Mastering Board Relationships: Key CFO Strategies for SMEs

Feb 21, 2025

For fractional CFOs of small to medium-sized enterprises (SMEs), managing a board of directors is not just about presenting numbers; it’s about fostering trust, ensuring strategic alignment, and delivering financial insights that drive the company forward. SMEs with formal boards are often found in industries such as technology startups, family-owned businesses, and nonprofits, where governance, funding, and strategic oversight are critical. Unlike larger corporations, in which extensive finance teams support communication efforts, SME CFOs often work with leaner teams and must take a more hands-on approach to board engagement. A well-managed board relationship can provide critical support, unlock funding opportunities, and help steer the company toward long-term success. Here are key strategies to strengthen and manage board relationships, as well as improve communication effectiveness.

Establish Clear and Consistent Communication

Regular, structured communication is essential for building credibility with board members. Fractional CFOs should establish a reporting cadence that ensures board members are always informed about financial performance, potential risks, and strategic financial planning. For SMEs, this means providing clear, digestible updates that board members—who may not have extensive financial expertise—can quickly grasp. Quarterly financial reports, monthly email updates, and pre-board meeting briefings can create a foundation for transparency and reliability.

Align Financial Strategy with Board Expectations

Board members of SMEs often include investors, business owners, or key stakeholders who have high expectations for financial performance. Fractional CFOs must bridge the gap between operational realities and board expectations by aligning financial strategy with business goals. According to a recent study, CFOs who engage in monthly financial review sessions with their boards report improved strategic alignment and decision-making. This means CFOs should not only present historical data but also provide forward-looking financial insights, scenario analyses, and risk mitigation strategies. Engaging board members in discussions about capital allocation, cash flow management, and revenue growth helps them recognize the CFO’s role in shaping the company’s long-term strategy and financial health.

Foster Transparency and Trust

Transparency is the cornerstone of strong board relationships. Fractional CFOs should be upfront about financial risks and challenges rather than waiting for problems to escalate. According to a survey conducted by PwC and The Conference Board in the fall of 2023, 68% of executives said they trust their boards to make decisions consistent with the company’s purpose and values. For SMEs in which financial resources can be constrained, board members appreciate candid discussions about budget constraints, cash flow concerns, and investment trade-offs. For example, suppose an SME is facing a liquidity crisis due to delayed customer payments or an unexpected drop in revenue. In that case, the CFO must communicate this reality to the board as soon as possible, outlining potential solutions such as renegotiating supplier terms, securing a short-term line of credit, or adjusting operating expenses. While delivering such a message can be difficult, honest communication builds trust and strengthens the CFO’s credibility, leading to better collaboration and decision-making.

Adapt Communication Style for Different Board Members

Anticipate and Address Tough Questions

Board meetings can be challenging, with tough questions about financial performance, cost controls, and growth strategies. Fractional CFOs must anticipate these questions in advance and prepare well-supported responses. According to a survey conducted by EY, only 32% of CFOs “always” speak up when their opinion differs from the consensus, and just 30% “always” strongly challenge members of the executive team when they disagree on an important issue. For SMEs, this is particularly crucial as financial volatility can be higher, and board members may seek reassurance about profitability, funding, and sustainability. Conducting pre-meeting financial scenario analysis and being ready with data-driven responses can make a significant difference in boardroom effectiveness.

Build Relationships Beyond Board Meetings

A strong board relationship isn’t built solely during formal meetings; it requires continuous engagement. Fractional CFOs should take the initiative to connect with board members individually, whether through informal check-ins, one-on-one discussions, or industry networking events. According to the 2022 NACD Public Company Board Practices and Oversight Survey, 58.4% of directors say that quality input from management is one of the biggest drivers of exceptional board performance. For SMEs, where personal connections and trust play a pivotal role in decision-making, nurturing these relationships can create a more collaborative and supportive board dynamic.

Leverage Technology for Better Reporting

In an era where data is king, CFOs should use financial technology to enhance board reporting and decision-making. Cloud-based financial dashboards like QuickBooks Online, automated reporting tools such as Fathom, and data visualization software like Tableau or Power BI can make complex financial information more accessible and actionable for SMEs without requiring enterprise-level investment. According to a 2023 survey by Accenture, 85% of SMEs stated that they already use digital services in their day-to-day operations. This high percentage suggests that SMEs are increasingly embracing digital tools, which could include real-time access to financial data. Implementing financial reporting tools can streamline data presentation, reduce manual errors, and enable fractional CFOs to provide board members with up-to-date insights that drive better decision-making.

Conclusion

Strong board relationships are essential for SME success, providing critical support, strategic guidance, and funding opportunities. By fostering transparent communication, aligning financial strategy with board expectations, and leveraging financial technology, CFOs can build trust and drive informed decision-making. At ProCFO Partners, we specialize in helping SMEs strengthen board engagement through clear financial reporting, tailored communication strategies, and data-driven insights. Our expert fractional CFOs provide customized financial solutions that enhance governance, improve stakeholder relationships, and support long-term business growth. Contact us today to learn how we can help your business build stronger, more effective board relationships.