Monday, November 24, 2008

Why Networking and the Part Time CFO

It is of great importance that the Part Time CFO goes out and networks. The main reason is for the CFO to network and establish relationships with the best service providers. These service providers should cover many different types of services. With this network the Chief Financial Officer can provide their client with options. These options will allow the client to compare quality, service and price. These options will provide the cornerstone of a cost reduction program. Networking should include but should not be limited to finding the following services:

Financing services
Credit card Services
Payroll Services
Property Casualty Insurance Services
Medical Insurance Services
Factoring Services
Mortgage Services
Leasing Services
Logistics Services
Telephone and Cell Phone Services
Banking Services
Office Supply Services
Storage Services
Travel Services
Freight Services
Advertising/Web Services
Internet Services
Computer Services
Graphic Art Services
Real Estate Services
Recruiting Services

With contacts with as many service providers as possible your CFO Services will be more valuable.

Tuesday, November 18, 2008

The Chief Financial Officer and Communication

If the Chief Financial Officer or CFO is going to be successful they must have solid communication skills. It is even more important when you are a CFO Consultant because with multiple clients it can be challenging to communicate with multiple clients.

Rule number one for good communications is a good communicator is responsible for both the sending and receiving of communication. You cannot be a good communicator if you are only going to be responsible for what you send out. You must also be responsible for what you receive in to make sure what the other person is saying is understood. It is important for the Part Time CFO to identify the clients needs and wants and that is where good communication comes into play.

Where communication starts to break down is when one of the people engaging in the communication does not like someone else in the communication loop. This dislike gets in the way of agreement and understanding and their must be agreement and understanding if there is going to be good communication. On the other hand you can have people who like each other in the communication loop but who do not agree or understand each other and that results in another breakdown of communication.

Therefore the objective of good communication is to have a liking and respect for the person or people in the communication loop and to attain an agreement and understanding. Once these objectives are accomplished good communication will result.

Having good communication skills and also being able to impart good communication skills to your clients organization helps the CFO perform another valuable CFO Service.

Saturday, November 15, 2008

Employment Liability Insurance

Employment Liability Insurance (EPLI) is an essential insurance coverage that a CFO should recommend to their clients as part of their CFO Services. The risk of unstable and under performing employees is a great risk of a business owner and is something not always detected in an interview. EPLI gives the business owner coverage for losses plus defense costs for any Employment Claim which the insured employer committed wrongful acts to an employee. Wrongful acts include errors, omissions, misleading statements, misleading acts, misleading omission, misleading neglect, or breach of duty committed or attempted, or allegedly committed or attempted. Coverage includes claims for sexual harassment, claims under the family medical leave act and claims for inappropriately terminating an employee. You also may elect to have coverage if a third party harasses an employee. Please check with your client’s insurance agent for specific coverages with your clients specific situation.

This insurance is relatively inexpensive when you consider the risk of employment claims.

EPLI Insurance is a great first step for the Part Time CFO to be proactive in protecting their client from the risks associated with having employees.

Saturday, November 8, 2008

Inventory Purchases

The part time CFO needs to make sure their client is considering all factors when deciding on which supplier or vendor to purchase inventory. This is a CFO Service that is sometimes forgotten, but can mean many dollars saved for the client if all considerations are factored into the decision.

When considering what supplier to purchase inventory from the following is what needs to be considered:

1. Price
2. Price breaks
3. Terms
4. Freight costs
5. Turnaround time
6. Minimum quantities
7. How does the vendor stand by their product
8. Restocking charges
9. How efficient is the product to handle
10. How efficient is the product packaged
11. How efficient is the product to use
12. What type of support are you getting from the vendor to help sell the product.
13. How flexible is the Vendors credit department
14. What products do the competitors sell
15. Can orders be cancelled without penalty

Looking for the best price is obvious, but understanding where the quantity discounts or price breaks are compared to other suppliers is important. Some suppliers offer free freight, so if you are not getting anywhere negotiating prices with the vendor ask for free freight.

Understand what the turn around time is and how quickly you can get product once ordered. Clients with Cash Flow Problems need to time their inventory receipts more precisely so turnaround time plays a greater role. What are the minimum order quantities? Once again this plays more of a role with clients with Cash Flow Problems because sometimes you just need small quantities.

It is very important that a vendor stands by their product. If something is wrong with the product either quality wise or technically the client must have assurances that the vendor will issue proper credit upon the products return. Understand what the vendor’s restocking fees are for product incorrectly ordered. Unless the client is in an industry where there are a lot of special orders, vendors should wave restocking charges.

Efficiency in handling the product is important for the receiving department. Remember, anywhere you can save costs throughout the entire process must be considered in the decision from logistics to manufacturing to merchandising/packaging to how efficient the product is to use. One of my clients is in the insulation business and although the pink panther insulation is more expensive, it is much easier to install making up for any increase in the price of the inventory.

The type of support that you get from the vendor to help you sell the product is a big plus whether they are free displays, marketing materials or coop advertising programs these programs tell you that the vendor is really interested in working with you. In the event the client runs into a cash crunch it is always nice to know that the vendor is willing to work with the client and that their credit policies are flexible enough to work through shifts in the economy or industry downturns.

Another consideration is what the competitors sell. Sometimes you can work a better deal with a vendor who is not with a major competitor because that vendor does not have much market share in the market the client serves.

One last rule: Do not over buy inventory as it is one of the most common reasons why businesses get in trouble. This is especially true for retailers. The flexibility to cancel orders without penalty helps prevent you from overbuying.