Benefits of a Fractional CFO You May Not Know

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As a business owner, it’s important to have a clear vision for the future of your company.  When you think about where you want your business to be in three, five or ten years, you need to consider factors such as market trends, economic conditions, customer demands, and technological advancements.

Is revenue growth and profitability on track to take your company to your next milestone?

Are you looking to expand your customer base, or introduce new products or services, but not sure where to start?

Do you have plans to purchase a business or sell your own business, yet unsure of the timing and steps?

Whether you’re looking to optimize your financial performance, improve your cash flow, or prepare for a major business transaction, consider these reasons that it may be time to hire a Fractional CFO.

Improve Profitability

People, processes, and technology all link to the ability of a company to be profitable.  By providing expertise in financial management, a Fractional CFO can help improve your business’s bottom line by identifying and addressing inefficiencies in your financial operations and product and service pricing.  They can assist in helping implement expense-controlling measures, identify areas that are inefficient, where you can cut back, negotiate better deals with suppliers, and streamline processes to improve time management and eliminate waste.

Optimize Cash Flow

A CFO will put an effective cash management system in place.  By managing the cash cycle, the company improves collections, pricing, and terms; all adding to increased liquidity.  This includes managing capital, debt obligations, and ensuring the ability to invest in new projects.  A CFO can create a solid forecast, so you avoid being blindsided by the cash flow problems that accompany rapid growth.  Furthermore, they will establish collection policies, payment terms with customers and suppliers, monitor inventory levels, and invest excess cash in profitable ventures.

Guide in Decision-Making

Without accurate financial data and insights, it can be difficult to make informed decisions.  This is where a Fractional CFO can be a tremendous asset for your business.  They can help you analyze your financial statements, identify trends, and provide insights to help you make better decisions such as where to best make investments, expand the business, roll out new products and/or service offerings.  A CFO can provide objective and expert financial advice while building clarity around goals and action-plans to forecast and meet those financial goals, helping the business owner avoid costly mistakes.

Fund Your Growth

A Fractional CFO can help you access the necessary capital to fund your growth initiatives.  They can work with you to identify potential sources of financing, such as loans, grants, or equity investments, and help you prepare the necessary documentation to secure funding.  With their financial expertise and network of banking contacts, they can educate you on the best options for funding as well as help you take the necessary steps to increase your chances of obtaining the funding you need.

Mitigate and Manage Risk

CFOs, given their expanded role in establishing and executing strategy, have become well positioned to help ensure that a company’s risks are identified, assessed, managed, and integrated into the corporate strategy.  A CFO has a keen understanding of the scope of risks that the organization faces by identifying the risks and classifying them by risk type (financial, compliance, debt, liquidity, operational and security risk).  A Fractional CFO can help you establish internal controls, create financial policies and procedures, and ensure compliance with regulatory requirements.  By taking a strategic approach to risk management, you can minimize financial losses and protect your business from potential legal and financial harm.

Assist in the Business Sale

If you are planning to sell your business, it is essential to have a solid exit plan in place.  One of the primary benefits of hiring a Fractional CFO for your business transition is their expertise in financial planning.  They can help you create a comprehensive financial road map to identify areas where you can improve your financial performance, thereby making the business more attractive to potential buyers.  A Fractional CFO will assist in identifying potential buyers, assemble a team of experts (CPAs, attorneys, M&A firm), negotiate the terms of the sale, and ensure that the sale proceeds smoothly.

Overall, engaging the services of a Fractional CFO can be a game-changer for the business.  Whether it’s developing a financial strategy, improving financial management practices, managing financial risks, or planning for growth or a business sale, a Fractional CFO can help businesses improve long-term value.

AE Tucker Consulting serves owners and management of small to midsize privately held companies to develop and implement strategy, improve cash flows, increase company value, and provide successful business transitions when the time comes.

Let’s start the conversation today on ways I can provide strategic financial guidance.  Please schedule a discussion at a time convenient for you. Schedule–>

Andrew Tucker, CPA, CGMA, MBA

AETucker Consulting

Andrew@aetuckerconsulting.com

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It’s Time for Your Mid-Year Business Financial Check Up

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As we are deep in the month of June, it’s important for business owners to take stock of their operations and prepare for the next six months of 2023.  

Conducting a mid-year business check-up is essential for ensuring the success and growth of your company.  This process involves reviewing your financial statements, analyzing your marketing strategies, assessing your employees’ performances, examining your goals and objectives, and determining if you need to make any adjustments to your budget or pricing strategies.

A typical mid-year review breakdown involves looking at all aspects of your business including: 

  • Financial Health: Are you meeting your financial goals?  How well are you performing against your budget (you do have a budget, right?)  How are your ratios and KPI’s vs. expected results? Dedicate the needed time to evaluate your cash flow and what areas of your business you’re spending too much on.  Your financial health at mid-year can foreshadow what’s to come so it’s crucial to resolve any financial issues.
  • Employee Wellbeing: How long has it been since you talked with your employees?  Is employee attrition/turnover high?  When was the last time an employee survey or evaluation was conducted?  Are you taking proper measures to make your team feel heard?  Do you need to re-evaluate your team structure?
  • Sales & Marketing Efficiency: What audiences could you be reaching that you haven’t yet?  Has revenue met your expectations?  How can you increase your ROI on your marketing expenses?  Are sales numbers growing, declining, or hitting a plateau?
  • Logistics and Operations: Are your products/services being delivered timely and accurately?  Have your margins changed/costs increased (i.e., service & installation costs)?  Have quality or customer satisfaction changed?  When did you last look at your suppliers?  Are they still good partners with your business?

