The Role of an Outsourced CFO in a Water Restoration Company

For a water restoration business owner, the path to expansion can often feel overwhelming, characterized by complex job costing, fluctuating cash flow, and persistent financial uncertainty. Instead of treating your financial data as a confusing "scoreboard" of past results, the goal is to transform it into a clear roadmap for profitability and growth. This is the essential role of an outsourced CFO, who serves not merely as an accountant, but as a strategic partner dedicated to unlocking your business's full potential.

Here is how a tailored CFO subscription service provides the critical structure and insight needed to thrive in the competitive restoration industry:

1. Building the Strategic Financial Roadmap

In the restoration industry, the BUDGET = STRATEGIC PLAN. An outsourced CFO helps the owner move beyond simply tracking historical numbers and focus on defining the future.

The CFO’s primary role here is to test the capacity of the business model and define the necessary costs to execute that model:

• Forecasting and Stress Testing: The CFO utilizes Budgets & Cash Flow Forecasting to give owners control over their finances. This involves answering key strategic questions: If revenue hits targets, can delivery scale with it? Are staffing and equipment already in place to handle the forecasted volume?.

• Strategic Adjustments: If the forecasted results are unfavorable, the CFO provides the insights necessary to make calculated decisions, such as securing new financing, delaying capital expenditures (capex), or adjusting growth targets—rather than immediately resorting to cost cuts.

• Defining Resource Allocation: They define where resources should be deployed to achieve the maximum Return on Assets (ROA).

2. Ensuring Foundation-Level Financial Visibility

Before any strategic planning can occur, the CFO must first establish "the hand we’ve been dealt"—the accurate starting point of the business. This requires a deep dive into the numbers (Financial Review & Analysis) to ensure accuracy and uncover hidden opportunities for growth.

The CFO works to ensure nine critical areas of visibility are tracked accurately:

1. Accurate P&L & Balance Sheet.

2. Service Line Profitability: Can profitability be measured by service line (e.g., mitigation vs. rebuild)? This insight is critical for operational and marketing decisions.

3. Labor Clarity: They ensure that labor costs are correctly analyzed, including tracking the Labor Split Between COGS and Overhead. This clarity is essential, especially when comparing the use of in-house employees versus subcontractors, which introduces different cost structures.

4. Working Capital: Essential working capital metrics must be tracked, including Accounts Receivable Tracked, Accounts Payable Tracked, and Deposits/WIP/Prepaid Expenses Tracked. They ensure that the impact of A/R and A/P cycles on cash flow is not forgotten.

5. Cost Specificity: Expenses must be allocated correctly, such as separating variable costs (like service vehicles) from fixed costs (like sales vehicles) to ensure accurate costing for different sections of the business.

3. Turning Data into Actionable Profit Drivers

The most valuable service an outsourced CFO provides is transforming detailed financial data into actionable steps. They connect KPIs to Action Items that drive measurable success.

Specific ways the CFO helps protect profits and manage cash flow include:

• Combating Cash Flow Leaks: The CFO focuses on managing Kiwi Cash Flow, analyzing where issues occur—from upfront cash exposure (e.g., not collecting deposits) to slow collection processes.

• Protecting Revenue: They monitor issues that prevent income from ever showing up on the P&L, such as a failure to submit supplements or change orders. They also ensure that revenue and expenses are matched in the correct month on financial statements.

• Improving Job Costing: The CFO helps measure critical operational metrics, such as calculating the cost per billable hour and ensures that job costing reviews or post-mortems are performed to improve and replicate profitability.

• Controlling Expenses: They ensure that overhead categories are clear enough to reveal the true cost of running the business when no jobs are happening. They also confirm that asset purchases are booked as assets, not expenses, to keep the net income accurate.

Ultimately, an outsourced CFO (like the strategic partner model offered by Kiwi Cash Flow) simplifies the financials, cuts through the confusion, and provides the expert guidance necessary for the owner to make confident, data-driven decisions. This partnership is essential for moving the business toward sustained growth and success.

We’d love to hear about your business on a free “right-fit” call. We look forward to talking with you! calendly.com/kiwicashflow