Don’t Hire a Finance Consultant Without Reading This Article
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Published:
June 13, 2023
Reading Time:
7 minutes
Are you thinking about hiring a finance consultant? Then stop.
First, ask yourself why exactly you need a finance consultant. Is it because the CFO resigned unexpectedly, profits are dwindling, or you need someone to implement a new budgeting process? Or is it because you want to raise funds?
If you know the exact reason why you need a finance consultant, you can hire the one who specializes in solving the same problems that you have. In the article, we will discuss what a finance consultant is, and also shed some light on the subcategories of finance consultants to ensure that you’re aware of the different available options.
So, let’s dive into it.
First, ask yourself why exactly you need a finance consultant. Is it because the CFO resigned unexpectedly, profits are dwindling, or you need someone to implement a new budgeting process? Or is it because you want to raise funds?
If you know the exact reason why you need a finance consultant, you can hire the one who specializes in solving the same problems that you have. In the article, we will discuss what a finance consultant is, and also shed some light on the subcategories of finance consultants to ensure that you’re aware of the different available options.
So, let’s dive into it.
What Is a Finance Consultant?
Imagine this: There’s a company that is struggling financially. Profits are declining and executives are questioning the existing strategy. Then, they hire a finance consultant. The consultant goes through financial statements thoroughly and analyzes where exactly money is coming in from and where it is being spent. After this, the consultant creates a well-thought-out plan to cut unnecessary costs, streamline operations, restructure the workforce, and identify investment opportunities. As a result, the company’s finances stabilize and come back into the safe zone. That’s basically the gist of what a finance consultant does.
From a financial standpoint, they can use this knowledge to lead companies on the right path from the get-go. Here are some ways finance consultants work their magic:
From a financial standpoint, they can use this knowledge to lead companies on the right path from the get-go. Here are some ways finance consultants work their magic:
- Financial planning: From budgeting and tax planning to investment strategies and risk management, finance consultants can create detailed, time-tested financial plans that are most likely to succeed.
- Risk management: This requires a separate bullet point because financial risk management is a crucial service provided by finance consultants. They can identify the following financial risks and prepare you beforehand: market volatility, which involves monitoring ever-changing market conditions; liquidity risk, which requires analyzing a company’s cash and liquid assets; credit risk, which is all about assessing the creditworthiness of clients and partners.
- Investment advice: All companies have a limited amount of funds. However, investing available funds in the right place can ensure a gradual increase in financial strength and prevent bankruptcy. Finance consultants conduct deep market research and present relevant investment opportunities that are most likely to generate great returns.
- Merger & Acquisition: Merging two corporate entities into one can be a hectic process with a lot of legal hassles. Finance consultants can conduct due diligence to analyze the financial health of the acquiree company. This means that they can give you detailed advice on whether or not a company is worth acquiring and merging with yours. After all, you want to acquire a profit-making machine, not a loss generator, right?
KEY TAKEAWAYS
- Finance consultants are experts who offer advice on financial matters to businesses and organizations. They use their knowledge of finance principles, markets, and growth strategies to help companies make the right financial decisions.
An Example of How Finance Consultants Can Help
Alright, this is what we’re going to do now. To give you a practical idea of how finance consultants can protect and grow your finances, we’re going to discuss a practical example. Let’s begin!
Step 1: Strategy
John starts by analyzing the company’s long-term goals, market dynamics, and target audience. He then creates a list of companies that can help the client target new segments. So, the strategy that John comes up with is: targeting newer audiences in the pharmaceutical niche by acquiring competitors and expanding the client’s market presence.
Step 2: Due diligence
The due diligence involves conducting thorough research on target companies’ financial health, market positions, and profitability. John goes through financial data on all target companies and shortlists the ones that are most likely to be lucrative if acquired.
Step 3: Negotiations
John uses his negotiation skills to work on creating a deal with favorable terms and conditions for the client. Using his knowledge of financial best practices and industry benchmarks, John structures the transaction in a way that is most beneficial for his client.
Step 4: Post-merger integrations
Smooth transition and alignment between the acquiree and acquired companies are crucial in any M&A project. After the merger is done, John plays an important role in the post-merger integration process by ensuring a smooth transition and seamless alignment between both companies. In particular, he focuses on harmonizing financial practices and optimizing processes. Using his financial acumen as a finance consultant, he creates a solid foundation for the long-term financial success of the client’s company
Mergers & Acquisition transaction, pharmaceutical company:
Let’s suppose a pharmaceutical company wants to strengthen its market position by acquiring other smaller companies that could become a competitor in the near future. The company hires a finance consultant named John to help with M&A. Here’s how he can help in this scenario:Step 1: Strategy
John starts by analyzing the company’s long-term goals, market dynamics, and target audience. He then creates a list of companies that can help the client target new segments. So, the strategy that John comes up with is: targeting newer audiences in the pharmaceutical niche by acquiring competitors and expanding the client’s market presence.