This year, these points are more important than ever.  From global economic shifts to escalating inflation to higher payrolls and customer demands, 2023 has had its own set of unique challenges.  In result, business owners and CEOs like you are adjusting your pricing models and overall strategies to combat what continues to be a difficult economic landscape.

The 6 Point Business Mid-Year Assessment

Financial Health:

A financial health assessment should be done more than bi-annually.  Naturally, the mid-point of the year is a great time to help you identify any areas of concern and make necessary adjustments to ensure you meet your financial goals for the year.  Review your financial statements by analyzing the balance sheet, income statement, and, especially, cash flow statement to assess your business’s financial position.  Look for trends in revenue and expenses and identify any areas where results are not what you expected.

Your cash flow statement is a crucial tool for understanding how money flows in and out of your business.  Use this statement to identify any cash flow gaps and determine whether you have enough cash on hand to meet your short-term obligations.  Compare your actual financial results to your budget for the year. Identify any areas where you may be overspending or underspending and adjust your budget accordingly.  Review your outstanding debt and determine whether it’s manageable given your current cash flow and revenue.  Consider refinancing or consolidating your debt if it’s becoming a burden on your business.  Finally, look for opportunities to improve profitability by identifying areas where you can increase revenue or cut costs to improve your business’s profitability.  Have you considered renegotiating contracts, finding new suppliers, or developing new products or services?  This is the perfect time of year to assess all opportunities.

Inflationary Strategies:

Prices on almost everything have gone up.  Have you been adjusting your pricing accordingly?  Are you taking note of the pricing changes whether it be with your supplier, your deliveries, your sourcing, or cost of production?  Have you thought about creating long-term contracts with vendors, suppliers, or shippers so that the pricing isn’t impacted as much by inflation?  Are your customers staying loyal through your higher prices and are you being transparent with them through the process?

When you do have to raise prices make sure you communicate with your clients your rationale and that they have many other reasons to stay with you and are not motivated to price shop.

Employee Performance:

Mid-year employee reviews are a great opportunity to assess an employee’s performance, acknowledge their achievements, and identify areas where they can improve.  To make the most out of these reviews, it’s important to consider several factors.

Do you have clear expectations for the review process and have procedures to review their job responsibilities and performance goals?  Take this opportunity to review job descriptions and any goals or objectives set at the beginning of the year.  Discuss any progress they have made towards these goals, identify areas where they can improve, provide constructive feedback, and acknowledge their hard work and contributions.  Send out an employee survey to collect feedback and ideas so you can improve the workplace culture.  Good lines of communication will yield rewards.

Customer Satisfaction Measurement:

A mid-year review is a great time to measure customer service performance. When considering how to assess customer service at your company, you will quickly realize that there are quite a few different factors that you could measure. It might also become apparent that focusing on just one area at a time will leave major blind spots.

What is your customer retention rate?  Do you know if your customers are completely satisfied with your service, products, quality, and prices?  Do they see the value you offer, or could they easily be swayed to go to a competitor?  Customer surveys are an ideal tool to get honest, constructive input that you can quickly implement resolution strategies and reach out to customers to further build the relationship.

Marketing ROI:

A mid-year review of your marketing campaigns and programs can help identify what is working well and what needs improvement, enabling the company to make data-driven decisions and adjust strategies for the remainder of the year.  

Start by reviewing your original marketing objectives for the year and assess how well you have achieved them so far.  Are you on track?  If not, identify the areas that need improvement and prioritize them.  Analyze your performance metrics such as website traffic, conversion rates, social media engagement, and lead generation.  Identify which channels are performing well and which ones need improvement. Use this data to optimize your marketing strategies for the remaining months so you can be prudent with your marketing dollars, investing in the best marketing vehicles that will improve your brand awareness and lead generation.

Resource Allocation:

Meet with your Fractional CFO to review cash flows, your allocated funds, and your budget.  Where is your money coming from?  Where is your money going? What department spends the most and why?  Are there certain activities and expenses that aren’t adding value, or a product you sell that doesn’t meet your profitability and margin benchmarks?  Have you invested in programs, machines, equipment, etc. that can drive revenue in the long run?

There are many touch points in building a great business, so taking the time to truly be real and honest about your company’s performance in these key areas can impact the next six months and beyond.

Here at AETucker Consulting, we can help you get there!  Contact me, Andrew Tucker, for help with your mid-year financial check-up. 

I can guide you through an effective midyear assessment and provide action plans to keep you on course. I can be reached by e-mail at andrew@aetuckerconsulting.com or schedule a call on my calendar here -> .

I look forward to starting a conversation with you.

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Balancing Summer Vacations and Running Your Business

Are you busy finalizing plans for your fun summer vacation(s)?


If you are like half of American workers, you may be foregoing that much needed vacation. Consider these surprising statistics about today’s workforce.

  • According to a recent poll, 46% of American workers, take less paid time off than they are offered, per the Pew Research Center. 1
  • According to Project Time Off, Americans forfeited 705 million unused vacation days last year alone. 2
  • Today’s workers are concerned that time off will slow down their career advancement or derail a deadline-driven quota or project.
  • According to Indeed.com, on average employees typically receive only 10 to 14 days of PTO (Paid Time Off) after one year of service. 3

Ironically, studies show that taking time off actually can help managers and employees feel recharged, rejuvenated, and ignite a renewed passion for work. Additionally, taking time away from the job is linked to physical and mental health benefits as well, such as lower stress, a positive outlook on life, more motivation, and overall physical vitality. 4

On the flip side, you may be experiencing the conundrum of receiving multiple summer vacation requests from your employees. When you run a small business, every team member counts and often wears multiple hats, which makes it difficult to manage even one key employee out for vacation. As a business owner, how do you balance honoring requests for time off and avoiding employee burnout, all while meeting business demands– especially during peak summer vacation times? Here are some best practices to follow:

Clearly communicate PTO policies. 
As a business owner, you can’t just offer an attractive PTO package, your company culture must support employee vacations, and your policy must be easy to understand and use. Being overly lenient or not having a strong PTO policy at all will make it difficult to operate your business, especially during peak vacation season. It’s best to create and consistently follow a written vacation policy that explains how vacation time is accrued, any peak times in your industry, and when vacations may not be feasible. In your employee handbook, make sure you have concrete details of how your employees can earn vacation, personal and/or sick time. Clearly state when the plan resets every year and how your company plans to handle carryover of any unused hours.

