Steering Your Business Finances: How Budgeting and Cash Flow Work Together

In my time as a CFO, I’ve learned a thing or two about what keeps a business running smoothly. It’s not just about having a great idea or a strong customer base – it’s also about getting your finances just right. Today, I want to share some straightforward talk on two things that are like the bread and butter of business finance: budgeting and cash flow.

The Basics: Planning and Tracking Your Money

Think of your budget as your plan. It’s where you write down all the money you expect to make and all the costs you expect to have. It’s a bit like a shopping list for the year ahead. But we all know what happens to the best-laid plans sometimes – they change when you’re out there in the real world.

That’s where cash flow comes in. It’s the day-to-day movement of money in and out of your business. It’s keeping track of the cash you actually have in hand to pay bills, buy supplies, or invest in new opportunities.

The Role of a Good Finance Guide

When I started in this job, I thought a solid plan (a budget) was all you needed. But I quickly saw that the real action happens when you start spending and making money – that’s managing your cash flow. It’s about making sure the money from your sales is actually there when you need it to cover the costs.

Sometimes, despite what the budget says, the money comes in late, or the bills come early. So, I’ve learned to adjust and not just stick to the plan when things change. This means always being ready to move money around to keep everything running smoothly.

Adjusting to the Real World

If you see that your cash flow – the real money you have – isn’t matching your plan, it’s time to update that plan. Maybe you’re spending too much, or maybe customers are taking too long to pay. Whatever it is, catching these things early means you can fix them before they become bigger problems.

Keeping it All Together

Keeping an eye on both your budget and your cash flow is important. It’s like having a map and a compass when you’re on a hike – they work best together. The budget sets your direction, and your cash flow tells you how you’re doing along the way.

Looking Ahead with Confidence

Drawing from my experience, I can tell you that having a good handle on both these areas will help your business stand strong, no matter what comes your way. It’s about more than just making it through the year; it’s about setting yourself up for success in the years to come.

By keeping your plan and your actual money in line, you’re making sure your business is ready for whatever lies ahead.

Here’s to smart planning and even smarter spending!

Here are a few of my favorite books that offer valuable insights into budgeting and cash flow management for small businesses:

  1. “Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine” by Mike Michalowicz
    • This book takes a behavioral approach to accounting and cash management. It’s a great read for small business owners looking to understand how to structure their business finances to prioritize profit and healthy cash flow.
  2. “Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential” by Greg Crabtree
    • Crabtree offers a straightforward guide to financial management for small businesses. He breaks down the essentials of how to manage cash, how to read financial statements, and how to create a budget that works with your cash flow.
  3. “The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It” by Michael E. Gerber
    • While not exclusively about financial management, this book is a classic for small business owners. It addresses the importance of working on your business, not just in it, which includes understanding and managing the financials like budgeting and cash flow.
  4. “Financial Intelligence for Entrepreneurs: What You Really Need to Know About the Numbers” by Karen Berman and Joe Knight
    • This book offers a deep dive into financial metrics, helping business owners understand not just how to read the numbers, but how to use them to make better business decisions. It touches on budgeting and how cash flow impacts a business’s financial health.

Each of these books provides a unique perspective on the financial aspects of running a business, emphasizing the importance of balancing budgetary control with the realities of cash flow management. Whether you’re a seasoned business owner or just starting out, they can offer valuable lessons and strategies to strengthen your financial acumen.


How Your Outsourced CFO Partner will Bridge the Communication Gap between Finance and the Rest of the Company

I’d like to tell you a true story about a fractional CFO and how he successfully became the glue that brought leadership, accounting, sales, and operations, working together successfully in his first 60 days.

