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How the Virtual CFO uses technology to drive change and business growth
13 October 2022 | Minutes to read: 3

How the Virtual CFO uses technology to drive change and business growth

By Eric Flammang

Business today is incredibly fast paced and the traditional month-end analysis to identify trends or incidents that could impact a business’s income statement is no longer enough. Decisions often need to be made instantly, informed by real-time data and quick actions are required to mitigate risks and embrace opportunities. This is where systems and software can support business owners to analyse a wide range of information from anywhere in the world, at any time. The Virtual CFO is aware of this and well adapt at using active intelligence platforms to combine multiple, complex sources of data to analyse financial performance, develop forecasts and run highly flexible financial simulations.

Functions and benefits of an active intelligence platform

A Virtual CFO or VCFO can be engaged to use active intelligence platforms, which they are well trained in due to the nature of the VCFO’s work which often occurs remotely, can be project-based and require quick turnaround times, immediate analysis of information and recommendations made in response. Benefits of active intelligence platforms include:

  • Data-driven dashboards with real time alerts that can spot outliers and anomalies to investigate further.
  • There are many off-the-shelf options available at different price points (many affordable), with different levels of complexity, data integration and reporting capabilities.
  • They have the potential to save critical time for business owners.
  • They are highly customisable depending on the needs of the business and skills of the management team.
  • They are built for collaboration.

A recent case study

At William Buck, we recently developed an intelligence platform for a very small and fast-growing retail and e-commerce business operating in a highly competitive environment. Bearing in mind the business’s strategy and goals, we worked with the business owner to develop a key performance indicator (KPI) framework encompassing a myriad financial measures and indicators. Using Excel and a third-party API application, we then developed the platform which captured data directly from the business’s customer relationship system (CRM) ledger into a highly customised and user-friendly spreadsheet. From here we developed a dashboard using a combination of Power BI, PivotTables, Power Pivot and Power View – all of which were able to express visually the metrics and data that we felt most aligned with the business’s goals and the direction in which trends and performance measures were heading.

Within a week, the system was not only implemented but embraced by all key personnel within the business. The dashboard included important key metrics surrounding the profitability of the business, including profit margins, labour utilisation, customer growth and retention. It also tackled major cashflow indicators.

While profitability was not an issue for the business at this stage of its lifecycle, the current and evolving economic environment has resulted in it becoming harder for the business to convert profits into cash. The platform therefore included important ratios, free cash flow and lockup metrics, an inventory management systems, and accounts payable and receivable data. Rather than just communicating the data, the platform demonstrated the impact of these metrics on the business’s bottom line, communicating the direct connection to users and a visual incentive for them to make effective, data-driven decisions.

When built strategically, these platforms are afforded even greater functionality and power. For example, when developing ours, we included a ‘what if’ module to understand the impact of small changes that could be easily implemented within the business. So, we could forecast the impact of a 1% change to the business’s receivable days. We identified that the change would enable the business to convert profits into cash 18 business days quicker and increase its overall business value by just under 20%. With insight, we developed a plan to implement this1% change which included renegotiating supplier payment terms and implementing a new online payment system. Before visualising the impact of the change, key management did not see it as a priority. Once they were able to visualise and quantify the impact however, they were incentivised to prioritise the steps and undertake the change.

As advisors, we are often amazed by how business intelligence frameworks can unlock the potential of small business’s which know their industries and are able to make smart decisions when provided with the right information at the right time.

This is why the role of the Virtual CFO is not always to find the ‘solution’ to save or grow a business, but to help the business develop its own success equation, enabling it to solve its problems and derive its own solutions.

If you would like more information on William Buck’s Virtual CFO service and how it can help you achieve your business’ goals, please contact your local William Buck advisor.

How the Virtual CFO uses technology to drive change and business growth

Eric Flammang

Eric is a registered tax agent and member of the Institute of Chartered Accountant of Australia and New Zealand and holds a Master of Professional Accounting and Master of International Tourism & Hospitality Management.

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