When your company faces complex financial challenges, bringing in an interim CFO can be the strategic move that drives transformative results. The journey to a successful consulting engagement begins with two crucial principles: fostering strong relationships within the team and maintaining a long-term vision, even if the interim CFO’s tenure is temporary. These principles lay the foundation for impactful collaboration and enduring success.
With these principles in mind, the interim CFO will focus on specific areas critical to your business, which I call the strategic pillars of the engagement. In my recent project with a consumer products company, these pillars were:
- Cash
- Inventory
- Budget
- Reporting
- Expense/EBITDA Management
- Transitioning to a Permanent CFO
Let’s delve into each of these pillars to illustrate how an interim CFO can address your company’s unique challenges and drive success.
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Key Takeaways
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Pillar 1: Cash
Cash management is paramount. If your company has issues like excessive inventory affecting cash reserves, an interim CFO can streamline your cash flow processes. By treating cash management like a simplified checkbook, the focus will be on understanding and optimizing cash inflows and outflows.
Key actions includes:
- Forecasting cash flow to predict timing and amounts of cash movements.
- Managing accounts receivable to improve collections.
- Negotiating with suppliers to extend payment terms and reduce outflows.
For instance, in my recent project, improving cash management led to a 400% increase in the cash balance. This was achieved by optimizing the cash flow forecast and negotiating better terms with suppliers.
Example:
In my recent project, improving cash management led to a 400% increase in the cash balance. This was achieved by optimizing the cash flow forecast and negotiating better terms with suppliers.
The client was a mid-sized consumer goods company experiencing rapid growth but facing increasing pressure on working capital. The company had strong topline performance, but poor visibility into cash inflows and outflows created unnecessary strain. As the interim CFO, my first priority was to build a reliable 13-week cash flow model that integrated real-time accounts receivable and payable data, enabling leadership to anticipate future shortfalls or surpluses with greater accuracy.
In parallel, I worked closely with procurement and operations to renegotiate supplier payment terms, moving several key vendors from Net 30 to Net 60. This change alone freed up significant cash while maintaining vendor relationships. We also introduced weekly cash review meetings, shifted certain customer invoicing practices to accelerate collections, and implemented tighter spend approval controls. These collective efforts allowed the company to unlock cash trapped in operations, extend its runway, and improve financial resilience—all without cutting core investments.
Pillar 2: Inventory
Effective inventory management is crucial, especially if your company faces overstock issues due to high growth forecasts and blanket purchase orders. An interim CFO can help by tightening control over inventory purchases and improving monthly reporting accuracy.
Steps to address inventory issues include:
- Halting new purchase orders temporarily to assess needs.
- Reviewing existing orders based on demand, minimum order quantity, and lead times.
- Implementing an automated solution for ongoing inventory management.
In one recent engagement, an interim CFO stepped into a fast-scaling consumer products company that had overcommitted on inventory during an aggressive expansion phase. Forecasts had been overly optimistic, and purchase orders were issued in bulk to secure vendor pricing—ultimately tying up cash and warehousing space. By freezing new orders temporarily and conducting a detailed review of open POs, the CFO was able to identify slow-moving SKUs and renegotiate terms with suppliers.
Additionally, the CFO collaborated with operations to implement a lightweight demand-planning tool that integrated sales forecasts with procurement cycles. This not only improved visibility but also allowed leadership to make smarter buying decisions going forward. As a result, inventory levels normalized within two quarters, cash flow improved, and the company reduced carrying costs while maintaining customer fulfillment rates.
Example:
In the example project, these measures decreased inventory by about 20%, positively impacting the cash balance and setting the stage for better long-term inventory control.
The client was a high-growth consumer products company that had overcommitted on inventory due to overly optimistic sales forecasts and a habit of issuing blanket purchase orders to lock in bulk pricing. As the interim CFO, I quickly identified that excess inventory was tying up a significant portion of working capital and contributing to storage inefficiencies and write-down risk.
