Is it time to hire a CFO?

In the beginning, hiring a CFO may seem unnecessary and maybe even a little extravagant. However, at some point it will be necessary to bring a CFO on board, either full time or on a consulting basis. Why? CFO’s have the expertise that reach beyond the level of a Bookkeeper. They can help take your business to the next level through strategic planning and financial analysis.

So what does a CFO do?

CFOs play an integral role in understanding a company’s current and future financial situation. They see the bigger picture and can provide insight into strategy, efficiency, productivity, and growth potential. Once you bring on a CFO, they can help you create strong financials in myriad ways. CFOs help with:

  • Business planning – providing your business plan with financial rigor
  • Financial projections – providing you with a bottom-up forecast: a detailed budget with spending plans by department
  • Rolling cash flow forecasts – enabling you to respond, in real-time, to emerging business conditions
  • Annual operating budgets – helping you keep track of maintenance operations, salaries, and interest payments
  • Three and five-year plans – forecasting expenditures and revenue during three- and five-year periods and creating corresponding strategic goals
  • Monthly management reports – with previous and current financial data
  • Pricing – building a financial model to set price
  • Manage debt – establishing a company budget and payment schedule to repay debt and keep debt low
  • Assisting with the valuation of your business

These are all vital areas within your business and failure to have experienced leadership there could result in profits below expectations and diminished capital growth.

When should I hire a CFO?

Many businesses reach a point at which a CFO either becomes a necessity or a strong recommendation.

Growth – If your company is experiencing growth or plans for fast growth, you’re going to need focused financial guidance. This means that you need a qualified expert that can not only provide oversight for your day to day financial obligations but also ensure that cash flow obligations are met.

You’re concerned about risk management – If “what if” scenarios keep you up at night, it’s time to hire a CFO. Many business owners don’t know how to look for the red flags that CFOs are trained to see. Therefore, they may not realise there’s a problem until it’s too late to institute a simple solution. A CFO can drive and monitor your strategy and plans and provide timely responses.

Size – Even if your company is not overly complex, its sheer size could make it difficult for you to stay on top of revenue streams, payrolls and tax implications without a CFO.

Developing and managing a finance team while also running a business is no simple task. A vital thing to remember as a business owner is that you must focus on running and growing your business. You’ll need the best available information and strategies to accomplish this, and it’s worth the investment to have the right financial team in place to help you get there. Contact NCA here to discuss your CFO options.