Do you think your company is too small to have a CFO? Think it’s still in its early stages and waiting for it to reach a growth level before consulting a CFO? Well, you can reach your desired growth level smoothly and run your business (even a small one) strategically with the help of a CFO. That’s why it is suggested to consult a CFO, even if once a month or have a permanent CFO (according to your business size).
Traditionally, CFO had three basic jobs- keeping a check of books and records of the company, financial reporting and statutory compliance of all dealings. But in the present increasing competitive environment, technology and cross-functional roles.
Including a CFO on your board can prove to be the one crucial factor your company needed to break through the roof, one key decision that you will not regret after looking at your very transparent quarterly reports.
A CFO has a complete understanding of your business model, he breaks down the entire factory line into sheer numbers that can be added on to your books which gives you a budgetary approach to understand your own business. Think of him as your very own finance minister whose sole job is to come up with a national Budget whenever you need him to.
Do you think your startup keeps losing track of invoicing? Have you ever wondered – “Will I benefit from taking over this project?” That’s where you need the money expert. Sometimes the biggest clients can prove to be the smallest additions to your profits and which is precisely why a CFO is needed – to analyze the financial perspective of any inbound projects/clients. After all, aren’t we all in it for the money?
A CFO also takes care of your company’s relationships with your banks. Let’s say you had to hire a guy to work on a remote project in a different country – do you know how to process payroll and tax for that country? Well your CFO would (wishing you had one yet?)
It’s not all just about money with the CFO. He/she is an integral part of your board. A CFO weighs in on any important decision just like a COO / CEO or a CTO. Sometimes your CFO takes over more than one hat (if your company is small to medium sized) CFO takes over the operations of the company especially of the finance department thus stepping in the shoes of the COO ample amount of times ensuring continuous and smooth cash inflow.
Let’s break down some of the crucial times you wished you had a independent finance guy looking over your shoulder:
When your company is launching a new Product
Let me walk you through this in the form of a case study – BYJU’s is a 6 billion dollar company that launched their live classes online within 1 week of India going under complete lockdown in lieu of Coronavirus. Not only that , but they started offering free trials to students across the nation until the end of the lockdown! (Bold move? I would say a smart one.)
Now the smarts behind the timing of the launch is PV Rao (CFO , BYJU’s). They had been looking for the right opportunity to launch this product for the past three months (Shh! Inside information), the point I want your attention to lay on is the strategy applied behind this. Mr. Rao must have analyzed the markets for months including the customer demands , response and of course the driving revenue behind it. Do you think the company could have pulled off this successful launch without a CFO’s insights? Granted this is a $6bn company in question here, but your company can be under the same situation sooner than you know and that precise planning is what a CFO helps you strategize.
Thinking of acquiring a smaller company?
If your company has reached up to the point where you can start thinking about acquisitions, your first member of the advisory counsel should be the CFO. He/she will be responsible for analyzing the company you are thinking of acquiring will prove to be additions to your profits or a liability. Even you can easily ask for quarterly reports of that company yourself but you can strategize on how to consolidate the accounts/books of that company with yours on your own.
Want to attract investors?
CFO will help your company put forth the best monetary front in front of the potential investors. Only a person who has been solely dedicated towards managing your company’s revenue would be capable of putting investor’s concerns at rest. Think of relating my last point to this one – if you were to invest in a company, wouldn’t you want to know the weakest links of that company because that is where you can bleed out money from.
Taxes and loans , you need advise before you file for them.
Your company is pulling off projects all over the country , maybe even all over the world ! Congratulations, you have been killing it out in the field! Now it’s time to show the government all the money you just made (you might have had a hard time keeping track of it ) is all white and legal. For the same you should now document everything for you to file for taxes in each location of your offices. This is exactly where a CFO would offer experienced consultation.
It’s the primary responsibility of any CFO to make sure the books are clean and updated.
Have your company ever reached the point when you had to liquify more than expected assets and now you are in dire need of cash inflow – your CFO would have alerted you of this happening prior to it happening. If in the case you consult a CFO in an emergency, he would be responsible for finding an alternative solution for it – loans (remember he still has been maintaining all the relationships with the banks).
Great example would be – companies in the USA are now taking advantage of the COVID 19 Stimulus package of 2 Trillions dollars that the US government has just released. Companies with dedicated teams and appropriate leadership in the finance department are now burning intense hours to keep their companies afloat. CFO s are spearheading to get a forgivable loan designed for all small – medium sized companies.
Since there is a limited budget for it – companies who are on top of this information will be able to survive this first come first serve basis of salvation. (Wishing you had a CFO yet?)
Extending current profit margins and leadership
You must be well aware of which are the most profitable units of your business. Your CFO can offer insight on how you can push the same money makers to the next level.
When you analyze your quarterly reports from the perspective of Profits /losses it’s easier to understand what changes need to be made to minimize mistakes , you may need to limit outsourcing because hiring a recruiter with a base salary could be more beneficial? You would only know if you crunch the numbers.
CFO acts as a revenue focused executive , but at the same time he is focused on giving insights just like any other board member.