Implement tracking tools.
It is important to have a clear and easy to manage PTO system, one that your employees understand and that is easy to monitor. Make sure you have the necessary tools and ability to ensure that you have adequate coverage while team members are taking PTO, especially during the summertime. There are many hassle-free systems that can centralize time off requests for admins, managers, and other employees. This could mean providing online tools or apps so your team members can quickly book their time off and check on the remainder of vacation days.

Set a notification deadline.
Whether it is one month or six, a deadline for notifying HR or management of a planned vacation is a must and should be spelled out in your vacation policy further. Plus, if other employees will be picking up the vacationing team member’s duties, this will give your staff time to get a list of essential tasks in order such as gaining access to files and any open projects they may have to hand off. Communicate clearly about your PTO requests and expectations. This way employees know what to expect before putting in their request. You may approve submissions immediately or you may have PTO come on a first come first serve basis. Get feedback from your staff to see what works for their lifestyle and their family’s particular situation.

Cross train your employees.
This is essential when you run a small business and is a best practice at any time. One of the best ways to prepare for peak vacation season is to always have team members training for other positions within your company. Managers should set clear expectations around project-based work and make sure that employees leave behind specific instructions for teammates doing fill-in work with all the necessary files and contracts to meet deadlines. If you have multiple employees taking vacation at the same time, it’s a good idea to have a back-up plan in place. This could mean hiring temporary workers or even asking some employees to work overtime.

Once you have a handle on an effective PTO policy, cross trained employees, and vacation-time tracking system, let your employees enjoy their hard-earned time off with these steps:

Promote a healthy work life balance.
Try strategies to incentivize employees to plan vacations around slower periods. Get creative with the busy summer vacation season when employees do want to take vacation (and you know they do!). Consider implementing a compressed work week, offering summer hours like flex Fridays, or allowing employees to work from home. Create an environment where vacation time is seen as an essential piece of employee well being, and mental health within your company’s culture. You could also consider incentivizing vacation time by offering rewards or bonuses for employees who use their accrued vacation days–strategically. This can motivate employees to take time off, while still meeting performance and target goals.

Be a role model.
Lead by example by encouraging senior executives and even yourself to take vacation time. This can help remove any stigma or reluctance to take time off and inspire your employees to follow suit. This does not mean taking your laptop on vacation, it truly means unplugging, spending time with family, and recharging. By the way, employees who never take or refuse to take time off could be a risk to your business.

Aspire to be an employer of choice.
A well-designed PTO policy demonstrates how your company values its employees. This can help in attracting and retaining top talent as PTO policies are key factors that candidates consider when choosing a job offer. Vacation time is essential to helping reduce employee burn out and stress which is linked to poor morale, productivity, and job satisfaction. When employees have time to recharge, they can return to work feeling refreshed, energized, and ready to get back to work. As an employer, it is up to you to quell the fears of your staff if they’re worried about falling behind on a project or job security.

According to Glassdoor, mandatory vacations are becoming a new trend in the workplace for many companies that are dedicated to retaining talent and improving their workplace culture. 5 By creating PTO policies and guidelines that motivate your team to enjoy time away from work, your company can continue running smoothly during the summer PTO request surge. Your company and your employees will thank you for it.

Business Guidance That Delivers Results

From strategic business advisory to operational efficiency, AETucker Consulting provides guidance, resources, and expertise to help companies operate at peak performance. For a complimentary consultation and to learn more, please visit us our website to learn more about our service offerings to business owners here or schedule a one-on-one discussion with me, Andrew Tucker, about your company goals.  It’s good to have a chat with someone new!

Schedule your discussion here  

Sources

1. https://www.businessinsider.in/tech/news/nearly-half-of-american-workers-dont-take-all-of-their-pto/articleshow/99155455.cms

2. https://www.inc.com/laura-garnett/705-million-vacation-days-went-unused-last-year-heres-why-to-take-yours-according-to-science.html

3. https://www.indeed.com/career-advice/career-development/average-vacation-time

4. https://www.allinahealth.org/healthysetgo/thrive/importance-of-taking-a-vacation

5. https://blog.giftogram.com/mandatory-vacations-a-growing-trend-with-incredible-benefits

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Why Your Business Needs a Fractional CFO

Leading a company in today’s economy comes with significant opportunities and challenges alike. According to Forbes magazine, fighting against inflation, customer retention, changing business models, and talent wars are some of the top challenges CEOs and companies are facing today.

As a business owner, overcoming today’s challenges while reaching your business and personal goals requires resources that are not necessarily available within your company. The good news is that with the support of a Fractional CFO, owners can better manage risk, plan strategically, prepare for future acquisitions, and improve overall business value.

So, what does a Fractional CFO do?

A Fractional CFO is a seasoned financial professional who provides financial expertise and support on a part-time basis to small and medium-sized businesses. This person is very much like their full-time counterpart except they work part-time and have other fractional or consulting work to do.

