Why Hire a Part-time CFO – Part 2 TRUST: The CEO/CFO Relationship

adult animals beautiful daylight

This is Part 2 of a 3-part series on Why Hire a Part-time CFO.  Part 1 was about deciding that the status quo is simply intolerable and finding the ideal CFO to enable change.

In this part, we dive into the all-important CEO/CFO relationship.  Beyond finding the most qualified candidate, business owners and CEOs need to find someone that they can fully trust. The CEO to CFO relationship must be based on mutual trust, as no one sees more than the CFO.  CEOs need an experienced CFO, who has proven competency at large, small and start-up companies.  Most important, the CFO must be a high-integrity person who puts the business above everything else.

Everything said must stay in confidence and the CFO cannot have any secret agendas.

Getting to Yes. The CFO’s job is not to say “no” all day, it is the opposite.  A good CFO can say yes to new opportunities, adjusting plans and timelines to develop alternate approaches to get the same result.  The CEO is the aggressive visionary, and the CFO is entrusted in making sure the CEO’s path to achieve their goals is realistic.

Assessing the character traits of any CFO hired is important.  Are they able to apply the focus and work ethic to see your great initiatives followed through to completion?  Is their mantra along the lines of working hard, getting things done, efficiently executing on projects assigned?

If you hire the right person as your CFO, they will be your greatest ally and asset.  They can connect with you at a deeply productive level.  They understand the roles and parameters the CEO prefers.  They are professional and represent the company in the best light possible.

CFO management consultants always make the best partner for 

Business Owners, CEOs, and Entrepreneurs.

To learn more about our affordable, flexible, part-time consulting services, or to get a free CFO review of your financials, call Arima Business Solutions today.

818.710.3899 | info@arimabiz.com. | http://www.ArimaBiz.com

Why Hire a Part-time CFO – Part 1 – Changing Your Status Quo

BankerThis is Part 1 of a 3-part series on Why Hire a Part-time CFO.  This article talks about the first step to take, once you decide that your current financial state is simply intolerable.

Over recent years, small business CEOs have become more aware of the consequences of failing to take action.  These CEOs carry a growth mindset as opposed to a fixed mindset and realize that continuing to tolerate the status quo is putting their business farther and farther behind the competition.

But where do you look to find a high-quality part-time CFO?  One that you can fully trust but as important, one who can get the job done?

A quality CFO has industry knowledge, problem solving skills, flexibility in methods, efficiency, and hyper-qualifications.  They should not only organize company finances but also be a first-rate problem solver.  They need to be flexible in changing their methods to fit the nuances of your business.  They need to work fast to improve the bottom line.  And finally, they need to be more qualified than any person you could hire as a full-time salaried employee.

The core value of a CFO consultant includes CEO advisory on major financial issues, strategic plan re-focus, execution of key initiatives, business funding and debt, litigation support, and facilitating key sales and financing transactions.  Matters like these are often complex and urgent to the business but can be handled by a money saving part-time CFO consultant.

Additionally, a great CFO consultant is well-versed in small business systems including   customer relations management (CRM), HRIS, digital marketing and lead generation.  This is to ensure you have a single point resource that understands all aspects of the business.

Onboarding a consulting CFO is simple and immediate and carries no long-term financial commitment.  Hiring a part-time CFO is ideal if a) you need a specialist, b) you need to act fast, c) your in-house team has problems, d) you don’t need more office workers.

(Next:  Why Hire a Part-time CFO – Part 2 – Built On Trust: the CEO to CFO Relationship)

To learn more about our affordable, flexible, part-time consulting services, or to get a free CFO review of your financials, call Arima Business Solutions today.

818.710.3899 | info@arimabiz.com. | http://www.ArimaBiz.com

Did Accountants Build the Great Pyramid?

great pyramid of giza

Of course not.  But a great pyramid of accounting talent is often needed to have a high performing team.  This is true for large companies, and sometimes it feels like you can never have too much accounting talent.  But for smaller companies, staffing even a few of these positions full time can be difficult to afford.  Small businesses also experience more ebbs and flows in accounting workload than larger companies.  They may need a lot of help at year-end and during tax season but may need less help during the dog days of summer and the holidays.  The below accounting pyramid shows the average compensation for common accounting positions.

