DashBoards Help You Stear Your Business
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A consultant is a professional who provides guidance in a particular area of their expertise. A CFO has expertise in the areas of accounting and finance. A good CFO can help identify a company’s needs and help them improve their performance and profitability by analyzing existing business problems and developing future strategies. Most CFOs will use some form of formal methodology to analyze these problems and to suggest better ways of accomplishing business tasks. They can help you execute your business plan and strategies and thus allow you to focus on other important business issues and your business meetings.

The most common methodology used by CFOs is a dashboard. In order to understand this, think of the dashboard in your car. As you are driving along, you can look down and see how much gas you have, if your engine is overheating, and how many miles you have gone. The same can apply to your business. Think of each month as a trip along the road of business. Each month you will have indicators that will help you see the health of your business just as you see the health of your car. You can think of your cash levels as the gas gauge. Think of your profits as your odometer, showing how far you have come. A good dashboard can provide indicators to help you make sure your business stays on track and that you get to your destination.

Most dashboards consider several factors such as:

  • Cash: How much of it there is and where it is spent?
  • Accounts Receivable: How long it is taking your customers to pay you.
  • Accounts Payable: How long it is taking you to pay your vendors.
  • Debt: Do you have too much and are you managing it well?
  • Gross margin: Are you making enough margin to support your business?
  • Breakeven point: At what point do you start making a profit?

If you currently are not using a dashboard to monitor the health of your business, you should really try one out. The amount of information you can get from a simple dashboard can speak volumes about your business and how to best manage it.

Once you are using a dashboard on a regular basis, you will start to see trends in your business. At this point, you can develop a strategy to improve your business performance. For example, let’s say your dashboard shows that you are not collecting your receivables for 60 days. Now that you know this, you can think of ways to correct it. For instance, you might offer a discount for paying within 10 days. Alternatively, you might impose a collection penalty after 30 days. Another consideration is that some customers just should not have credit.

Just a simple strategy like this can greatly improve your cash flow. Imagine what a full dashboard could tell you about your business. A CFO can help you implement a dashboard customized just for your business and your needs. Consider hiring a part-time CFO for your business to help you improve your management and grow your business to where you want it to be.

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