Understanding the value of a Finance Executive in your business

In small and medium-sized enterprises (SMEs), many business owners believe that Finance Executives are expensive and unnecessary.

They think they don’t need a Finance Executive as long as their books are done and VAT is paid on time.

However, this mindset fails to recognise the significant impact that a Finance Executive can have on their enterprise. So, what exactly should a Finance Executive bring to the table for SMEs?

There are five compelling reasons why meticulous, comprehensive, and pragmatic financial management should be embraced:

1. Anticipate the Unforeseen

Many business owners never enjoy the fruits of their labour due to late customer payments, delays in important shipments that make it impossible to issue invoices or a lack of sufficient funds to purchase necessary inventory. A knowledgeable Finance Executive has the foresight to identify potential challenges and risks, and skilfully guide the enterprise through them.

2. Profit Preservation

Are you curious about where your hard-earned profits went after a promising venture? Why must such a revelation only surface after completion? A skilled Finance Executive examines cost structures, manages expenses wisely, and mitigates potential penalties.

3. Cash Flow Management

Did you know that according to the University of Western Cape, 70 to 80 per cent of new small businesses fail within five years? Surprisingly, it’s not due to a lack of money but a lack of cash flow.

This is the primary reason that businesses seek financial help. Finance Executives work hard to ensure that companies collect revenue on time, pay suppliers promptly, and maintain optimal inventory levels so that business owners can focus on growing their sales.

4. Steering Clear of Penalties

Unforeseen penalties resulting from PAYE omissions, erroneous VAT declarations, or unscrupulous supplier practices can quickly erode profitability. A competent Finance Executive extends their expertise to safeguard the enterprise from such pitfalls.

5. Exit Strategy Excellence

Working with a Finance Executive is essential if you’re an entrepreneur thinking about selling your business. These experts can help you create accurate financial records, make precise forecasts, and ensure regulatory compliance, increasing your chances of attracting potential buyers. Prospective purchasers will carefully examine your operations for any discrepancies and may adjust their offers if they find anything that appears to be less than perfect.

Are you giving enough attention to the essential aspects of managing your business?

These aspects include planning and monitoring, controlling, cash flow management, compliance, and exit strategy.

It’s important to ask yourself if you’re focusing enough on these areas!

Originally written by:  Cornel Welgemoed

Cornel Welgemoed is the Regional Director of the East Rand region, for The CFO Centre.  He’s passionate about using his experience gained as a successful FD, CFO and MD in mid to large multinational companies, to help entrepreneurs achieve growth and success in their businesses.