A “CFO on Hire” or an outsourced CFO is an increasingly popular option nowadays for firms wanting to engage a professional without burning their pockets and parting with stock options. But knowing what they should be doing for you and setting some standards to achieve is crucial before you start such an engagement. As we know, a CFO is responsible for the financial activities of an organization end to end. It covers both short-term and long-term needs that helps the company scale.
The short-term activities could include establishing performance measures and understanding the drivers of cash flow while assessing financial risks and strategizing for the next big move for the company are crucial long-term objectives.
What should your CFO do for you?
Broadly the CFO has two main sub-roles other than being the Grand-poobah of all things “numbers” in your company.
Controllership
Controllership duties infer that the CFO will be responsible for collecting, analyzing and presenting a company’s financial records and information ideally on real time. This creates a relationship where she has a duty to board members, shareholders, creditors and any other associates that need such information. A very critical and perhaps the most important facet of being CFO to a small business.
Treasury
A treasury role handles the fund-raising aspect of a CFO’s duty. There is nobody that should know a company’s financial stance more than the CFO and it is for this reason that he/she is the key person to engage in-depth for decisions regarding investment, taking into consideration the risks involved.
Apart from these traditionally assigned roles, the CFO of today has to be deeply involved in strategically guiding the Company through its next major phase – be it an exit, a larger funding round or expansion plans.
Growth Catalyst
The CFO can accelerate or stimulate the timely execution of fundamental changes in the company. Some examples are improving a company’s digital ecosystem and creating a digital asset for the future, managing contractual risks (from a financial perspective) etc. These are not usually listed as every day, but an experienced finance person, whether in-house or outsourced is able to lend a hand where its’ most crucial for a small business.
Leadership
Today, the CFO has a very strategic role in being available for the inner circle of key decision makers, including but not limited to the C-Suite executives and shareholders. With the disruptions happening on the digital side of “doing business”, the pressures on a modern finance guy is immense. Adapting and adding value to a challenging leadership scene has become a primary goal for any CFO who wants to make a difference.
To do or not to do
In a lot of ways, having someone look at your organization independently – numbers, plans and the strategic direction, is immensely valuable. With an outsourced CFO, you don’t run the risk of “keeping them on” if they don’t bring value to the table. A lot of small to medium sized enterprises, now bring on exceptional individuals on a project basis to guide them through a major business face – such as an exit.
To sum up, here is a quote from Simon Kelly, Outgoing CFO and COO, Nine Entertainment Co as shared with Ernst & Young on their CFO Stories Segment,
“The traditional CFO part of the role takes up approximately a quarter of my time today and has done for the last few years. The other 75% of my time is really working very closely with the CEO, the senior executive team and with the board to dynamically craft, develop, and challenge the company’s strategy and to oversee the execution of key strategic initiatives. You need to be very agile. I think the core CFO expertise is the ideal foundation for somebody to take a leadership position in the business."
Sources and references
http://focuscfo.com/services/what-does-a-cfo-do/
http://www.investopedia.com/ask/answers/04/042204.asp
https://strategiccfo.com/the-role-of-the-cfo-chief-financial-officer/
https://www.accountingtools.com/articles/2017/5/14/chief-financial-officer-cfo-job-description
https://www2.deloitte.com/us/en/pages/finance/articles/gx-cfo-role-responsibilities-organization-steward-operator-catalyst-strategist.html
http://www.ey.com/gl/en/issues/managing-finance/ey-cfo-program-dna-of-the-cfo-embracing-disruption#the-corporate-athlete