As a leader within your organization, you may have found yourself thinking of ways to make your company more valuable. If you thought that bringing on a chief financial officer (CFO) might be a good decision, we are here to validate this thought process.
While this leadership role may not have been on the top of your list (due to budgeting and other financial reasons) a CFO can help your company grow and improve in numerous ways. Below we outline how a CFO adds value to a company.
1. With Their Background
A CFO will add value based on their type of background. Most commonly, a traditional CFO will have an accounting or finance education, which sets them up to be extremely numbers-oriented. This type of training will save you big bucks on when it comes to your books, as the CFO will be overseeing record keeping, reporting, and financial planning.
Not only will these skills be necessary for the company’s health, but they will lend themselves well to improving the cash flow of the business. As the CFO manages the cash conversion cycle, the business will ultimately improve its collections, pricing, and terms. Through this cycle, the company will be able to increase liquid assets, making it possible for the CFO to make financial projections that will be imperative to the companies growth.
2. With Their Strong Leadership
CFO’s can add value to a company with their leadership skills. When looking for the right CFO candidate, the candidate will likely need a wide range of skills and capabilities to prepare for the opportunities and challenges ahead in relation to your business. Whether you are a current CFO or a future finance leader, continuing your personal and professional development will be critical for continued success.
While not every CFO will be able to bring this trait to the table, it is crucial to find one who can. During the interview process, you will want to ask questions to discover if this individual has what it takes to lead the company. Some of these topics could include:
- What tangible operational experience they have
- How they have thought strategically in the past
- Teaching you something you don’t know
- How they reached their long-term goals in a previous position
- How they would pitch the company if they were in a sales meeting
You will also want to be on the lookout on their resume for broader business acumen (even beyond finance), leadership roles and qualities, and strong and effective communication skills. Having all of this knowledge will help you determine if this candidate has what it takes to be a leader in your company.
Bonus Tip: If you can find a CFO with experience in the finance community, chances are they have connections that can be beneficial to the company. If you have a larger company, the CFO will be maintaining the relationship between the business and the various departments within the company. It will be necessary for the individual in this role to be able to communicate the business’s finances with the banks effectively and efficiently. By keeping the lines of communication open between the two entities, the company’s chances of accessing funds to grow will be more significant. Ask the CFO candidate if they’ve acted as a liaison between a company and a bank during the interview process.
Read More: The CFO of the Future: Why You Need One
3. With Their Ability to Increase Profits
Timing is everything when it comes to hiring a CFO. If your company is going through growing pains and is looking to increase profits to make the changes necessary for success, hiring a CFO could be a great decision. There are numerous ways that a CFO can help increase gross profits, but the most common is by managing the cash flow.
By handling the cash flow of the company, a CFO can boost profits. It’s possible your company has never had a CFO. Therefore, the individual in this role would need to establish processes and put effective procedures into place for collecting payments as well as paying vendors.
What is most important to understand is that cash and liquid assets are going to be the most valuable to your business. With this knowledge, a CFO will oversee the operating cycle to understand better how long it takes for the thing being sold to convert to cash in the bank. Once this financial leader can see the sore points in the cycle, they can make suggestions on how to collect cash quicker, to increase company profits.
If you are looking for a way to add value to your business, employing a CFO is an ideal solution. How a CFO can add value is one of the many questions our team receives from prospective clients. What do we tell them? The role of the CFO encompasses more than the finances of the company, but they must be a leader with the experience and foresight to help add the most value.
If you think a CFO would be beneficial to your company but are concerned about budgeting for their salary and benefits, consider fractional hiring before making that major investment. At Signature Analytics, we can help place fractional, part-time employees that work in or outside of your office. This is a great solution to get the benefits of a CFO without the price point of a full-time role.
Read more: Signs Your Company Needs to Hire a CFO
To hear more about this kind of service, please contact our team today.