Maximizing Cash Flow: Solutions from Expert CFOs

Maximizing Cash Flow: Solutions from Expert CFOs

Cash flow measures the movement of money in and out of your business. Maximizing it can give you more funds for expansion, debt repayment, and other financial goals. But that’s often easier said than done.

CFOs help businesses measure and optimize cash flow with their expertise. Here are some of the solutions they use to help companies thrive, which may work for your business, too.


Scenario Planning

One of the difficulties of preparing for your company’s future financial needs is uncertainty. For example, if you don’t know how many clients you’ll have next year, it’s tough to say how much cash you’ll have available for expansion.

That’s why CFOs use a strategy called scenario planning. This involves creating financial forecasts based on different assumptions. That way, companies get a complete picture of how their cash flow might evolve over the measured period.

For instance, a CFO might create one budget forecast with an assumption of 1,000 paying subscribers and another with an assumption of 500. The resulting cash flow in each scenario can help leaders set high and low estimates for revenue. This creates a range of possible expectations to plan within, even though you can’t definitively say whether you’ll have 500 or 1,000 subscribers next year.


Industry Benchmarking

CFOs also benchmark their companies’ cash flow against others in the industry. This helps them identify the biggest opportunities for improvement within the organization.

For example, you might spend $1 million on logistics annually. That’s a figure you’d be happy with if your competitors are spending $2 million. But if they’re only spending $500,000, it’s a clear sign your business has room for logistics optimization.

This type of benchmarking helps you understand your cash flow strengths and weaknesses. You can use that information to pursue improvement.


Leveraging New Technology

Although CFOs are financial experts, they don’t try to manage cash flow on their own. They take advantage of modern technology to get help with forecasting, data entry, and other important tasks.

Your business can benefit from using the same technology. From AI-powered accounting software to financial planning and analysis platforms, there are plenty of tools out there that can guide you toward better cash flow management. These will also help you save time.


Goal Optimization

Finally, CFOs combine the insights they gain from these strategies to help businesses pursue goals more effectively.

For example, a CFO may use new technology to benchmark your company’s cash flow against its top competitors. That could help them identify the biggest opportunities for optimization. Then they could use scenario planning to help you find the best path toward the improvements you want.

In other words, they help you take all of this information and use it to make tangible progress toward your business goals.


CFO Expertise at an Affordable Price

The average CFO earns over $400,000 per year. That’s more than your business may be able to spend. That’s why hiring an outsourced CFO can be a smart move. You’ll get access to the same top-flight talent at a fraction of the price.

Sign up for a free consultation with CFO Hub to learn more about how an outsourced CFO may be able to help your company improve its cash flow management.

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