How an Experienced Interim CFO Can Counter Cash Flow Mismanagement

Cash flow mismanagement is a common problem among small and mid-sized businesses. But many owners do not have the experience to precisely pinpoint where cash flow mismanagement has occurred, nor the background to develop plans designed to counter those cash flow issues.

A typical small or mid-sized business owner can spend hours examining the company’s financial statement and nevertheless fail to see the underlying causes of cash flow problems, whether they be mismanagement of receivables, problems in pricing strategy, erosion of margins, escalating operational costs or other cash flow problems.

Cash Flow Analysis and Financial Statements

Reviewing the same financial statements, an interim CFO will spot red flags in cash flow that managers without in-depth financial expertise just can’t be expected to identify. To a highly qualified interim, those errors are almost instantly recognizable.

An experienced interim will have witnessed similar cash flow problems countless times and will know what works. That executive knows how to pinpoint the problems, and how to expeditiously lay out a strategy the business owner can employ to help counter the cash flow quandary.

Of course, helping business owners recognize and overcome a cash flow management problem they are currently experiencing doesn’t necessarily help them down the line, when problems with cash flow are likely to crop up again.

Learn to Identify Cash Flow Issues in Financial Statements

Mentoring is critical to the interim mission. The quality interim CFO will take the time to teach the business owners how to accurately “read” their financial statements for potential cash flow red flags. The interim CFO can show the owner what lies behind those numbers.

Business owners who are serious about understanding their own financial statements have their eyes opened to cash flow threats. They come to more fully grasp what they should be looking for in financial statements as the enterprise evolves.

Build a Custom Financial Reporting Template

For example, many business owners benefit by receiving from the interim CFO customized templates specific to their individual businesses. Each template provides a schematic that enables critical figures to be pulled from the company’s financial statement and more carefully tracked over time. The template is a way of ensuring a current problem doesn’t become a recurring one.