You may also hear the terms Part-time CFO, Outsourced CFO or Virtual CFO.

In a nutshell, a Fractional CFO provides support for management by helping define and develop goals, processes, and procedures, implement financial strategies, analyze and prepare financial statements, and manage cash flow. Oftentimes, they assume a leadership role in the company as well.

Here are some reasons why your company would want to enlist the services of a Fractional CFO.

  • Achieve Consistent Business Growth

Even if the financial data reveals the company has been growing steadily, how do you take the business to the next level of growth? A Fractional CFO gives you the senior level advice and oversight that your business needs without the cost of a full-time person. Fractional CFOs provide key business advice through a financial lens and can help uncover reasons if your business has experienced a growth plateau. They can assess the strategic initiatives needed to propel your business while leveraging your industry expertise. This outside perspective gives balance and strength to you and your management team and is tremendous in building future growth and value.

  • Manage Cash Flow

CEOs that I speak with are concerned about the constraints on their cash flow due to the rising cost of supplies, services, personnel, and the overall impact of inflation. The lack of healthy cash flow can have significant consequences if your organization does not have someone who can help you strategically plan to avoid a cash crunch. If your cash flow is getting tighter or you have a new contract which is bigger than you have handled before, it may be time to bring on a Fractional CFO. You need to know well ahead of time if cash will be tight and what your options are to infuse cash into your company.

With an eye on your financials and operational data, a Fractional CFO can create a cash flow forecast and predictable models to better manage your cash and negotiate your position with lenders or investors. Optimizing working capital is one of the ways in which a business can increase cash levels in a short period of time. A Fractional CFO can help analyze your cash flow statements to determine potential cash flow improvement and forecasting cash flow by reviewing cycles of accounts receivable, payable and inventory.

Remember, a big reason many businesses fail is due to lack of proper cash flow oversight.

  • Prepare Accurate and Timely Reports

Chances are you have a very reliable bookkeeper or accountant to help you manage the books. A Fractional CFO can take a deeper dive into your financial reporting. Monitoring financial documentation is necessary for effective debt management and budget allocation and provides insights into key areas of spending. Tracking and monitoring your financial information with timely reporting can ensure your business is running effectively while knowing exactly where you spend and earn your money (Cost and Profit drivers). Preparing and monitoring financial reports on a regular basis can help you make more informed decisions while being prepared for future uncertainty.

  • Expand Business Relationships

A strong foundation for any business is the relationships it develops with other professionals. These people may be investors, lenders, bankers, or other stakeholders. A Fractional CFO can provide the necessary expertise to help establish and maintain good relationships. Having a network of trusted experts will improve your odds of obtaining loans, attracting investors, or finding lenders willing to provide the funds for a potential business expansion.

  • Keep Up with Change

If your business is going through changes or the industry you serve is constantly evolving, you need a financial champion to provide relevant and timely information to help you make strategic business decisions. A Fractional CFO can work closely with you and your team to identify and measure the key factors that are driving your business performance. He/she can properly advise you on expanding your business, offering new products or services, and how to operate against your competition. Fractional CFOs work with clients from across various business sectors and industries, providing a breath of experience and knowledge that would otherwise not be inaccessible.

  • Guide and Resource for Tax Planning

Working with your tax preparer, a Fractional CFO can help you with tax planning and preparation. They can also help you identify tax-saving opportunities. Your part-time CFO has the expertise to identify tax deductions as well as offer guidance on overall spending.

  • Support in M&A Deals

For companies who are selling, raising capital, or acquiring other businesses for growth, a Fractional CFO plays a vital role at every stage in the deal process. The beginning stages of a deal include extensive due diligence, where a CFO helps solidify the story that will be presented to stakeholders on expected outcomes. Whether on the buy-side or sell-side, the CFO considers financial questions about pricing expectations, value add, and risk. Once the company has found potential acquirers, the CFO is key at negotiating on your behalf, making sure your company achieves the best deal possible. Once a deal is complete, a Fractional CFO helps make important decisions about the financial and operational structure. During the negotiation phase, a CFO becomes one of the chief mediators. The ultimate goal is to maximize synergies and derive as much value from the deal as possible.

  • Add Significant Value to Your Business

A Fractional CFO can be the lifeline to your business. As your business advisor and financial champion, I help business owners make informed, data-backed decisions, improve cash flow, raise capital, achieve growth, implement systems, improve company financial performance, and transition the business at the maximum price. Examining the company’s unique challenges and future goals, and utilizing financial data, we can build a roadmap for long-term success.

From serving as CFO previously, working in a wide range of industries and experience with companies of different sizes, the client gains the benefit of deep financial insight and expertise that ensures the company is operating at top performance, cash flow is healthy, expenses are effectively managed, and opportunities are seized.

To learn more about AETucker Consulting, please visit my website, aetuckerconsulting.com. If you want to have a complimentary and confidential conversation, I’m a phone call, email or calendar invite away!

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Cash Flow Management Advice for Your Business

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Today, there are more than 30 million privately held businesses in the U.S. However, two out of every three new businesses will shut down during the first 10 years.  Why? A recent study by U.S. Bank drilled down and discovered that 82% of the time, poor cash flow management or poor understanding of cash flow contributes to the failure of a small business.

Healthy cash flow isn’t simply earning more than you spend, nor is it about sitting on a pile of cash. It’s about ensuring your organization has sufficient cash flow to capitalize on new opportunities such as making investments in your company’s technology or infrastructure, hiring new talent, or expanding operations.  It is also about having cash reserves to weather a crisis or economic downturn that negatively impacts your business.

