Preface: A CFO is a trusted advisor to your business. The trust factor is vital. A CFO provides in-house financial and strategic counsel. Discussion, management, and decisive resolution of these business themes can be as easy as a visit to your CFO’s office. What does a CFO do – this blog answers that question.
Your Business Needs a Chief Financial Officer (CFO)?
Credit: Donald Sauder, CPA
A Chief Financial Officer (CFO) is a strategic financial partner for your business. A CFO’s primary responsibility is oversight of the financial decision making of a business. This oversight includes: planning, reporting, strategizing, and managing financial performance. A CFO reports to the CEO (Chief Executive Officer) and the board of directors.
The role of a CFO has changed over the years, from solely financial management, to helping develop company plans and being a strategic partner and advisor to the CEO.
A Chief Financial Officer needs to understand not only financial concierge and managing volatility, but also the strategy of developing the business position in the marketplace.
A CFO will help provide answers to questions such as: are the financial statements timely and accurate? What is driving profits? How do we manage key assets such as receivables, cash, employees? How should we make decisions about capital expenditures? What are our measures of financial performance? What are the company’s overhead costs and break- even points? Are revenues trending up and why? Where should we invest excess cash? Should we develop a strategic plan? What information do we need to assess market conditions and make decisive business decisions? How will we finance expansion of the business? How can we manage the business more efficiently? What do key performance indicators indicate? Are we meeting cash flow projections? What does the balance sheet show as a strength or weakness in the business? What does our business do right, and what does it do wrong? How do we develop strategy? How do we provide our accounting staff with oversight? When should we obtain financing or refinancing for the business? What are our objectives and long-term goals?
A CFO is a trusted advisor to your business, on payroll or with contract. The trust factor is vital. A CFO provides in-house financial and strategic counsel. Discussion, management, and decisive resolution of these business themes can be as easy as a visit to your CFO’s office.
If your business is growing, a CFO can act as a trusted advisor and assist in developing a strategy–financial, operational, managerial–that prepares and positions your business for the future. A CFO is more than a numbers person. A CFO will work with your bookkeeper or accountant to understand what is important to business performance. They will monitor business performance indicators, financial statements, and environment, to prevent financial fires. They will also help with strategic business planning and pinpoint areas for improvement.
If your business is exceeding $10 million in revenue, you likely need a CFO full time. If your business revenues are $3 million, a part-time CFO will likely provide you necessary pillar to your developing business framework. If you begin signing international contracts or complex deals, a part-time CFO probably cannot keep up with those pleasant surprises.
If you think a CFO, either part-time or full-time, would benefit your business, talk with your CPA. Often small businesses begin with a CPA as the strategic CFO partner, and develop into a part-time or full-time CFO on contract or payroll. A CPA will also have the expertise to help you make the decision about what is in the best interest of your business when hiring a CFO–the expertise and experience required. You need a CFO who understands your business industry. A CPA can guide your decisions on the development and fulfillment of the CFO role in your business.
In summary, a Chief Financial Officer or CFO is a strategic financial partner for your business. A CFO provides additional management of financial decision making and business strategy. CFO’s can be either part-time of full-time. For small businesses, a CPA can fill that spot well. If you think your business may have a need for a CFO, talk with your CPA.