When Do You Need a CFOMay 13, 2021
Yes. You need a CFO.
Even if you have a bookkeeper or an accountant, even if you’re a small business or a start-up. You – yes you – need a CFO.
Or more accurately, you need a CFO’s perspective. A financial strategist who can help you align the goals of your company with the financial structures and frameworks for growth. A CFO – or that essential perspective – helps your finance and accounting functions grow up. If you have that in your bookkeeper or accountant, congratulations! But most financial specialists are great at, well, the speciality. Keeping books or accounting is not the same as financial strategy. This is where the role of the CFO traditionally excels.
But here’s the thing: You probably don’t need a Full-Time CFO. In fact a Part-Time CFO might be just the catalyst your business needs to experience growth and transformation.
Perspective of the CFO
Once we understand the function of the CFO in your business, we can calibrate expectations. Many business leaders have gotten used to a status quo where the CFO is a reporter, or a box-ticker. This, then, might be their expectation – to have somebody who can translate financial reports when asked and essentially share content.
What’s needed is a financial complement to the visionary’s skillsets. Leaders need a CFO who can appropriately challenge them, focused as much on providing answers as they are capable of asking the right questions. This creates context around your financial functions in a business. Sure, your CFO should be able to provide updates on your KPI’s. But are they also helping you decide what your KPI’s should be? This is where having the right frameworks and structure are essential.
Part-Time CFO vs Full-Time CFO
Some organizations require a full time employee to manage other financial officers and teams. They’ll have wide ranging responsibilities to answer to key leaders, investors and partners. They might have global scope, needing to manage in real time sophisticated financial relationships with suppliers, vendors, manufacturing partners or sales teams. The longer the tenure of this employee, the more effective they can be for the company. A Full-Time CFO is a great fit for these companies.
But most companies simply don’t require that kind of full-time energy, commitment and investment. Most companies, especially small and mid-market companies, need structure. Frameworks to help sustainably manage cash flow or increase profitability. They need confidence in key relationships with bankers or lawyers. A better grasp of how changing market dynamics are impacting revenue. Once those frameworks are introduced, adopted and in action, they need consistent guidance and evaluations against key performance indicators and metrics. This is where the right Part-Time CFO shines.
Advantages of a Part-Time CFO
A key advantage the Part-Time CFO brings to an organization is diverse experiences. This is amplified with a network of connected CFO’s, like with ProCFO Partners, where there is virtually no circumstance, business model or financial situation that hasn’t been successfully managed before. That experience and expertise can be applied to whatever your organization might be experiencing or goals you want to achieve. Where the benefits of a long term full-time CFO can be strongest in sophisticated business situations, long tenure can actually become a liability for a company if fresh perspectives, new ideas or innovative strategies can’t be considered. With a Part-Time CFO, you benefit from financial leadership built from rich experience.
Do You Need a Part-Time CFO Right Now?
Yes. You do.
Many companies don’t look for financial leadership until they’re experiencing some kind of financial dysfunction. This is like going to the doctor only when something’s wrong.
And similar to when we ignore an issue and hope it goes away (instead of just making that doctor’s appointment), a lot of leaders put off cash flow issues or hope that profitability plummet will somehow resolve itself. Inevitably the problems just become exacerbated and what might have once been more easily or quickly addressed can become a more significant issue.
Enlisting a Part-Time CFO as a responsible part of business leadership and growth strategies is like having a personal trainer or on-call physician who doesn’t just help you avoid potential issues or address immediate dysfunctions, but helps you proactively make the right decisions and see big-picture possibilities. Every business can benefit from that approach, all the time.
Question your trusted advisors, your business networks and key relationships. Ask around. Who are colleagues working with that’s helping them do more, and better, with their financial functions? Then get in touch and start a conversation. You might have to talk to a few people or companies to find the right fit for you, and that’s okay. Among your criteria for a possible Part-Time CFO, ask about frameworks, structures and processes they can put into place for you – remember you don’t just want somebody who can manage a spreadsheet and read last month’s numbers to you. The right Part-Time CFO is a strategic complement, helping leaders improve their peripheral vision on the company.