Managing cash flow effectively will ensure you have the cash inflow you need to pay your employees, vendors, and other suppliers so you can get your products and services to your customers on time.

Proper cash flow management is a key strategy that every business owner must master for long-term financial success. First, let’s get a handle on just what is meant by the term cash flow. 

Generally speaking, it can be separated into two categories: cash inflow and cash outflow.  Cash inflow refers to the amount of money that is coming into your business and is being generated when you sell your products or services. Cash outflow, as the name suggests, is the money going out of your business. Regular expenses and debt payments would fall under the cash outflow category.

As a strategic business advisor and fractional CFO, I help implement and improve the cash flow management process for my clients.  In this article, I share cash flow management advice that will strengthen your business and protect you from unexpected financial emergencies.

Start with Consistent Financial Reporting

Your financial reporting and models should include a Balance Sheet, Income Statement (with projections), and Cash Flow Statement. These key financial tools should be monitored faithfully every month.  The income statement solely will not uncover weaknesses in your company cash flow. Sure, a company may show a profit on the Income Statement, but without healthy cash flow, it cannot survive.  After all, you pay your employees, bills, taxes and yourself from cash flow, not profits.

The most effective way to track your company’s cash flow is through a Cash Flow Statement. It enables you to get an overall view of money that has come in and gone out of your business’s bank account, and basically to understand your company’s cash position (whether it is positive or negative) every month. The first section of the cash flow statement is cash flow from Operations, which includes transactions from all operational business activities.  Cash flow from Investing activities is the result of investments made in the business (think long term and fixed assets such as equipment and vehicles).  Cash flow from Financing provides an overview of cash used from debt and equity.  Below is a snapshot of a sample cash flow statement or report:

Figure 2: QuickBooks provides a Statement of Cash Flows report.

Create a Cash Flow Forecast

Cash flow forecasting involves estimating your future sales, expenses and investing activities (again think equipment and vehicles). Not only does a cash flow forecast help give you advanced notice of any problems that you may encounter in the future, but it also makes sure that you have the cash on-hand needed to fend off unexpected situations. It puts you in a better position to capitalize on opportunities and helps your business continue to scale and evolve over time.

These negative and positive cash flow swings don’t have to catch you off-guard because chances are there’s a pattern. If you perform a cash flow analysis, where you study your business history to identify trends, you can spot cash flow swings ahead of time and start preparing earlier.

Determine Your Borrowing Needs

By far, one of the most important ways to make sure you have a handle on your cash flow situation is to gain as much insight as possible into the money that you’re borrowing – and why.  Most businesses need to take out loans for the needed capital for starting their business and operations and for further growth and expansion. However, pay careful attention to borrowing too much or borrowing from sources that are too expensive. If you have too many loans with a high-interest rate, you may be paying more each month than that money is actually bringing into your business. If you start to miss a payment or two, those interest rates could increase even further – causing you to take on additional debt just to stay afloat.

Maintain Cash Reserves

Cash reserves are important because they can help you protect your businesses by providing cash flow in the event that unexpected expenses arise or revenue drops. An emergency fund can help you cover expenses without having to get a loan or stacking up credit card debt. Additionally, having significant cash reserves provides a company the ability to make a large purchase— whether it be new equipment or real estate.

Monitor Your Receivables

Managing your accounts receivable to maximize cash flow is a critical aspect of operating your business successfully. By monitoring your accounts receivable, you can address an issue immediately if a payment is late. Sometimes it may be a simple oversight by your customer.  It could also indicate a recurring trend; in which case you might need to decide on applying stricter credit terms or ending the business relationship altogether.

Some strategies to collect quickly on invoices include immediately sending your invoice after services or product is delivered. In addition, most accounts payable departments tend to make payments on weekly or biweekly intervals.  The more time you give your customer to make their payment increases the likelihood your cash flow will remain steady.

Consider your terms.  Credit terms are generally set as due upon receipt or due in a number of days, such as net 15 or net 30. You may need to consider specific factors about each customer; primarily, payment history. Giving your customer longer credit terms may positively affect the relationship but could negatively impact your cash flow. 

Think about this – do you want to become a “bank” for your customers?

Improve Your Inventory Management

If you sell a product, your cash flow cycle depends on your inventory. You spend the cash you have to buy your inventory and that inventory turns back into cash when it sells. Consequently, your cash flow can easily be reduced by poor inventory management. Specifically, issues with stocking your supply and customer orders can lead to fewer sales which hurts your cash flow. Instead of buying more of what doesn’t sell, get rid of it—even if you need to sell it at a discount. This is where an inventory management software is beneficial.  Meticulously track and manage your inventory flow, and you’ll have a firm grasp on your cash flow. There are many strategies you can take to manage inventory to boost cash flow. A business advisor can point you to some effective solutions and software.

Request an Upfront Deposit  

Especially when you’re working with new customers, consider getting an upfront deposit before you begin to work on a  project. That helps with your cash flow and also reduces the risk of miscommunication (discussing pricing and costs upfront will make sure both you and your client are on the same page.) Last but not least, deposits tend to scare away bad clients — the kind who would only hurt your cash flow in the long run anyway.

Consider Leasing Instead of Buying

Business owners can often avoid the large up-front costs of new equipment and other capital expenditure by renting instead. Leasing equipment for a fixed monthly fee will allow you to make smaller payments that don’t eat into your cash reserves.

Remember to consider the costs of repairs and maintenance of equipment the business owns when weighing up the benefits of leasing vs buying. Many commercial lease agreements include servicing, so if you’re spending a lot on technicians’ fees, leasing may be a better option.