Website blog - pyr and callouts
(source: Glassdoor Feb 2019, Los Angeles area, plus 25% employee benefits load)

Using these budgets as a point of reference, let’s look at the cost of a typical small business setup of General Accountant plus Controller.  This pair costs $236,552 annually, or $19,713 per month.  This is a permanent monthly fixed expense since these are full-time employees on payroll.

Alternatively, a part-time CFO paired with a full-time Bookkeeper costs only $7,971 per month, or 60% less than the $19,713 full-time Accountant plus Controller. With a CFO, processes and controls will be created so that a Bookkeeper can competently handle the day to day. The true cost of this option will of course vary.  The complexity of the work, the frequency and intensity of pre-existing problems, are two factors that influence how many CFO hours are needed per week.

The good news is that more and more small businesses today are seeing the flexible consulting CFO model as a much better fit for their unique situation.  They can avoid being overstaffed today then understaffed tomorrow.  Right-sizing accounting resources is one of many reasons the part-time CFO model has become increasingly popular. It has become an attractive option for small businesses that:

  • Need a specialist, fast.
  • Want a flexible budget that fits the week-to-week or month-to-month workload.
  • Want to avoid long-term cost commitments.
  • Want to avoid the rigor of hiring and firing.
  • Want an experienced large company CFO that fits their small business budget.

This cost analysis is not suggesting that either option is superior to the other one.  But we should do what we can to raise awareness.  As a small businesses, did you know that having your very own best in class accounting function is very much in reach?

 To learn more about our affordable, flexible, part-time consulting services, or to get a free CFO review of your financials, call Arima Business Solutions today.

818.710.3899 | info@arimabiz.com. | www.ArimaBiz.com

The Three Biggest Problems Facing Today’s Small Businesses

not enough cash flow • too much stress and anxiety • not enough free time

We had previously introduced to you the idea that time, money, and stress, represents the most persistent problems facing small businesses today.  To expand further on this notion, and to accept the fact that no two small businesses are the same, it is important to isolate where, and to what degree, time, money and stress issues have infiltrated your small business.

We created a checklist, so that small businesses can “self-assess” whether problems related to time, money, or stress applies a lot, a little, or not at all to your situation.

The checklist items start with “I am having problems with …”

  • getting some outside expertise and resources which will allow me to focus on sales, new services, new customers and other priorities, instead of other things that often sidetrack me.
  • gaining a better understanding of the financial side of my business, to know the truth about my business finances so I can make better decisions, while eliminating unwelcome “surprises” caused by relying on inaccurate, unreliable, late, incomplete or misleading financial information.
  • finding a business partner that can serve as a sounding board or second set of eyes, one who will give honest feedback on my business, good or bad.
  • having a safety net or warm fuzzy blanket, to give me peace of mind. For example, a CFO that is “on call” to periodically check your numbers and advise you of problems before they happen.
  • improving my credibility with stakeholders, investors, management and staff. To have them trust that I have a confident grip on my financials.
  • installing, quickly and easily, a system of checks and balances, to monitor and protect my cash always. To minimize the risks of dishonesty, fraud, waste and harmful mistakes.
  • automating my back office, to improve profit margins while reducing time wasted on the day-to-day.

To learn more about our affordable, flexible, part-time consulting services, or to get a free CFO review of your financials, call Arima Business Solutions today.

818.710.3899 | info@arimabiz.com. | www.ArimaBiz.com


CFO Remedies for Small Business Symptoms – The Doctor is IN

An interesting way to think about treating small business financial ailments, is to associate the process with the process of thinking about when you are due for your regular doctor check-up.

Like a doctor, a CFO management consultant can look at specific symptoms to determine if a small business is overdue for a check-up.  We have created another checklist for you, which identifies the most serious and persistent symptoms facing many small businesses.  If your small business shows any of these symptoms, they can be looked at by a trustworthy and dependable CFO consultant.

By observing your day to day and week to week, see if you are fighting any of these conditions.

  • You worry about meeting payroll.
  • You are late paying vendors and suppliers.
  • You are overly obsessed with monitoring your bank balance, clearing checks, and avoiding overdrafts.
  • Your credit card is not being paid, or carries a large balance, or is on a minimum payment plan.

As an owner, see if you are having persistent issues with these business funding challenges:

  • Spending more than 50% of your time thinking about how to get more funding.
  • Getting successful and prompt approval for your requests for more credit or capital.
  • Thinking more than you should about being boxed into having to start divesting.

