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Episode 65: Contract to Cash Masterclass with The Cash Flow CFO and JKA Solutions – Part 1

May 20, 2024

Episode 65: Contract to Cash Masterclass with The Cash Flow CFO and JKA Solutions – Part 1

“Think of your CFO as the navigator, looking ahead to ensure your business remains profitable and on track. They work alongside your bookkeeper, who handles historical data, to create forward-looking financial plans.”

– Andrea Jenson

Welcome to a brand new episode of the Cash Flow CFO Podcast. Join me on this episode for the first half of a two part series in which I co-host a virtual workshop with Jean Kristensen, the CEO and chief consultant at JKA Solutions. We discuss the importance of being financially ready for business growth. At The Cash Flow CFO, we specialize in helping entrepreneurs manage their cash flow and navigate the financial complexities of scaling their companies. Your business is your most significant asset, and our goal is to make it financially robust enough to sell, leverage for financing, or provide for your future. We’ll explore what it means to be procurement ready, especially when targeting large contracts with government agencies or corporations.

Join us to learn the whole story!

“Your business is your most significant asset, and our goal is to make it financially robust enough to sell, leverage for financing, or provide for your future.”

– Andrea Jenson

Becoming Procurement Ready

One of the first steps in being financially ready is having accurate, timely financial statements. This helps you understand your business’s health, sales goals, and revenue. When securing large contracts with government agencies or large corporations, you need to be prepared for the associated delivery costs. Financial readiness means knowing where your business stands financially before bringing in contracts, having a plan for servicing those contracts, and ensuring you have a line of credit for slow-paying customers. This preparation demonstrates your understanding of your numbers and makes you appear more prepared to potential clients.

The Role of a Fractional CFO

A fractional CFO is crucial for scaling your business. They provide forward-looking financial strategies, unlike bookkeepers or tax preparers who focus on historical data. Your CFO will create an annual budget based on growth goals, prepare a staff utilization schedule, manage job costing, and maintain relationships with bankers to ensure effective use of funds. This helps in understanding your burn rate, making timely decisions, and ensuring your business has at least 90 days of operating cash.

Strategic Planning and Growth

Effective financial management involves setting aside profits for taxes, debt, growth investments, and owner compensation. A CFO helps you create a predictable profit model by allocating revenue into cost of goods sold, general and administrative expenses, marketing expenses, and profit. By understanding customer acquisition costs and sales funnel metrics, you can make informed decisions about scaling. With a strategic plan, entrepreneurs can confidently aim for significant growth, knowing that they have the systems in place to support their expansion and secure larger contracts with ease.

“For every dollar in revenue that you bring in, it equals 100%. That 100% needs to be split up over four big buckets in your business: cost of goods sold, general and administrative expenses, marketing expenses, and profit. The profit needs to cover your operating expenses, any existing debt, income taxes, and reinvestment back into the business. This ensures that your business remains financially healthy and can support growth.”

– Andrea Jenson

Want to get in touch with Jean Kristensen?

Website: https://jkasolutions.com/