Keep Out-of-Control Expenses at Bay

Ballooning expenses are one of the main reasons why company’s face cash flow struggles. Take a look at all the business services you’re paying for and stop the ones that aren’t absolutely necessary, at least temporarily. Review every line of your Profit & Loss Report and assess high expenses, what you can cut and how you can negotiate better pricing with suppliers.

In general, look for opportunities to reduce your operating costs as much as you can, at least for a little while. It can certainly help ward off any impending disaster and allow you to get back on your feet through a series of strategic financial moves in the days and weeks to come.

Work With a Financial Professional

Another one of the most common cash flow problems that business owners deal with in particular involves attempting to handle all aspects of this part of their business on their own. A financial professional with deep business experience that you trust not only will they be able to help you come up with an effective cash flow management strategy, but they can also put together essential documents like a cash flow statement and cash flow forecast data as well. The former paints a vivid picture of where you stand today, while the latter helps you see what you will achieve if you stay on the current trajectory.

The Bottom Line

Healthy cash flow is the result of operations that run efficiently and smoothly. While implementing some or all of the above steps should help you increase your business’s cash flow, you’ll also want to make sure you’re making the right decisions regarding your marketing, customer service, product or service development, and new customer acquisition.

If your business is experiencing cash flow problems or you want to talk over budgeting or other cash flow tips, reach out AETucker Consulting for a consultation.  A growing business needs accurate and timely record-keeping and reporting. But if your needs have grown beyond basic bookkeeping and you need financial insights, accounting management, KPI tracking, and analysis, it’s time to hire a professional.  AETucker Consulting is here to help!

Please contact me via email at Andrew@aetuckerconsulting.com and check out my website www.aetuckerconsulting.com.

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Quick Guide to Adjusting Your Business Budget to Inflation

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How-To-Guide: Business Budgeting During Inflation

As we roll into December, business owners are focused on ending 2022 strong and preparing for an even greater 2023.  Included in the year-end planning objectives is the desire to hit growth targets, improve the availability of capital resources, and control expenses for the coming year.

Naturally in a high-inflation environment, budgets are being examined based on potential concerns for higher spending on the supply chain, payroll, and benefits, meaning there’s less money to go around for other critical projects and investments.  Budgeting and planning season is a daunting task.  Many clients come to me with the same concerns: where do I start and how do I stick to a budget – especially with future inflation, a potential recession, and continued supply chain disruption?

Budgeting from Every Angle

What’s the best approach for your business?  Top-down or bottom-up budgeting?

Depending on the size of your organization and if you have various departments heads, each of these different approaches to budgeting may work best.

Top-down budgeting refers to a type of budget allocation where executive leadership and senior management set high-level budgets based on company goals for the year.  Once approved, management “pushes down” the budget to the management teams, who communicate and monitor the budgets with their teams.

Bottom-up budgeting is the opposite of top-down budgeting, the CEO or Business Owner drafts plans based on their strategic needs and goals, then present it up to their managers.  Each department needs to identify their goals — and what it costs to achieve their goals.

Once you’ve identified the best approach to map out anticipated spending for the coming year, following these steps will ensure you stick to a budget and avoid surprises:

  1. Frequently monitor the numbers.
    You can’t know your numbers – and you need to know your numbers!  Since we are living in an inflationary environment, it’s important to keep a close eye on the critical numbers that can help monitor climbing expenses and how that is having a negative ripple effect on other critical numbers that include:

    These key numbers include:
    Cash Flow
    Profit and Loss
    Sales
    Price/Selling Point(s)
    Gross Margin including by product line and by customer
    Net income
    Total Inventory

Stay on top of your numbers.

2. Calculate Your Return on Investment
Business owners can use return on investment as a measuring stick for their company’s profitability.  The amount of money spent vs. the expected financial return should be a focus of performance management.  The data collected from your ROI tracks what efforts you are investing company funds in are performing best.

If you determine you are wasting money on an expense, rethink your strategy as something needs to change.  Many types of ROI can help you make important businesses budgeting decisions such as: purchasing new equipment, hiring new employees, investing in marketing, or expanding into a new geographic location. Practically every business decision requires knowledge of ROI.  Simply divide the gains from your investment by your investment’s cost and you have your answer as a percentage or ratio.

3. Track Your Sales Cycle:
There are a number of factors to consider:

How long does it take to move prospects through your sales pipeline?  The answer depends on how many steps are in your sales cycle, how complex your product is, and the cost of your offering.

What are the projected sales for the budget period?  If you overestimate, it will cause you problems in the future.

What are the direct costs of sales (i.e. costs of materials, components or subcontractors to make the product/provide the service)?

What are the fixed costs?

What are the overhead costs?

The length of time it takes to convert leads to sales needs to be factored into your budget.  Using your sales and expenditure forecasts, you can prepare projected profits for the next 12 months and beyond.  This will enable you to analyze your margins and other key ratios such as your return on investment.

4. Overestimate expenses.
By overestimating monthly expenses, businesses can account for the possibility of variable unexpected expenses.  A suggestion: take your total expenses, then add at least 5% to cover the unexpected financial surprise.  Most businesses can categorize their expenses in three areas (see below).  By analyzing spending history, you can estimate your monthly expenses in each category.

  • Fixed expected expenses: Expenses that come at regular intervals (weekly, monthly, annually, etc.) and don’t vary are called “fixed.”  Examples can include building rent, insurance premiums, equipment leases and payroll.
  • Variable expected expenses: Expenses that come at regular intervals but can vary are called “variable.”  Examples can include utilities, phone bills, employee training, bonuses, donations.
  • Variable unexpected expenses: Otherwise known as “emergency expenses,” this category is the most likely to trip up even the best budget plans.  For example, no one plans for a major piece of equipment to fail or their biggest client to jump ship.

