This is a financial column for CEOs.
Thank you for joining me again today.
Many CEOs have heard the term ‘financial consultant’ but don’t know exactly what they do, how they differ from tax accountants, or whether they are worth the advisory fees. In this article, I will explain exactly what a financial consultant can do for a CEO.
Conclusion: A financial consultant is an expert dedicated to improving your future finances. Their focus is different from that of a tax accountant, who primarily processes past figures.
The first thing a financial consultant can do is
support the improvement of your bank credit rating. They provide expert advice and execution support on how banks evaluate your company, what steps to take to raise your rating, and how to organize your finances to improve loan conditions. Bank credit ratings affect everything regarding loans: eligibility, interest rates, and terms. By raising your rating, you can lower your company’s cost of capital.
The second thing a financial consultant can do is
support the improvement of cash flow management. They work with the CEO to think through and execute strategies for managing monthly cash flow, taking action when funds are running low, and improving overall cash flow. Improving cash flow is the foundation of stable company management. Financial consultants propose concrete actions while monitoring the numbers.
The third thing a financial consultant can do is
support bank negotiations. They provide expert support for preparation before loan applications, the creation of explanatory materials for banks, and the negotiation of loan terms. Knowing what documents banks require and how to explain your situation to increase the likelihood of loan approval is a key role of a financial consultant.
The fourth thing a financial consultant can do is
support the formulation of management plans. They help define where the company is headed, how to generate profit, and how to build numerical plans. Financial consultants support the creation of management plans from a financial perspective, helping the CEO develop plans that meet the standards required by banks.
The fifth thing a financial consultant can do is
support the execution of financial improvements. They propose concrete actions for financial improvement, such as how to increase your equity ratio, shorten debt repayment periods, or reduce inventory, and provide ongoing support for their execution. Monitoring monthly figures together to track progress is also a role of a financial consultant.
Let me explain the biggest difference between a financial consultant and a tax accountant.
A tax accountant’s job is to correctly process past figures.
A financial consultant’s job is to improve future finances.
A tax accountant works with deadlines, such as tax filing dates.
A financial consultant works toward the goal of improving the company’s finances. Even though both use the word ‘finance,’ their focus is completely different.
Here are the characteristics of CEOs who should consult with a financial consultant:
CEOs who are anxious about monthly cash flow,
CEOs who lack confidence in bank negotiations,
CEOs who feel their credit rating is dropping,
CEOs whose companies are profitable but whose cash reserves are not increasing,
CEOs who want to improve their finances but don’t know where to start.
Consulting with a financial consultant is effective for CEOs with these concerns.
Here are some points to keep in mind when choosing a financial consultant.
Unlike tax accountants, financial consultants do not have a national certification. Therefore, their knowledge, experience, and track record vary greatly from person to person. When choosing one, confirm whether they have a track record of supporting small and medium-sized enterprises, experience in bank negotiations, and the ability to provide concrete support for cash flow improvement. Choosing a financial consultant with a proven track record and experience is a key point for increasing your return on investment.
In summary: A financial consultant is an expert specializing in improving bank credit ratings, improving cash flow, supporting bank negotiations, formulating management plans, and supporting the execution of financial improvements. Their focus is completely different from that of a tax accountant who processes past figures. If you are a CEO worried about cash flow, lacking confidence in bank negotiations, or wanting to advance financial improvements, please consider consulting with a financial consultant.
Next time: Financial Consultants vs. Tax Accountants: What’s the Difference? #4 ‘Characteristics of Companies That Should Use Both a Tax Accountant and a Financial Consultant.’ I will explain which companies need both and which companies are fine with just one. Follow me so you don’t miss the next article.
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