Your P&L is Lying to you… (kind of)

Have you heard the term “Cash is King”? Cash is the life force of a business. No cash means no way to get resources to operate. Lots of cash and now you have endless opportunities with your business.

I assume if you are reading this then you may fall into the no cash category. You may be wondering how your Profit and Loss statement shows you made a profit but you’re still pinching pennies to pay the bills. This my friend is called an accounting profit, or a profit on paper. This is the type of profit investors, bankers and venture capitalists want to see. What you are chasing is money in the BANK.

Let’s talk Cash Flow. Cash flow is the total amount of cash moving into and out of the business. Cash Flow controls the liquidity of a business, and like I said early, it is the actual pulse of your business.

How do you start making turning that accounting profit into money in the bank?

• Create a Financial Plan

• Build Cash Reserves

• Cash Flow Forecasting

• Inventory Management

• Payment Term Analysis

Listen, we know what it feels like to drive the ship blind. We are here to bring clarity, strategy and proven methods to bridge financial and business goals.

Stress-free business finances?

We know business finances live rent free in your mind, especially when rent and payroll are due. Another month of unpredictable cash flow and another month of just trying to make it. Or maybe you got it under control, you’re profitable on paper, but you still don’t seem to have money available when you need to take a withdraw.

What if we told you there is a simple way to get control of your finances? The easiest and quickest way to start to understand the in and out-flows of your cash is to start creating an annual budget. By definition, a budget is an estimate of income and expenditures over a set period of time.

Though this is simple many small business owners don’t believe an annual budgeting process can help them. Some go as far as saying things like “It too complicated”, “Budgeting is for struggling businesses”, and “my income and expenses are steady so this doesn't apply to me”.

Unfortunately, crossing your fingers, hoping, praying, and manifesting without a change in your process cannot alter the reality of your business finances. All that energy focused on the wrong area could actually be making your business finances worse.

The thing is we know you are ready for the legacy and wealth to pour out of your business.

We are here to help make your financial wealth dreams a reality with proven financial strategies that provide REAL luxury, clarity, strategy and REAL value to your business.

Value added from budgeting with The Luxe CFO

• Understanding cash in and out flows

• Hold business and management accountable to obligations

• Financial roadmap with clear guidelines

• Plan for capital expenditures

• Plan for cyclical slow periods

No, you don’t have to be a fortune 500 company to have a strategic CFO on your side.

Let’s build financially smart roadmaps together for the future of your business. If you are ready tackle STRESS-FREE business finances, reach out to us here.

What is a fractional CFO?

If you are a small businesses then you probably have a bookkeeper for everyday transaction management and a CPA for tax preparation. That is usually where small business accounting teams stop. But, should it? Let’s take a deeper look at what each professional specializes in.

A Bookkeeper is professional who handles all of a businesses transactions such as revenue and expense classifications, managing invoices, payments and occasionally payroll. Bookkeepers are helpful when business owners are needing to focus more on the business strategy. These professionals ensure the financial statements are in order and ready to review. Their primary focus is on looking at the past to present day.

CPA is short for Certified Public Accountant. These are licensed accounting professionals who have passed several exams and have met state licensing requirements. They are able to help with tax preparation, accounting and tax audits, and financial statement preparation. Their primary focus is on looking at the past to present and how well your financial presentation follows state/federal regulatory guidelines.

Fractional CFO or Fractional Chief Financial Officer is a finance executive that provides high-level strategic financial guidance on a part-time or contractual basis. They may have a CPA or CMA (Certified Management Accountant) designation. A CFO’s primary focus is on creating financial strategies that tie the financial goals to the business goals.

Now that we understand what each accounting and finance professional focuses on, let’s talk about when it would make sense to hire a Fractional CFO. Here is a list of scenarios:

• If you need help aligning financial goals with business goals

• If you need help developing financial strategies such as budget planning, forecasting and analysis

• If you a better understanding on your financial statements and what they tell you about your business

• If you need someone to build a system that holds the business financially accountable

• If you need help understanding your cash flow

• If you need Financial and Capital Expenditure planning

• If you want to make accurate data driven decisions

• If you want help identifying financial risks in your business

• To create internal controls to eliminate risks

• To create forecasted growth plans and strategies to grow your business

The unique perspective of a fractional CFO is that they can tie the past, present and future together in one picture. They can explain the unique story of where we have been, where we currently are and gear us to where we are headed based on proven financial strategies.

Why I love business finances & you should too

If you found yourself on this blog then you are likely an entrepreneur that is trying to understand their business finances, you may have even tried to avoid confronting that monster in the corner that has been causing undue stress and anxiety. Finance doesn’t need to be that monster anymore and we are going to talk about why.

Business finance at its core is the strategy and system a business uses to allocate their financial resources.

When the finances in your business don’t make sense like low cash-flow, low funding, this is actually a symptom rather than the root cause. What I find is we get mad at the money instead of thinking about it as a tool. The finances in your business can speak to you in a whisper or blow-horn. It all depends on if you are listening.

There are usually signs that your finances will show you before you notice them yourself, like low profit margins, increased costs, and unexpected expenses. When we regularly review our finances we are better equipped to tackle risks before they become huge problems for your business.

The next time you sit down to review your business finances, I want you to ask what are the numbers trying to tell me about my business?