    5. Improve Cash Reserves and “Emergency Funds”.
    In business, rainy day funds or retained earnings are cash supplies that are kept on hand to enable your business to continue operating in lean times or in an emergency.  Many businesses during the pandemic did not have more than three months cash reserves and failed to stay afloat.

These funds allow your business to keep providing services while making payroll, paying bills, and purchasing supplies, and they allow the Owner to sustain the family’s income. The emergency fund provides immediate access to funds during critical times.  Insurance may cover loss, property damage and other repairs, but processing claims can take weeks or months, putting a sledgehammer through your profitability and productivity.  Budgeting for the emergency fund while keep you in business if a crisis should strike.

6. Avoid Deviating from the Budget.
By making and following a budget, you can better control costs, avoid overspending, and plan to meet financial goals.

It is important that you compare actual results vs. the budget and investigate any significant differences and the causes.  Failure to properly use your budget can seriously impact your bottom line, and even jeopardize the success of your business.  Tracking your expenses is one of the key factors in making your budget work for you.  Over time your budget will allow you to track revenue, expenses, and cash flow.  A budget provides a guide to cut unnecessary spending, allocate revenue to other areas of the business, prepare for busy seasons and slowdowns, plan for required purchases, and secure funding from financial institutions.

7. Plan Ahead and Constantly Scrutinize.

Budgeting takes time and usually requires a few iterations.  Depending on the size of your business and your goals, budgeting can take anywhere from a few days to several weeks.  While creating a static budget can act as a guideline and serve as a basis for your budget vs. actual comparison, a dynamic budget adjusts to the changes in our economy, especially with high inflation, supply chain challenges, and labor costs, serving as a good ongoing forecasting tool.  Budgets should be updated regularly and monitored throughout the year to adapt to the changing needs of the business.

8. Seek professional advice and guidance.

Building a realistic budget is an effective way to help keep your business profitable.  It might be difficult at first by being realistic and strategic about your budget and tracking the actual results against the budget will help your business stay healthy and successful in the long run.

Even with all the right tools in hand, there are still best practices to keep in mind when producing your  budget.  Follow these tips to ensure your team is well-informed and better equipped to achieve company goals.  Professional guidance can help you set and keep clear objectives.  A CFO and business advisor can help you set your budget around your company goals.  An outside perspective can help you see overlooked possible expenses you will need to allocate to achieve your projected budget. If you need help building your company’s budget or want to ensure you’ve built a budget that fits your goals and your unique situation, contact AETucker Consulting for help.

As a fractional CFO, I help owners, management and board members solve financial and operational challenges by providing unique and customized guidance.

To learn more about how I can help your business create a solid budget or implement strategies to improve your financial wellness, please contact me via email at Andrew@aetuckerconsulting.com and check out my website www.aetuckerconsulting.com.

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How to Successfully Plan, Budget and Thrive in 2022

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A new year is officially upon us and with that comes the perfect time for any business owner to assess and evaluate their company—and goals. New chapters can sometimes introduce new opportunities as well as new threats. That’s why business planning and smart fiscal budgeting disciplines are key. Traditionally, business strategic planning takes place once a year, and attempts to set a business strategy for an extended period. Of course, the pandemic taught business owners that in a volatile business environment it’s extremely unlikely that a plan that is only updated once per year is sufficient to guide every strategic decision that CEOs will need to make over the next twelve months.  When you assess where your business stands today, then develop budgets, financial models, tax strategies, and cash flow forecasts, you can be ready for any roadblocks and adjust as you pursue your goals.   An effective business planning process should aim to help your leadership team understand the company’s strengths, weaknesses, opportunities and threats. Simple steps to planning include:

1. Assess your 2022 goals. Where do you want to go and why.
2. Review your market analysis/industry analysis. Where has your industry been, how has it changed, forecast for where it’s heading.
3. Preform a competitive analysis to determine who and what you’re competing against for customers and market share. 
4. Detail a 12 month sales and marketing plan to understand how you’ll reach your audience and your projections for why your specific sales and marketing strategies will ensure you’ll meet your 2022 goals.
5. Assess financial information data including sales forecasts, anticipated expenses; budget for expenses, cash flow analysis, and profit and loss from the last twelve months.
6. Outline what results the organization is committing to deliver in terms of goals and objectives. 
7. Create a road map of how and when the results are going to be delivered. Who is responsible for each portion of the plan and how will you measure, monitor and pivot if plans and goals need to change.

Creating a Budget to Match Your Planning  

If there’s anything the pandemic has taught us it’s that curveballs can hit your business at any given time and it’s crucial to have safety nets, emergency funds and savings set up that give your company a life jacket in the storm.

In addition, budgeting just makes perfect sense to be financially prepared as to how the future of your business’s finances will look. It requires examining what happened last month, what happened three months ago and what this month last year looked like — then using that information to make wise financial decisions for the months and years ahead.

Carve out plenty of time to work through your business budget.  You will need to have access to important financial information to help.

Estimated revenue:  This is the amount you expect to make from the sale of goods or services. It’s all of the cash you bring in.

Profit:  Profit is what you take home after deducting your expenses from your revenue. Here you’ll plan out how much profit you plan to make based on your projected revenue, expenses, and cost of goods sold. If the difference between revenue and expenses is not on par, you need to rethink your cost of goods sold and consider raising prices.

Putting “Pen to Paper”

The best way to truly plan your budget is working with a CFO or financial advisor/consultant on adding the above calculations onto a spreadsheet where you also have prepared other foreseen costs.