Step 2: Due diligence
The due diligence involves conducting thorough research on target companies’ financial health, market positions, and profitability. John goes through financial data on all target companies and shortlists the ones that are most likely to be lucrative if acquired.
Step 3: Negotiations
John uses his negotiation skills to work on creating a deal with favorable terms and conditions for the client. Using his knowledge of financial best practices and industry benchmarks, John structures the transaction in a way that is most beneficial for his client.
Step 4: Post-merger integrations
Smooth transition and alignment between the acquiree and acquired companies are crucial in any M&A project. After the merger is done, John plays an important role in the post-merger integration process by ensuring a smooth transition and seamless alignment between both companies. In particular, he focuses on harmonizing financial practices and optimizing processes. Using his financial acumen as a finance consultant, he creates a solid foundation for the long-term financial success of the client’s company
Types of Finance Consultants
This is the reason why you were advised to read this article before hiring a finance consultant. You see, finance consultant is a very broad term and includes many subcategories. It’s important for you to know different types of finance consultants to make sure you choose the right one for your project. So, here are some categories that should know of:
Interim CFO
When a Chief Financial Officer (CFO) leaves unexpectedly, a regular finance consultant cannot fill the position. Instead, you will need an Interim CFO who already has enough experience in a very senior position. Interim CFOs are temporary professionals who can be hired rather quickly and can hold the helm until a permanent hire is found. Interim CFOs can help you with risk strategy, cash management, debt and equity financing, financial reporting, and much more.Zero-Based Budgeting consultants
First, let’s understand what zero-based budgeting (ZBB) is. Simply put, it’s a budgeting method in which every expense is to be justified—instead of just using previous budgets as a baseline. Zero-Based Budgeting consultants can examine the current spending patterns and find areas of inefficiency. They can help create a culture of accountability and financial responsibility in an organization. Furthermore, ZBB consultants can create and execute a foolproof action plan to implement new budgeting changes in a company.Digital Finance consultants
Want someone to guide you on how to take advantage of digital channels while overseeing payments, insurance, credits, and remittance? Then you should hire a Digital Finance consultant. There are many ways these experts can improve your company’s financial situation. For example, they could use digital tools to create a finance data strategy. This can be done by using different types of data to improve financial reporting and predictions. Similarly, they can also improve your management reporting and financial analyses using the power of digitalization.Working Capital Optimization consultants
Working capital optimization involves making intelligent choices to effectively manage the money a company has for its daily operations. In easy-to-understand terms, it’s creating a balance between the money coming in and the money going out. A Working Capital Optimization consultant can help you with the strategic management of your company’s current assets and liabilities. This is done to make sure that your resources are utilized efficiently and that your company has maximum liquidity. If you want to ensure that your company always has enough money to pay bills, salaries of employees, and invest in new opportunities, you should speak to a Working Capital Optimization consultant today.Fundraising consultants
If you’re a non-profit organization, then this one's for you. Running an effective fundraising campaign that actually generates cash can be a daunting task. That’s when fundraising consultants come into play. These experts can create an engaging equity story that highlights the unique strengths of your organization. Also, through various strategies like content marketing, crowdfunding, and mobile giving, they can help you reach your donation goals. Furthermore, fundraising consultants bring strategic thinking into planning and monitoring campaigns for nonprofit organizations. They can measure results and refine techniques to maximize your fundraising efforts. So, did you see how broad the term ‘finance consultant’ is? Now that you know which type of finance consultant to hire for a given task, let’s help you find one.
Here at Consultport, we have thousands of highly experienced, freelance consultants in our talent pool. We conduct a rigorous background check and only hire the best of the best. All our consultants have worked for top consulting firms or digital agencies in the past. So, if you’d like us to connect you with your next finance consultant, get in touch now.
Here at Consultport, we have thousands of highly experienced, freelance consultants in our talent pool. We conduct a rigorous background check and only hire the best of the best. All our consultants have worked for top consulting firms or digital agencies in the past. So, if you’d like us to connect you with your next finance consultant, get in touch now.
