By Tracy Miller
Oct 24, 2023
| External CFO | News

Do you know the financial health of your company? Unless you’re looking well beyond the profit and loss statement, it’s very likely you don’t have a full understanding of your financial position – from cash flow, to liquidity, to profitability. This is where a financial health check can be beneficial.

What’s a financial health check?

A financial health check is a comprehensive assessment of a company’s financial performance. It can be conducted internally or by an external financial expert, such as a CFO service or virtual CFO.

A financial health check can provide a number of benefits for companies, including:

  • Identify financial risks: A financial health check can help companies to identify and mitigate financial risks such as cash flow bottlenecks, declining profitability or rising costs. This can help to protect the company from financial losses and to ensure its long-term success.
  • Improve financial performance: A financial health check can help companies to improve their financial performance by identifying areas where they can reduce costs, increase revenue, and improve profitability.
  • Make better financial decisions: A financial health check can help companies to make better financial decisions by providing them with a better understanding of their financial situation and by identifying opportunities for growth and improvement. This may include entering new markets, launching new products or restructuring.

How a CFO service can assess your finances

If you don’t have an internal CFO, as is the case for most high growth small and medium sized businesses, engaging a virtual CFO or outsourced CFO service can be a great way to conduct a financial health check.

They are well positioned to assess your finances as they offer:

  • Access to expertise and experience: They are highly trained and experienced financial professionals who can provide valuable insights into a company’s financial health and performance.
  • Objectivity: They can provide an objective and unbiased assessment of a company’s finances. This can be helpful for companies that are looking for a fresh perspective or that are facing financial challenges.
  • Flexibility: They can be engaged on a part-time or full-time basis, depending on the company’s needs. This can be a cost-effective way to access CFO expertise without having to hire a full-time CFO.

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How a CFO service conducts a financial health check

A CFO service or virtual CFO will typically start by reviewing the company’s financial statements, including the balance sheet, income statement, and cash flow statement. They will also look at other key financial metrics, such as profitability ratios, liquidity ratios, and debt ratios.

They will also meet with the company’s management team to discuss the company’s financial goals and challenges. This will help them understand the company’s strategic direction and to identify areas where the company can improve its financial performance.

Once the CFO service or virtual CFO has completed their assessment, they will provide the company with a report that identifies the company’s strengths and weaknesses, as well as recommendations for improvement.

What are the next steps?

Once the audit and assessment has taken place, then the real work begins. Understanding what needs to be addressed is the first step. The second step is to take action. Following the assessment, the virtual CFO or CFO service can then turn their attention to:

  • Developing and implementing financial strategies: This can help you achieve your financial targets and improve overall financial performance.
  • Improving financial reporting and analysis: This can help you better understand your financial performance and identify areas where you can improve.
  • Managing cash flow: This can help you avoid cash flow pressures and ensure you have enough cash to operate and grow your business.
  • Raising capital: This can help your company finance your growth and achieve your business goals.

Looking to engage a virtual CFO or CFO service? We can help. Keeping Company is an award-winning accounting firm with extensive experience in CFO services. Contact us today to find out more.

At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential. 

We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.

1300 533 787

For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.