Small businesses need to grow to survive.  As you grow, see if you can identify with one of these growing pains.

  • Having no clear, compelling, realistic financial plan or growth strategy (in writing), to have a solid strategic roadmap to guide your actions toward your business goals.
  • Frequent rejection when applying for growth capital from your preferred sources.
  • Uncertainty on whether your existing systems/infrastructure is strong enough to support the planned growth of your business.


To learn more about our affordable, flexible, part-time consulting services, or to get a free CFO review of your financials, call Arima Business Solutions today.

818.710.3899 | info@arimabiz.com. | http://www.ArimaBiz.com


Financial Checkup Checklist

Summer is here, which is the perfect time do a Financial Checkup for your business.  This article suggests tackling the “6 P’s” of a financial checkup.  In the Spring you have tax season and fiscal year-end reporting, so who has time?  In the Fall companies are making a push to finish strong to meet year-end quotas before new business shuts down for the holidays.  Winter is too late to effect change for the year, and it is hard to advance work when so many people are out on vacation (or sick!).  This makes the Summer a great time for a financial checkup.

What is a financial checkup exactly?  It could be a lot of things, but here are six ideas.  Pick three of them (one per category) to accomplish.  Show that you are committed to the financial health of your business, and your business will definitely thank you in return.

Business Model Review (do at least one)

  1. Plan – re-visit your business plan. The prior year financials (the key benchmark) should be final, so use it as the foundation for a refresh of your business plan.  Do it for current year and next year.  Add another year, and you have the coveted 3-year financial plan.

A Plan is great for:

  • businesses involved in a significant financial transaction.
  • businesses that consider great planning a key to their success.
  1. Projections – prepare quarterly forecasts to see what you think the business will look like in terms of revenue growth, operating profits (EBIDTA), working capital, and the capacity to service debt and distribute capital. These are all critical financial measures regarding the health of your business.

Projections are great for:

  • giving to banks and lenders so they become more comfortable and confident in your business.
  • owners and stakeholders, so they can see how today’s business will look tomorrow.
  • leaders and managers, who can use projections to set goals and measure results.

Profits and Cash Flow Review (do at least one)

  1. Performance Reports – this could include monthly or quarterly income statements or Profit & Loss (P&L) reports. Sales trends can be analyzed to see if new business is healthy or anemic.  P&Ls can calculate profit margins and expense ratios, to show how effective you are in managing costs relative to sales generated.  Many business leaders have little time to study detailed reports, so create one-sheet scorecards with infographs and bullet point summaries. Reports are of no use if they are not read.  Create a monthly production report package, to keep an ongoing pulse on the state of your business.

Performance Reports are great for:

  • managers and leaders that want accountability for business results.
  • sharing with stakeholders, banks, and lenders, to prove that you can articulate your business from a financial perspective.
  1. Profit Conversions – profits stuck in receivables are bad for cash flow and bad for your bank account. The longer the receivable is outstanding the less likely you will be able to collect.

Summer is great for getting your cash receipts in order.  Get backlogged invoices sent out promptly.  Review credit terms for down payment and installment billings, and revisit your financing and late fee policies.  Collect all open receivables.

Reviewing cash payments is equally important.  Set up a sensible weekly check run process.  Review credit terms of key suppliers, and negotiate them.  Examine vendor due dates to see who might accept a more favorable payment schedule.

You can never have too much cash on hand, and here you can boost cash without having to sell more or spend less.  You are simply managing your cash better.

Profit conversions are great for:

  • companies running a thin line with cash and working capital.
  • companies that are interested in building that emergency “cushion” for the unexpected.
  • companies that want to go from good to great in their cash management practices.

Resource Assessment

  1. People – you count on people to make your company perform. Is everyone on the team signed up for at least one educational or development class?  Are people allowed to work on a pet project that supports the company?  People are what make the difference, and investing in people is great for:
  • building morale and team spirit.
  • developing talent and skills inside the business, so you can outperform the competition.
  1. Platforms – along with people, your company systems make up the key resources to run your business. Use the Summer to identify all key systems the business relies on to operate.  It can vary by industry, but computer and data networks, accounting and payroll systems, customer and CRM systems, and online systems and tools are universally important to businesses large and small.  Are you able to make a case that all your systems are working seamlessly and smoothly?  Can your systems today support your future growth?  If you can’t answer confidently to these questions, a system review may be your key Summer project.

