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Maybe you’ve heard the acronym CFO before and know that it stands for Chief Financial Officer. Maybe you even have some understanding of what a CFO does and how they can add value to your business. But what about a CFO for hire?
To the extent that small business owners know what CFO means and understand how they can add value to a business, often the idea of having a CFO is dismissed as too costly or unnecessary for a small business.
While it may be true that a full-time CFO might be too expensive and even unnecessary for a small business, having a CFO resource available and engaged in your small business on a part-time or on-demand basis is not only affordable, but can return long-term, significant value.
What does a CFO for hire do?
A CFO is responsible for overseeing a company’s financial activities and operations. This includes addressing short-term needs and day-to-day analysis by engaging in things like establishing performance measures and understanding the drivers of cash flow. In addition, a CFO focuses on long-term goals by acting as a strategic partner and advisor and by assessing financial risks and opportunities. The role of a CFO is to keep a company on solid footing while at the same time moving it forward. Most of a CFO’s time is spent working with you to improve operations, increase revenue and improve cash flow. A CFO for hire does all the same things as a captive CFO, but on a schedule that meets your business’s operational, strategic and budget requirements.
Who needs CFO for hire services?
While there is no hard and fast formula for the size a business should be to need a CFO resource, we have found many of our clients sought our services once they reached $2-10MM in revenue. That said, we would argue that any business no matter how small would benefit from a CFO resource – even for a couple of hours a month.
Engaging a professional firm that delivers CFO services can particularly benefit small and mid-sized businesses, which often see their financial situations become more complex as they grow. Many of these companies don’t have room on their payroll to hire a full-time CFO and lack the in-house financial experience they need to make informed strategic, long-term and day-to-day decisions.
Outsourcing the CFO function is a way to bring on much-needed financial expertise on a flexible and affordable basis.
A Final Clarification: What’s the difference between a CFO and a CPA?
CPA stands for Certified Public Accountant. In reality, some CFOs are CPAs, but CPAs are often not CFOs.
CPAs tend to spend most of their time on accounting, taxes and reviewing and presenting the historical numbers for a business. A CFO plays a much greater role in the broader business aspects than does an accountant.
While a CPA will usually spend the majority (90% or more) of their time on accounting and little if any time on broader matters, with a CFO it is the opposite – a small % on accounting and the majority on broader and more strategic business matters. Even the small amount of time a CFO spends on accounting is done with an ever keen eye on longer term considerations.
So what the heck does it all mean?
Having even a little time from a CFO resource will yield long-term and permanent benefits to your small business. CFOs spend their time on revenue strategies, profitability enhancement and cash flow while an accountant often handles bookkeeping, closing the books and taxes.
As a member of the management team, a CFO must keep track of the company’s day-to-day financial operations while contributing to any number of financial projects and tasks. This includes, but is not limited to:
- Working with the production team or project managers on ways to increase profitability
- Building financial models and budgets
- Identifying Key Performance Indicators (KPIs) to ensure your business stays on track with its goals and remains healthy and vital
- Supporting the sales and marketing teams
- Helping raise capital
- Managing internal cash flow
- Coordinating with a company’s key advisors
- Supporting the short and long-term strategic planning for the company.