Are You Getting Enough Value From Your CFO?
Let’s face it: A CFO is one of the most expensive positions in a company. There is a huge difference between an average CFO and an outstanding CFO. As a starting point, a CFO would offer reporting and business support but what you really need is for a CFO to be a driving force behind the company’s strategy. Here’s the big question: Are you getting enough value from your CFO?
Is your company benefiting from this role and is this position taking ownership of the company’s finances and success like any other executive at your company would? Does this individual lighten your load as the company leader, allowing you to focus on customers, business and product development? Are they helping your business grow and maintain both speed and velocity in that growth? Here are five things to ensure that you’re getting the most value from your CFO:
- Ownership of Cash Flow –
Your CFO must take ultimate ownership of the management of the cash flow of the company. Make sure that you have cashflow coming in from your operations. It is also important to receive a short term forecast (weekly, monthly) but also a long term forecast in order to look a year into the future to see if and when your business might run into trouble. The CFO must own the process of cash flow, both micro and macro for the company as well as give guidance on how to maximise cash flow coming in and minimise the risk of running out of cash.
- Provide Accurate, Simple and Timely Reporting –
Your CFO is responsible for a company’s past and present financial position, and the role is an integral part of a company’s financial future. It seems obvious, but many companies falter here, especially with the timely aspect of reporting. It is important for a founder to know what type of capital investments are approaching after a large customer payment is received so the cash can be allocated strategically. Reporting to management should also be done in the most simplest way to easily digest data without disrupting their ability to manage.
- Deliver Actionable Insight –
Actionable insight gives the business owner and CFO peace of mind to make strategic, well thought-out decisions. These decisions can drive positive business outcomes because the insights were derived straight from your customers.In order to deliver on a company’s execution strategy, especially when it’s a start-up or high-growth company, reporting is essential in order to provide actionable insight. This is meaningful actions that can be taken from analyzing any type of raw data and the result provides enough data for organizations to make a well-informed decision. By doing so, the CFO will identify areas where you can create processes and policies for improvement which include both a look at historical performance, as well as future predicted performance.
- Act as a Strategic Partner –
Whether you have a part time CFO or a full-time CFO, they are a member of your executive team and should assist in the strategic process of the company. Moreover, as a member of the executive team, they should be taking ownership such as:
- Development of company strategy and execution;
- Gathering and analyzing the data to support fact-based strategies;
- Continually handling transformations within the economy and technology.
- Optimise Performance –
They will help the company to identify areas of improvement, build the necessary financial systems, integrate them and will help drive development in those areas. Most importantly, they will take ownership of optimising performance. The CFO should think about developing more effective operational strategies for adding value and managing operational risk throughout your organization. It is also important that the CFO thinks of ways to leverage a suite of tools to identify and drive profitable sources of revenue growth
A CFO has a very important role to play within a growing company, therefore we want to make sure that they contribute maximum value to the business. They need to be a team player and deeply invested in the success of the business. They are forward-thinkers, influences and a financial asset to your business. Make sure that you as them the right questions and give them the right KPI’s in order to get the most value out of the position as it is most likely a big part of your payroll expense.
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