Platform reviews are great for:

  • companies wanting to run leaner to increase profits and optimize enterprise value.
  • companies managing change.
  • companies that plan to grow significantly.

  360 degrees of Small Business Solutions

Arima Business Solutions (ABS) is a business management consulting firm located in the heart of the San Fernando Valley.  We specialize in solving the most top-of-mind problems for small business owners.  We offer a deep skill set and know how on running the finances, operations, and marketing areas of a small business.  This makes ABS uniquely equipped to provide 360-degrees of client service.  Finance consultants often do strictly finance while marketing firms focus mainly on sales and branding.  The best solutions are balanced solutions, that examine not just one, but all of the key areas that are important to your business.

You and Your Banker

Bankers are great. They tell it like it is. But in good times and in a good economy, it is easy for small businesses to take them for granted. If you have loans out there, it is easy to forget—or worse—ignore a banker’s request.

Meeting loan covenants and requests for information during good times and bad is critically important. Make sure you can answer these questions:

  1. Are you filing your quarterly loan covenant requirements consistently and on a timely basis?
  2. Is everything organized, complete, documented, and supported to ensure a high-quality submission?
  3. Are any questions that are asked, for whatever reason, responded to timely, completely, and accurately?

Loans will mature and the economy will tighten. It is too late to undo past bank compliance infractions, as the notes on late, incomplete, slow responses are already noted. But building a good track record going forward can make a positive difference. Good bank relations habits include:

  1. Meeting all loan covenant requirements completely and on a timely basis.
  2. Being very responsive, consistently, on any bank requests or questions.
  3. Meeting all interest and principal payments like clockwork.

All crucial banking activities, new loans, credit line increases, renewal of matured loans, forbearances, loan extensions, or re-structures must be underwritten anew with credit committee approval. To ensure you remain in good standing with your banker, understand the terms of your loan documents and loan covenants. They spell out the rules, and understanding them well can prevent being in default with your loan.

Having a CFO or financial leader focused on banking for your small business is a luxury. Who wouldn’t want to have that go-to person on staff to oversee and negotiate small business bank and lender relations? Unfortunately, many small businesses are not budgeted to have a full time CFO with banking credentials. But there are alternatives, such as management and financial consultants who can step in to affordably clean up and monitor the banking needs of your business.

This is the story of you and your banker. Let’s all be proactive to secure a “happily ever after.”

Attention: Small Businesses who are LA Sports Fans

There is nothing like a fun day at the ballgame with your favorite client or hot prospect.  Grabbing a beer and a dog to build that relationship . . . what client or prospect wouldn’t want that invitation?

Figuring out how to use that limited marketing budget can be a slippery slope.  Does this key individual even like sports and if so, how do I determine which sport he or she is a fan of?  It might be easiest to simply ask.  But why not do some simple market analytics first, to get a better idea of local fan-base tastes and tendencies by various demographics?

This chart below, from the LA Times sports page, inspired me to put a little more thought into this. JA blog - LA sports teams infograph (1)

I like this infograph, as it is brief, clear, and provides good information in easily digested form.  I learned a couple of things very quickly.  The popularity of the Lakers is declining, but they are still the hottest ticket in town.  The Rams (“the same old Rams!”) are more popular with African-American Baby Boomers.  84% of Asian Americans prefer either the Dodgers or Lakers, and Latinos tend to bleed “Dodger Blue” more than other ethnicities.

Buying tickets to whatever event requires some level of planning.  For example, season ticket commitments occur long before the season starts.  Instead of blindly guessing how to allocate the client and prospect marketing budget, many small businesses reach out to boutique consulting firms to obtain market research to make better and more informed decisions.  Tickets are not cheap, so everyone wants to hit the bullseye the best they can.

It would be nice if there is an affordable and fast delivery of Infographics that cater to the specific and often unique target markets of your small business.  Local financial consultants understand the local market, including the trends and tendencies of sports team popularity by demographic.  Pulling data from the overwhelming but useful data available today, then organizing and distilling it using spreadsheets and graphs that are read and not ignored by your audience, is doable today at a low cost and low burden.

The local sports market is in the midst of further recent disruption.  Layered onto the LA Rams move from St. Louis is the pending moves of the Raiders (Oakland to Las Vegas) and Chargers (San Diego to LA).  This volatility is compelling many small businesses to seek experts to guide their navigation of the shifting LA sports team landscape.  Sharpening your decisions through high quality and productive market research and analysis supports the high profit margin, high growth, and maximized marketing ROI financial models of premier small businesses.

