin. Depending on your processes, pending payouts can cross from one financial period to another. Thus, profit margins may not reflect operational achievements.
Manual data entries may sometimes complicate payment processes. Thus, fractional CFOs use payment processing tools to streamline these procedures. Additionally, these tools help make the payment process easier and faster. Therefore, they improve the business’s cash flow management.
Payment processing tools provide practical solutions to payment efficiency, human errors, labor costs, and cash flow management. It’s worth noting that these tools can also help improve account receivable processing.
3. Accounting Tools
You may find an accounting team that’s still reliant on spreadsheets for their day-to-day data entry and monitoring. This may work for a small business, but can be complex and time-consuming for a large one. Still, the small business may need more workforce and time to maintain proper accounting records.
Such manual records can provide a challenge to a fractional CFO. Thus, the CFO may not offer real growth scenarios. This might also take time as the volume might be significantly large.
However, with accounting software tools, a business can embrace automation, thus, reducing the risks of human error. Additionally, the tools can provide vast data for analysis and interpretation within a shorter period. CFOs can leverage these accounting tools to give details on a business’s financial position and offer growth ideas where necessary.
Various accounting tools are available today, like invoicing and accounting software. Integrating these accounting tools with other software can enhance a CFOs analysis and interpretation. In addition, these tools give a CFO a better view of current challenges in relation to desired financial goals of a business.
4. Enterprise Resource Planning Systems
Although initially developed for the manufacturing sector, enterprise resource planning (ERP) tools are also available in other sectors. ERP tools help manage daily operations in a business. It’s important to note that an ERP tool helps integrate different software solutions that you use in your operations. Thus, it’s vital when accessing reports and the progress of various processes in your organization from a single point.
A fractional CFO can use this tool to monitor costs versus revenue and advice on potential risk areas of your operation. The reason is that it gives a CFO a complete overview of all areas of operation, thus, making it easier to spot deviations and erroneous data.
5. The Payroll Management And Human Resources Platforms
Payroll management might be a primary function of the human resources (HR) sector. However, it’s an expense that affects analysis and reports in the financial books. Matters such as leave payments, recruitments, termination dues, benefits, and salary increments are some functions that require input from the financial department.
Therefore, fractional CFO would require these data to be readily available to help develop sound HR practices and policies, for instance, when developing salaries and benefits caps, as well as vacation pay policies. Such things require coordination between the HR and finance departments to ensure accurate and updated data.
Using payroll management and HR software can help the two departments streamline their functions and reduce the need for paperwork. Additionally, using such software removes human input, which reduces errors, delays, and misreporting. A streamlined payroll can help CFOs understand the staffing function better. Therefore, they can develop informed policies to improve staff experience, increasing productivity and accountability.
Every business’s long-term goal is to maximize its profit margin while managing its expenses. Enlisting the service of fractional CFOs can help you achieve this. They can use the software tools enumerated above to contribute to your business’s success.