Navigating Business Challenges to Maximize ROI and Drive Profitability

CFO Advisory Services | Christopher L. Zellman | Sep 26, 2023

In a previous article, we discussed four common business challenges that Prager Metis CFO Advisory Services can help you overcome: cash flow problems, lower-than-expected profitability, key performance indicators (KPIs) that don’t tell the whole story, and unreliable budgeting and forecasting.

The good news is that the CFO Advisory team offers a level of expertise and an objective, outside perspective that enable us to identify issues you may be missing. We can help you implement sustainable, best practices-based solutions that have a direct impact on the performance and growth of your organization.

Let’s take a closer look at the value our team brings delivers to help you successfully address the above challenges, using practical examples of how we can deliver significant ROI to your company.

1) Visibility into Cash Flow

The unfortunate reality is that businesses often fail because they run out of money. There are many issues that negatively impact cash flow, from poor forecasting to unforeseen expenses to late customer payments. The key is to have visibility into the factors that are driving cash flow, both positively and negatively, so you can understand your expected cash flow and manage accordingly.

How can Prager Metis help?

Many companies experience cyclical cash flow challenges during different times of the year but don’t understand the root causes. The CFO Advisory team will analyze your financial data to develop a sophisticated, rolling cash flow model. Such a cash flow model would enable you to better predict cash inflow and outflow, providing visibility into how cash flow should be expected to change based on factors such as inventory increases, changes in customer payment habits, seasonal sales trends, to name a few.

Having visibility into the true drivers of cash flow and the upcoming cash needs of the business enables you to operate more efficiently and prevent unexpected cash flow shortages. Your company will be more resilient and better positioned for growth.

2) A Clear Picture of Profitability Drivers

As we discussed in the previous article, profitability could fall short of expectations for a variety of reasons, such as product mix (high margin vs. low margin products) based on changing demand, sales volume, high overhead expenses, among others. When you partner with the CFO

Advisory team, we’ll analyze the key factors that affect profitability, including the cost of products, services, materials, equipment, vendors, transportation as well as others.

How can Prager Metis help?

Another obvious factor in profitability is pricing. The issue is too often price changes lag cost changes resulting in lower margins and lower profitability. If your prices remain constant while the costs increase, profitability will be negatively impacted.

Again, visibility is critical. You need a full and accurate picture of what is driving the changes in profitability. CFO Advisory Services can analyze and identify these drivers, helping you make better informed decisions based on facts and not guesses and recommending changes that will drive greater profitability and realistically deliver ROI in less than a year.

3) KPIs that Drive Performance

Key performance indicators (KPIs) can tell a very right story or the wrong story. Organizations need to make sure KPIs are telling the right story and the whole story. Unfortunately, many businesses fail to understand what the critical KPIs are that affect performance and profitability while failing to track the KPIs that matter most to their organization.

Too many management teams tend to focus on KPIs that the marketplace says are important instead of developing KPIs that are specific to their company. Also, a KPI that is relevant or important to one company might not be relevant or important to yours.

How can Prager Metis help?

If revenue per employee increases by 20 percent, that sounds like a positive number on the surface. However, if profitability hasn’t increased, that KPI is not a reliable performance metric by itself without related KPIs, such as gross margin, that complete the story.

Based on deep understanding and analysis of the company, industry, and market conditions, the Prager Metis CFO Advisory team can pinpoint the KPIs that drive performance, now and in the future. We’ll show you the connection between these KPIs and the strategic objectives of your organization, allowing you to leverage this information to make better decisions.

4) Data-Driven Budgeting and Forecasting

Many companies take a somewhat simplistic approach to budgeting and forecasting. They look at the numbers from last year and increase the budget and forecast slightly to account for expected growth, inflation, etc. The problem is that there is little if any support around the validity of the numbers other than they seem ok based on last year. Using the simple approach of basing next year’s budget on last year’s results is easy, but most often not useful.

The kind of questions that the above budget process fails to ask and answer are things like (1) what is the growth trajectory we should plan for that is not just an incremental increase over last year; (2) is every dollar we are spending adding value to our business; (3) what are the strategies that need to be implemented to achieve or surpass the budget; (4) and finally is the profit that is being budgeted reflect it can and should be? These are the kinds of questions the CFO Advisory team will help you answer so you can develop accurate, reliable, and transformative budget and forecasts.

How can Prager Metis help?

Instead of using last year’s budget as the starting point for the new budget, start with a baseline of zero. Zero-based budgeting/forecasting is not a new concept but one that is so often not used because it requires you to challenge past results and many of the myths that restrain the thinking about what is possible. Using a Zero-base model, every expense and initiative is examined and justified for inclusion in the budget based on the value that it creates. Every number is backed up by data rather than assumptions and guesswork. This approach will give you visibility into the correct cost of doing business and how revenue will be generated. Once completed, we then work with management to develop the strategies that will achieve or exceed the budget.

A best practices-based budgeting and forecasting model will also show you where challenges lie and provide insights to help you address them. Implementation of this model coupled with thinking through the strategies that will drive success can produce ROI within a year.

An Unbiased Perspective from a Strategic Partner

When executives are deep in the day-to-day details of running a business, it’s not easy to step back and objectively observe and assess how the business functions. We’ve seen how emotional attachment to certain products and services and operating a certain way, though well-intentioned, have clouded judgment to the detriment of the business.

With an unbiased perspective, the Prager Metis CFO Advisory team can extract insights that you have difficulty seeing. When you partner with us, we’ll help you identify both weaknesses and opportunities that have a direct impact on the financial health of your business.

What are you trying to accomplish? What could be keeping you from reaching that goal? What could help you reach that goal faster? Drawing on our decades of experience serving in multiple financial roles in a variety of industries, we’ll tell you what we see and develop strategies for improvement and optimization. Your investment in our CFO Advisory services & team will provide a positive and most often strong ROI in less than one year and many times over throughout the life of our partnership.

More than an accounting firm, Prager Metis is an advisory firm that can be your trusted strategic partner to help you address common obstacles and support the growth and success of your company. To schedule a free consultation, contact Christopher Zellman, Principal, Prager Metis CFO Advisory Services, at 212-643-0099 x10203 or