Beyond the Numbers: The Human Side of Fractional CFO Work

Next week marks WrightCFO's 10th anniversary, and it's got me thinking back to my first gig as a Fractional CFO (or as it was called back then, a part-time Finance Director).

I stumbled upon the opportunity through a LinkedIn group that no longer exists. It was a stroke of luck. I introduced myself to the group, and a small media business with a pressing issue reached out. They had recently fired their FD due to suspected fraud and theft.

My task was to investigate and gather evidence for legal action. Using their Paprika software, I quickly discovered a pattern of suspicious transactions. Money was being moved between bank accounts like sheep from field to field, with one account being suspiciously off-limits.

But as I spent more time in the office, I noticed other concerning issues. Despite good sales and profitability, the cash balance was dangerously low. Finance assistants were constantly stressed about making payroll and tax payments, while the sales team celebrated new client wins. Something didn't add up.

Problem 1: Uninvoiced Revenue

A quick analysis revealed that over £200,000 in sales had not been invoiced. I proposed a new process to ensure timely invoicing and collection.

Problem 2: Unpaid Invoices

The company had a high volume of outstanding invoices and was relying heavily on invoice finance. Credit control was a mess, with a remote credit controller who was overwhelmed and underutilized. I visited her in person to understand her challenges and implemented a solution: hiring a part-time assistant to focus on sales invoicing, credit control, and debt reduction.

Problem 3: Lack of Insightful Reporting

The existing CFO, who was also part-time, presented confusing and unhelpful financial reports. I discovered that the board members didn't understand these reports, and one client was on the brink of leaving due to dissatisfaction.

Solution: I presented a more meaningful analysis, highlighting the concentration of revenue from a single client group and the urgent need for action. The Chairman stepped in, addressed the client's concerns, and essentially saved the business.

Lessons Learned:

1. Fresh Eyes Bring Value: An external perspective can uncover hidden issues and inefficiencies.
2. Fractional CFOs Are Problem Solvers: While I initially went in to investigate fraud, I ended up addressing broader financial and operational challenges.
3. People Matter: Understanding the people involved is crucial. By observing the stress levels, celebrating wins, and complacency, I was able to identify the root causes of the problems.

Key Takeaways:

• Don't rely solely on numbers: Look beyond the data and talk to people.
• Proactive credit control is essential: Prevent late payments and reduce reliance on invoice finance.
• Clear and actionable reporting is vital: Ensure that financial information is understandable and drives decision-making.

This first experience taught me invaluable lessons that have guided my career as a Fractional CFO. It's been a rewarding journey of helping businesses overcome challenges and achieve their goals.

Click here to book a free consultation with Founder, Sophie Wright.

Or contact via:

Email: sophie@wrightcfo.co.uk

Phone" +44 (0) 20 3151 7430

WrightCFO is a UK based Fractional CFO Consultancy.