When CEFO Advisors first met with this client, it was clear that there was something going on that was creating a growing sense of frustration and tension within the company.  The disconnect between management, accounting, and the other departments was growing.  Processes were weak, cross-departmental communication was reaching its breaking point.  Financial reporting was 45+ days late month after month and the owners of this company had little faith in the accuracy of the information.  To add insult to injury, there were several disparate systems and much of the operational data was compiled using very large, cumbersome spreadsheets. The owners were nervous about the volatility of the markets, and the accounting team was working against finding a solution to bridge the operational data with the financial data to ensure the financial reports were accurate and explainable.

CEFO started right away reviewing data, compiling processes, and interviewing each person on the administrative and finance teams.  It was clear that the rapid growth of this company had pushed everyone beyond their capabilities. Operational data was reviewed with the owners and a connection was built between the information disseminated in those reports with the actual changes in market volatility, versus what the recorded financial results were showing.  There were many errors in processes that were evaluated, and controls were put in place to quickly minimize the errors.  Weekly accounting and ownership meetings were established and led by our CFO.  Our CFO was instrumental in championing the finance team as well as management when appropriate.  He gained a lot of respect and trust through weeks of consistently reviewing the results with the team and helping to solve critical and non-critical issues.

CEFO developed a strong relationship, one of mentorship with the Controller and his team at the client.  Our CFO was able to drive financial reporting time from 45 days down to 30, then down to 15 within 5 months. A standard financial package was developed, with monthly deep dives into topics such as margin dilution, inventory tracking, and cost containment.  Our CFO continued to lead the weekly meetings, but after 7 months, he was able to turn that over to their Controller knowing that consistency was the key to much of the success. Our CFO continues to be onsite monthly to perform financial reviews, and quarterly to lead and conduct a leadership strategy summit.  Communication within the Company continues to be strong, and the Controller and his team continue to lean on our CFO whenever necessary.

The Company continues to grow, margins have stabilized, the client is ecstatic, and we can’t wait to continue to watch their success!

Excellence in Onboarding – The CEFO Advisors Way

At CEFO Advisors, we understand that the onboarding process sets the tone for our entire relationship with our clients. That’s why we take it seriously. In this blog, we want to share with the world how we approach onboarding with the care, expertise, and commitment it deserves.

Our Philosophy on Onboarding: Onboarding at CEFO Advisors isn’t just about getting the paperwork done. It’s about building a foundation for a strong, enduring partnership. We believe that effective onboarding is the first step in a journey towards mutual growth and success.

Understanding Your Business: Every client is unique, and so are their needs. Our approach begins with a deep dive into understanding your business culture, structure, and objectives. This enables us to align our services with your specific requirements.

Setting Clear Objectives: Clarity is the cornerstone of effective collaboration. We work with you to establish clear, achievable goals right from the start. This ensures that our efforts are always aligned with your vision and business objectives.

Building Relationships: Our team, including experienced controllers and CFOs, are not just service providers; they are partners in your growth. They engage closely with your team to build a relationship based on trust, respect, and collaboration.

Communication is Key: We believe in keeping the lines of communication open. Regular updates, feedback sessions, and open dialogue ensure that we are always on the same page and can quickly adapt to any changes or challenges.

Respect for Your Processes: Our goal is to enhance, not disrupt. We respect the processes and systems you have in place and aim to provide insights and improvements that can coexist with your established practices.

Active Problem Solving: Our team is committed to being proactive in identifying and solving problems. We don’t just advise; we roll up our sleeves and get involved in crafting practical solutions.

Professionalism and Integrity: At CEFO Advisors, we are committed to upholding the highest standards of professionalism and integrity. This commitment is reflected in every interaction and decision we make.

Adaptable and Personalized Approach: We understand that business needs to evolve. Our team is flexible and adaptable, ensuring that our services remain relevant and tailored to your changing requirements.

The onboarding process at CEFO Advisors is designed to be as smooth and effective as possible. It’s not just about starting a project; it’s about laying the groundwork for a successful, long-term partnership.

Are you interested in experiencing the CEFO Advisors difference? Contact us to learn more about how we can help your business achieve its financial and strategic goals through our dedicated and personalized approach. Give us a call at 518.693.7446 or check us out at