Whatever industry you’re in, whatever the size of your organization, the Chief Financial Officer plays a vital role in your company’s success. If you run a small company, you may not have the workload or funds to support a full-time financial executive. If this sounds familiar, a part-time CFO could be a viable solution to reap the benefits of a financial executive without breaking the bank.
Read on to explore why your company needs a part-time CFO, what this fractional executive does, and how to hire for this critical role.
This is Why Your Company Needs a Part-Time CFO
In many small and growing companies, an accountant or maybe even the owner picks up CFO duties. While the owner may know the business inside and out, they often don’t have a lot of experience managing finance and accounting or don’t enjoy dealing with it. In many cases, accountants don’t have the proper training to provide strategy and forecasts the way a CFO does.
A CFO measures the success of your business in dollars and cents to help your company grow as quickly and as profitably as possible, while providing these key benefits:
- You’ll have a personal advisor: Your CFO will always be there to guide your financial decisions. They come with a wealth of knowledge and will have a grasp on the ins and outs of your business financially.
- You’ll have help raising capital: Your CFO will play a critical role in managing your business funds and equity. They will help you to raise enough capital to expand and ensure that your revenue is collected on time.
- You’ll have an expert in financial data: Currently, data is one of the most significant driving forces behind a company. The expectation is that a CFO with experience will know how to analyze Big Data, pair it down, and report the most important facts and figures to the CEO.
- You’ll have more time to do what you do best: As your CFO brings in-depth knowledge of all things financing and capital, they can manage relationships with partners, shareholders, lenders, and investors. This help will open up your calendar, giving you more time to concentrate on running your company.
Which Kind of Background Should I Look for in a CFO Candidate?
As you’re searching for the right CFO, it will be imperative to consider your company’s short-term and long-term goals. Your goals will help shape the qualifications you are looking for in your next finance leader.
While all CFOs have qualifications and experience in business finance, each has their area of expertise that can serve as a bonus to your company.
The KPI Wizard: This type of CFO loves metrics. They can step into your business and quickly see how you are scoring on performance. If you are not up to par, they will be very swift to tell you where and how to make improvements.
The Numbers Champion: This type of CFO is a leader that feels comfortable wearing many hats. Within the finance department, their role may include handling treasury, controllership, financial planning, and auditing. They won’t let a single figure slip by without notice, and they will keep you informed of all significant financial occurrences.
The Strategy Ace: This type of CFO usually has experience working on other aspects of a company such as general management, marketing, and operations. These experiences give CFOs the ability to effectively communicate with practically anyone on the team to ensure accurate procedures are followed. The results are streamlined business strategies and employees who are prepared to handle any issue that may arise.
The Development Expert: This is a new breed of CFO. Chief financial officers who are experts in growth and development usually have several years of experience dealing with venture capitalism, private equity, and mergers and acquisitions. They will help you grow your business in ways you may not have thought of yourself.
Read More: The CFO of the Future: Why You Need One
These are the Reasons Why Your Company Needs a Part-Time CFO
Small to middle-market companies who range in $40 million in annual revenue, and who may have a small accounting team, may not need an in-house, full-time CFO. Of course, this is dependant upon a variety of factors. However, they likely still need the advice of a financial leader, especially when it comes to the following:
- Improving your financial awareness: Accounting departments rarely have the knowledge and experience of a CFO. They cannot provide the same level of financial forecasting or strategy development and implementation as a CFO.
- Reaching solutions fast: While it’s true that you know the business best, a CFO brings a fresh perspective. They can help find solutions to recurring problems and work with you directly to streamline all the financial aspects of the business.
- Creating cash flow forecasts: A thorough understanding of economics is essential to anyone in the role of CFO. This knowledge enables them to develop accurate cash flow forecasts based on the company’s finances and its standing within the industry.
- Staying aligned with your financial department: A qualified CFO has a firm understanding of the latest financial software solutions and cloud-based tools. Knowledge such as this provides the company with ways to more easily access important business information.
Read More: Signs Your Company Needs to Hire a CFO
What You Get with a Part-Time CFO
A CFO’s responsibilities are broad and will vary somewhat depending on your company’s industry and size. Regardless of sector, there are a few essential functions they can use to help any company:
- Providing a thorough understanding of your company’s financial situation
- Helping you make necessary financial decisions based on that knowledge
- Taking steps to reduce financial risks now and in the future
- Forecasting budgets and developing strategies to grow your business
- Implementing an economic growth plan
- Managing or supporting multiple departments:
- Accounting: tracking cash flow and financial planning
- HR: managing payroll and flexible benefits
- Legal: overseeing taxation issues
- Treasury: deciding how to invest the company’s money
- Monitoring different transactions:
- Benefit plans: optimizing price and value
- Acquisitions: managing a merger or acquisition strategy
- Insurance: making sure that the company has adequate protection
When is it Time to Engage a Part-Time CFO?
There are a few significant signs that it might be time to consider a part-time CFO for your company. Some of these include:
- Periods of rapid growth: A CFO can help scale your business by focusing on capital, liquidity, and free cash flow. Their expertise can ensure your rapid growth is fiscally sound and sustainable in the long-term.
- New product development: You can benefit from a CFO’s market assessment skills and their ability to work with marketing and sales partners. Their analytical ability will help you get the best return on investment when it comes time to launch your new product.
- You want to boost profitability: In this instance, a CFO can understand the cost of various projects, track the right metrics, and use data to streamline the company. When the CFO understands the bigger picture, they can set your company on the right track towards long-term growth. They can even get you back on track if your business has become stagnant after several years of maintaining the status quo with less successful results.
Filling the CFO seat can be beneficial for numerous reasons, including quantifying and reducing risk to the organization, lowering costs to increase profitability and cash flow, and ensuring your long-term company strategy is executed and results realized.
By bringing on a part-time CFO, business owners and managers can realize these benefits at an earlier stage and save on costs, rather than waiting for a full-time CFO role to develop.
If your business could benefit from a part-time CFO, contact Signature Analytics. We are happy to discuss our outsourced CFO services. We can set up a consultation to learn about your specific business needs and can discuss the best, outsourced CFO services for you.