Bookkeeper, Housekeeper?

Bookkeeping. What is bookkeeping, and what are they “keeping?”

A bookkeeper is “a keeper of books,” not too different semantically from scorekeeper (keeper of score), housekeeper (keeper of the house), and timekeeper (keeper of time). What’s the common thread with these vocations? At first blush, they are dull, boring, unremarkable. They are things many wish not to do. But bookkeeping (at least for small businesses) is absolutely necessary.

When companies are doing well, it’s great. Cash is coming in, new accounts abound, territories are expanding, and there may just be an IPO looming. But when this happens, if a dollar is lost, stolen, or misplaced . . . no one notices. The mentality seems to be, “The cash is coming in. We got it covered!”

When companies are struggling, it’s an entirely different situation. The mentality pivots: “We need to upsize that line of credit! Can we ward off the bank’s credit committee? How did we get boxed into this financial condition? You want me to meet our future equity partner?” These are Dickens’ “worst of times.”

Now let’s talk about bookkeeping. It is suddenly important, yes? That loan increase or loan forbearance will not happen, not if the integrity of your books is compromised, not if the system of checks and balances is scaring the credit officer. And what if you’re looking for some equity cash? Sure, no problem, but the books are not current, and they are unreconciled, so the price point certainly will adjust for that.

Good bookkeeping departments or, if outsourced, good bookkeeping services can make or break a company. But once the strong cycle has transitioned to tough times, it is too late to package a clean and polished financial statement for banks and investors. The books are already closed, for better or for worse. As Chick Hearn would say, “The books are in the refrigerator, the P&L is cooling, and the miscodes are getting hard.” It is too late.

The requirements of bookkeeping can be simply stated. Book your GAAP accruals, reconcile cash, and close the books quickly. Begin with properly trained, reliable resources. Employ oversight and/or coaching by a competent supervisor. Establish accounting processes and practices with great internal controls.

Arima Business Solutions provides full-service bookkeeping. If you need an influx of talent and new perspectives, make sure they can bind the day-to-day bookkeeping so that it supports and does not detract from the company plan. Good consultants can sniff out fraud. They can identify red flags and mistakes. They can distill the information for easy understanding by owners, presidents, and Boards. They can speak to the financial trends, positive and negative. The competition is crowded and fierce in most industries today. High credibility from very well-kept books is, indeed, a strategic weapon.

Companies that are not focused on bookkeeping? Well, you know. The miscodes are getting hard.

ABS Financial Services consultants are eager to meet with you. Reach out to us today. Let’s have a conversation about your needs.

The Age of Big Data

I know. Another article on Big Data. Although I can’t promise an edge-of-your-seat, fascinating tell-all story that dazzles the senses on Big Data, we ARE in the Age of Big Data. To properly integrate Big Data analytics so that it delivers the expected customer value requires proper planning. It also requires people that are passionate about executing this type of innovation.

Analytics was once a back-office operation, driven primarily by actuaries and statisticians, but it is now a cross-functional group with executive-level visibility. When asking CIOs how they would spend a windfall of “extra” IT budgets, over one third said they would spend it on Big Data.

Let’s face it. Installing Big Data is a heavy investment in people and budgetary resources. Substantial risk is in play for failure to execute. Poorly-managed system integrations like this can produce overages in the time to go to market, budgets, and having an end result that does not satisfy the customer value objectives. Infrastructure modernization can be costly, estimated at $232 billion across all industries in 2016.

The inroads made in automating processes, combined with the increased access to data, have created realistic opportunities for companies to develop and launch Big Data innovations. In the race to drive top-line growth, there is great pressure to make use of Big Data advanced analytic tools. Clients demand greater depth and insights into their accounts. Larger competitors, who have the capacity to acquire the internal intelligence to build proprietary data platforms, are making smaller companies nervous about being left behind.

The good news is Big Data is available to all of us. The bad news is, well, Big Data is available to all of us, competition included. Notwithstanding, having an abundance of Big Data is a good thing, right? The answer is yes, if you are able to organize and develop a flexible system that is built for scale.

In the coming weeks, look for additional articles on Big Data from ABS. Until then, consider reaching out to us today. Let’s have a conversation about your needs.