To address this, we temporarily paused new purchase orders to assess actual demand and ran a detailed review of existing inventory—analyzing SKU-level turnover, lead times, and sales velocity. Working cross-functionally with operations and sales, we restructured ordering policies based on real consumption data and introduced inventory dashboards that enabled ongoing tracking of key metrics. As a result, the company not only reduced inventory by 20%, but also improved cash availability, minimized holding costs, and established a more disciplined, data-driven approach to procurement going forward.
Pillar 3: Budget
A robust budgeting process is vital for aligning your team’s efforts with your financial goals. An interim CFO can help develop a bottom-up budget owned by the leadership team, ensuring everyone is invested in the financial outcomes.
Two key goals for budgeting:
- Involving the leadership team in budget creation for better ownership and understanding.
- Aligning sales and profit growth expectations to ensure sustainable EBITDA growth.
This collaborative approach led to an anticipated 100% growth in adjusted EBITDA year over year in my recent engagement.
Pillar 4: Reporting
Efficient and accurate reporting is necessary for timely decision-making. An interim CFO can streamline your reporting processes, reducing the time required for monthly closes and improving the accuracy of reports.
Key improvements include:
- Reviewing and optimizing the close calendar.
- Creating detailed process documentation for easy transition.
- Adding checks and balances for report accuracy.
In the example project, the reporting time was cut by 50%, making the process more manageable and reliable for the accounting team.
Example:
In the example project, the reporting time was cut by 50%, making the process more manageable and reliable for the accounting team.
The company was a multi-entity organization in the facilities industry, dealing with fragmented reporting processes across regions. Month-end close took nearly 15 business days, with each business unit submitting reports in different formats and timelines. As interim CFO, I led a close calendar redesign that established consistent deadlines and deliverables across the company.
We also centralized the reporting function, created standardized templates for income statements and balance sheets, and implemented review checkpoints at each stage. With better coordination and real-time tracking of progress, the team reduced the monthly close cycle to 7 business days. Leadership gained access to more timely financial insights, which improved forecasting accuracy and enabled faster decision-making across departments.
Pillar 5: Expense & EBITDA Management
Controlling expenses and managing EBITDA are critical for financial health. An interim CFO can implement tight controls over spending and instill a cost-conscious mindset across the organization.
Key strategies include:
- Setting up business cases and approval structures for expenses.
- Encouraging a frugal mentality, asking, “Would you spend this if it were your own money?”
- Ensuring proper reporting for departmental budget management.
Beyond simply reducing costs, the goal is to align spending with strategic priorities and ensure each expense contributes to long-term value. An interim CFO can audit current expense patterns, eliminate non-essential spending, and realign budgets to focus on areas that generate return—such as product development, revenue growth, or operational efficiency.
They also play a key role in clarifying EBITDA goals and helping department leaders understand how their decisions impact profitability. By introducing consistent budget review cycles and clear accountability, the interim CFO enables leadership to make proactive adjustments and hit EBITDA targets without resorting to reactive cost-cutting.
Pillar 6: Transitioning to a Permanent CFO
The final step in any interim CFO engagement is transitioning to a permanent CFO. This process involves detailed handovers to ensure the new leader is well-prepared to continue driving the strategic pillars forward.
An effective transition includes:
- Providing comprehensive knowledge transfer.
- Ensuring continuity of processes and strategies.
- Supporting the new CFO in adding their expertise to the existing framework.
While the departure of an interim CFO may be bittersweet, it marks the return to a stable, well-managed financial state with a capable permanent team in place. As you consider hiring an interim CFO, these pillars can guide you in evaluating how they can contribute to your company’s success and ensure a smooth transition to lasting financial health.
8020 Consulting’s Interim CFOs are Here to Drive Financial Success to Your Company
Interim CFOs play a critical role in stabilizing and strengthening a company’s financial foundation during periods of transition or challenge. By focusing on key pillars like cash management, inventory, budgeting, reporting, expense control, and leadership transition, they help companies regain control, improve performance, and prepare for long-term success.
At 8020 Consulting, our experienced interim CFOs bring a hands-on, strategic approach tailored to each client’s needs—whether you’re navigating growth, restructuring, or leadership change. Ready to explore how an interim CFO can drive results for your business? Schedule a consultation with our team today.