What value can a CFO bring to my business

November 23, 2021by Michael Derin0

Many small business owners can only dream of having extra resource in their operations, as they struggle to find enough hours in the day to do everything that inevitably needs their attention. An example of the kind of extra resource that an ambitious small business owner would aspire to have is a Chief Financial Officer (CFO) within their company.

Even if they have a bookkeeper on the payroll, they cannot access the kind of knowledge, expertise, experience and financial understanding a Chief Financial Officer (CFO) brings. When and if a business moves from small to medium size, the attraction of a CFO or an external CFO service, becomes even more compelling for the business.

A CFO can make a huge difference in the way a business grows and how it operates on a day-to-day basis, as well as having a dramatic impact on the financial strategy, including forward planning, capital raising, borrowing, financial and tax planning, compliance, and business owner exit.

It is hard to disagree that a Chief Financial Officer or CFO services don’t add significantly to a business (with the possible exception of the smallest of businesses, who would still benefit, but may not have the finances or resources to pay for or implement the suggestions of a CFO).  The Chief Financial Officer (CFO) will bring the big picture thinking to a business, while the owner or the managers concentrate on the day-to-day of making the business work. That alone is a why many medium sized and bigger businesses see a huge advantage in having a full time CFO or hiring a CFO service.

Five ways in which a CFO adds value to a Business

  • CFOs offer analysis and information for important decisions and give businesses the opportunity to identify change early and react quickly and effectively
    Business owners are usually totally immersed in the day-to-day running of their business. Giving them precious little time to concentrate on financial matters, such as, financial forecasting, capital raising, cost control analysis and business efficiency measurements. An in-house CFO or a CFO service can focus on analytical and forward-thinking tasks that will give a business invaluable information that will allow them to be financially prepared for opportunities or market changes and mean that they can be quick footed to change their business structure, their products, production, pricing, or market communication, very quickly, if needed. It will also allow businesses to see potential problems coming rather than simply having to react to them once they have arrived.
  • CFOs play a key role in keeping a business moving forward
    Whatever size a business is, a CFO can offer enormous advantages. If the business is growth focused, the CFO or CFO service can focus on growth initiatives, growth measurement and making sure that the business growth is not having a negative impact on other parts of the businesses’ performance. In small businesses, the CFO can take a much more hands-on approach to cost control and controlling cash flow, as well as looking for sustainable growth opportunities. For all size of business, a chief financial officer can operate as the financial public face of the company, communicating results and working with financial institutions, stakeholders, and shareholders.While a CFO’s role is to be responsible for reporting financial performance and ensuring financial compliance, the great advantage they bring to a business, is the ability to look forward. Whether it be bringing financial realism to strategy development, providing business advice, or sitting on the company board to bring their experience and expertise to issues such as acquisitions and disposals, capital and debt strategies, succession planning and corporate governance. The CFO brings expertise in areas that most business owners simply don’t have the necessary level of knowledge.
  • CFOs allow business owners to focus on their most important tasks
    Business owners are often most focused on revenue and in times of growth, this is especially important. A CFO allows business owners to concentrate on their key challenges, by shouldering the responsibility for financial tasks, such as analysis, accounts and budgets, debtors, and creditors, as well as legal issues, company banking and even real estate. They are also able to take responsibility for being the financial face of the business with banks, shareholders and other financially interested organisations and individuals. By offering that level for support for the business owner, the chief financial officer’s role becomes extremely important within the organisation and many business owners rely totally on their CFO to be fully responsible for many functions of the business.
  • Risk Management
    A chief financial officer can also manage risk for a business, whether it be something like insurance, which is an increasingly complex area, with significant regulatory requirements for all businesses and needs a high level of technical understanding. As well as a specific area such as insurance, the CFO can also take responsibility for risk management in other areas, such as regulatory requirements and compliance, human risk, which can occur in a number of areas, for example, staff complacency, occupational fraud, negligent hiring and retention, turnover of staff and catastrophic workplace events. A CFO will have the experience and expertise to take charge of these areas for the business and allow the business owner and management team to concentrate on building, growing, and furthering the success of the organisation. The CFO can also identify areas of risk that could result in the organisation not achieving its business plan, as well as help mitigate investment risk.
  • High quality reporting
    A CFO can help a business with many of its systems, including financial systems that expand to match the future needs of a growing business. Systems that operate faster and smarter as the organisation develops and grows and the quality of information it needs, becomes more sophisticated and more detailed and is needed more quickly. Having a CFO to oversee the development and operation of a businesses’ financial systems and procedures will allow a business to continue operating but be able to grow at the same time, without the risk of failing to comply with all regulatory requirements.A CFO should be able to work with and help businesses on a number of different levels, depending on the organisation’s requirements. If hiring a full time CFO is not an option for a business, then it is possible to outsource a CFO who can come in when required or under contract and provide effective financial leadership for the organisation. A CFO can make a huge difference to a business, whether they are full time employees or an outsourced CFO service.

Michael Derin

CFO Australia’s Lead Advisor with over 28 years’ experience as a Senior Finance professional, Chartered Accountant, Corporate Advisor and Board Advisor across Asia-Pacific with a track record of leading multi-million-dollar projects to success.

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