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28 January 2022 Posted by 


Businesses performing at the top level
AS a Virtual CFO, one question I often hear from SME’s is why they need a finance manager or a CFO when they already have an accountant?

The answer to this lies in understanding the value to businesses of being what I like to call “Finance Fit” all year round. Much like the human body, a growing business needs regular and deliberate care and attention to remain healthy and for a business to maintain performance at an elite level it needs more than the traditional annual check-up to keep itself fit and able to reap the benefits of this.

What is Finance Fit?

A business that is Finance Fit typically has an ordered system for managing its accounts, is receiving up to date and in depth understanding of its financial performance and has the management of its finances directed towards executing its broader strategy and achieving its goals. While a business that is Finance Fit often is performing well in terms of traditional key indicators such as sale growth, profitability, and free cash flows these are not necessarily determinative of a Finance Fit organisation. The real keys to being Finance Fit is that your financial position supports your strategy and that you have a deep understanding of the risks and trends in your business and a plan for managing these.

Why is this important?

Businesses that are not on top of their numbers or managing their financial position in line with their goals are most likely leaving a lot of value on the table. A Finance Fit business is in a much better position to identify and take advantage of opportunities that are available to them as they have a clearer understanding of the things they need to be looking for and are getting the quality information they need to identify these early.

For example, a difference between identifying and reacting to upwards trends in input costs of just three months can result in thousands if not tens of thousands in sacrificed profits, depending on the size of your business.

Also, as any experienced business owner can attest to, prevention is far better and less costly than the cure. You would much rather be compliant before the fact and invest upfront in being adequately prepared then be scrambling to get your finances in order at the last minute and risk paying what can be a significant penalty.

How do you become Finance Fit?

The first step to being financially fit is to establish the goals for your business and to have a clear strategy for achieving these. This allows you to set benchmarks or indicators of what good performance looks like and to manage, forecast and track your financial position accordingly. It is important to remember that not every business is the same in this respect as your industry and the stage of your life cycle can influence what good performance looks like.

Once you have set the benchmark, disciplined management of your accounts and regular financial reporting will help you to stay informed of trends and opportunities within your business and to act accordingly. Famed business management guru Peter Drucker is famous for saying ‘what gets measured gets managed’ and the best businesses utilise insightful financial reporting to remain agile and tactile in all business operations.

The final ingredient that I see in most financially fit businesses is that they have a smarter system of managing their accounts and operations. The first step to this is having a flexible accounting system that is tailored to the needs of your organisation and saves you time and money in unnecessary manual processing.

The other important step is to avoid doing everything yourself which obviously limits your capacity to grow or improve your business. While you should never outsource your core capabilities, it does not make sense to sacrifice your time on admin and accounts work when you can pay someone to do this at a fraction of the value you can create with the time that this will free up.

As we embark on a new year and reflect on our experience of the turbulent year that has past, what is evident is that those businesses with a clear understanding of what success looks like and a robust reporting system that allows them to respond quickly have outperformed their competitors and will remain best positioned to perform at an elite level all year round.

Joseph Essey is the founder and operator of Your Business Finance Manager, an Outsourced Finance and Accounts solution for growing small businesses and has over 15 years’ experience helping small to medium sized businesses to manage their financial position and achieve sustainable growth. Visit: www.ybfmanager.com



Michael Walls
0407 783 413

Western Sydney Business Access (WSBA) covers the business and community issues of the Greater Western Sydney region of Australia. WSBA is the popular media source for connecting with the pulse of the region and tapping into it's vast opportunities and networks.