What is Financial Management?

 

In every company, regardless of size and stage of development, finance is called to address a series of functions organized in four main areas:

 

(a) Accounting, reporting & tax    (b) Financial planning & analysis    (c) Treasury    and   (d) Financial operations.

 

Large companies perform these functions in an integrated way under a Chief Financial Officer (CFO). Growth companies often lack the benefits of integrated financial management. Oftentimes, they focus on Accounting, leaving the other functions as ad hoc activities of the CEO/entrepreneur and his team. 

 

This arrangement has a number of negative implications:

  

1. Financial management is sub-optimal as it is performed on a part-time basis and without formal training or professional expertise

2. Key employees are constantly diverted from their normal duties to deal with financial matters and related crisis

3. Accounting is a “black box” – separate from the other 3 finance functions allowing for multiple reporting standards and “versions of the truth”

4. Finance is not supporting the company’s growth strategy through proper planning and execution but, rather, adds to an already long list of crises that require management attention

 

If your growth potential suffers as a result of your current financial arrangements, then you need to consider outsourcing your financial management. Red Tree can help you integrate all your finance resources and offers a customized and affordable alternative to hiring an in-house CFO and a team to support him/her.