These costs can include your personal plans for retirement, investments your company needs to make technology or marketing-wise, the status of your working capital reserves or the need for a lump sum of money to grow your business. Moreover, this is where you prepare your “safety” fund; stability comes from these prepared safety nets!

Your financial go-to should then work with you to plan for the profit you’ll need to generate the sufficient cash flow to maintain all these factors and budgets. This will then lead to preparing the number of sales your product or service will need to undergo to meet this net income.

Listen to the Numbers

At the end of the day, data doesn’t lie— numbers ultimately tell you the big picture. If they’re not adding up, it’s time to take the proactive steps and cut back on the projects, the talent or expenses you can live without. If your departments are spending too much, work with their leads to see how to cut the right corners.

Again, work with your financial support team or advisor on what exactly can be cut this year— exactly how much can you tweak your gross margin?

You’re Not Alone

As a CEO or business-owner, you don’t have to figure out your 2022 business planning and budgeting on your own. We mention throughout this piece the pivotal role your financial department plays— they, after all, are the number interpreters.

If you need a guide, consultant, advisor or part-time CFO, look no further than AETucker Consulting. We work with business owners and management of small to midsize privately held companies to develop and implement strategy, improve cash flows, increase company value and provide successful business transitions. 



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7 Tips to Build and Maintain Your Business Budget: Part 1

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This is the time of year when many companies dedicate time and energy devoted to their Annual Budget.  

So, exactly what is a Budget?  A budget is an estimate of income and expenditure for a set period of time.  In other words, it is your plan for how you think the business will perform over the chosen period of time, typically a year.

Budgeting should be the central nervous system of your business. A well-planned and executed budget can help ensure your business is ready to take on new opportunities and has financial safeguards in place should unwanted surprises strike.

Starting the budgeting process can feel overwhelming. Many clients come to me with the same concerns: where do I start and how do I stick to a budget?  

Following these steps will ensure operational wellness:

  1. Know your current numbers. It’s important to keep a close eye on the critical numbers that can help you predict a lag or success of your business. These key numbers include:
  • Cash Flow
  • Profit and Loss
  • Sales
  • Price/Selling Point(s)
  • Gross Margin
  • Net income
  • Total Inventory

    2. Focus on Return on Investment (ROI).  Business owners can use return on investment as a measuring stick for their company’s profitability. The amount of money spent vs. the expected financial return should be a focus of performance management. The data helps measure success over time and takes the guesswork out of making future business decisions.

Simply divide the gains from your investment by your investment’s cost and you have your answer as a percentage or ratio. From hiring a new employee to investing in a new software tool to expanding your advertising, ROI determines whether your efforts are yielding results and how can you properly optimize profitability.

3. Track the sales cycle: There are a number of factors to consider:

  1. How many days does it take for prospects to move through your pipeline? The answer depends on how many steps are in your sales cycle, how complex your product is, and the cost of your offering.
  2. What are the projected sales for the budget period? If you overestimate, it will cause you problems in the future.
  3. What are the direct costs of sales (i.e. costs of materials, components or subcontractors to make the product/provide the service)?
  4. What are the fixed costs?
  5. What are the overhead costs? 

The length of time it takes to convert leads to sales needs to be factored into your budget. Using your sales and expenditure forecasts, you can prepare projected profits for the next 12 months and beyond. This will enable you to analyze your margins and other key ratios such as your return on investment.

Stay tuned, my next post will share the rest of these budgeting tips to keep your business healthy and on track.  

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Does Your Business Need A CFO?

Entrepreneurs and small business owners can have excellent skills at managing their companies, including financial matters, but as the company grows and becomes more complex, most will reach a point when they realize it is time to step back and allow the financial matters to be handled by an experienced and qualified CFO. That important addition can make a tremendous difference in company operations and profitability.

When a business owner is feeling the pressures of too much to do or is overloaded and overwhelmed by the demands of financial planning, record keeping, financial reporting and managing financial operations, it is time to bring in an experienced and highly qualified CFO to share the load. Every company, regardless of its size, can benefit from the services of a CFO.

Common questions a small business owner might ask when considering hiring a CFO include the following:

1. How will I know I need a CFO? Here are some indications:

• Your company’s finances take more of your attention than ever.
• You are distracted from critical revenue generating activities to handle finance issues.
• Your business is spiraling down and you cannot determine why
• You are expanding and you need help to manage it.
• You are not getting financial reports on a timely basis that you trust and understand.
• You don’t understand some of the finance related correspondence you receive.

2. What can a CFO do for my business? 

A dedicated CFO will manage the financial aspects of your business, so you can concentrate on other administrative and revenue producing tasks to support company growth. The CFO can help create accurate and reliable financial reports for better management decision making, control company costs, assess new business opportunities, and help your business move forward. In brief, a CFO will help manage financial risk, planning, record keeping and reporting for your business.

3. What services does a CFO provide? 

A CFO provides leadership and expertise in a variety of financial areas including cash flow, budgeting & forecasting, strategic planning, banking, borrowing, insurance, accounting, financial reporting and exit planning.

4. How expensive is it to hire a CFO? 

It is costly to not hire a CFO. They can be a great addition to your company in terms of allowing growth in a fiscally responsible manner. They become part of your team and can truly enhance your company’s movement toward growth.

I provide complete CFO consulting to small and mid-sized privately held companies on a part-time (also called an outsourced or fractional CFO) and affordable basis.  If you think your company has reached a point where you need a part-time CFO, let’s talk.  Please contact me by e-mail at andrew@aetuckerconsulting.com or by phone at 704-651-2216 for a complimentary assessment of your company’s financial needs.

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