Boosting the accounting side of your business or hiring a CFO can bring a lot of value to the company. Sure, you might be looking to buy extra resources or invest in making more sales, but the truth of the matter is that a CFO can double your profits within the year. This of course is no small feat, but that is the impact a CFO can have on your bottom line. “How?” you wonder. Well let’s have a look at the three ways a CFO can improve your company.

Eliminating Excess Spending

If you’ve heard of the Pareto principle or the law of the vital few, you know that 20 percent of the effort brings in 80 percent of the results, and 80 percent of the effort brings in the other 20 percent of the results. A CFO can help you “prune” your company by reducing the excess 80 percent and consolidating the essential 20. For example, reducing the number of items on the list of gross margin contributions will focus your efforts on the big winners. The same goes with customers. You will be looking to consolidate your “base”, while driving prices up for less loyal customers, to either make them become high value, or to drive them away and save on the time and money you invest in them.

Daily Cash Balance

A CFO can keep you up to date, or keep an eye on the flow of cash going in and out of your business on a daily basis and make sure that none of it is wasteful. He or she can also better structure and organize the company’s business and activities. With money management being in good, dedicated hands you can have your activities optimized, and a safe knowledge that you have someone making sure that you do not run out of money.

Cash Conversion Cycle

The cash conversion cycle is a key metric that helps you determine how much time it takes for a dollar that has left your pocket (rent, marketing, payroll, R&D, etc.) to make its way back into your hands. This metric is used to determine the rate of which you can grow your company using internally generated cash. By constantly improving the cash conversion cycle you can avoid having to look for funding and grow at a much more steady pace. A CFO can help you make this cycle faster by making activities such as collecting money or receiving invoices go a little faster.