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What Should Small and Mid-size Businesses Expect From Their CFO?

The role of a CFO within a company will depend on several factors, including the CEO and/or board of directors’ expectations, the industry, corporate strategy and business aspirations. A company’s size will also have a significant influence on the CFO’s role; however, below are some general responsibilities that every business, regardless of their size, should be able expect from their CFO.

Forward-Looking Financial Analysis

The foundation of any company’s accounting and finance function is to produce timely and accurate financial information for the business. The CFO oversees these accounting and finance functions; however, the true value of a CFO is their ability to provide forward-looking financial analysis. This analysis should be focused around driving additional profitability and value to the company.

Whether you have a full-time, part-time or outsourced CFO, below are some examples of the forward-looking financial analysis you should expect from the CFO role:

Cash Management & Forecasting

Are you able to predict when you will have a surplus of cash that you need to manage or when you will have a shortage of cash and may require financing?

Cash flow problems can kill businesses that might otherwise survive. Your CFO should be monitoring cash flow and analyzing cash flow projections on a regular basis to ensure your business does not run out of cash.

Budgeting & Expense Control

Does your business have a budget? Do you receive an analysis comparing prior year actual, current year actual, and current year forecast on a regular basis?

Your CFO should own the budgeting process – incorporating input from each department for the most accurate and complete projections. They should also be monitoring budgeted versus actual results on a quarterly or monthly basis and reforecasting accordingly.

Compensation Plan Development

Is the compensation of your employees aligned with the goals of the company?

The CFO of a company should help to structure employee compensation plans that incentivize efficiency and are also aligned with the financial goals of the company.

KPI Development & Analysis

Are you maximizing margins? Are revenues analyzed by revenue stream? Are employees being utilized appropriately to maximize profitability?

KPIs (or Key Performance Indicators) are different for every business, but it is the responsibility of the CFO to work with those in operations to help develop KPIs applicable to the company and support the analysis of those KPIs on a regular basis. Making changes that directly improve KPIs can help improve the future value of the company.

Board & Investor Communications

Are you providing valuable financial information to your Board of Directors so they can review the trends of the company’s operations and assist in making appropriate decisions? Is the information presented in a professional manner?

Your CFO should be preparing presentations for your board members that clearly communicate the company’s financial information in an organized and easy to understand manner. The information should show trends to help visualize projections so the data can be used to drive business decisions.

Securing Financing & Raising Capital

Do you review your banking relationships on a regular basis and are you confident that you have access to financing on the best possible terms for your business? What are the capital needs of the company now and in the future? What is the best way to meet those needs?

Your CFO should play a key role in identifying and securing investment and financing. They should identify capital requirements prior to approaching financial institutions and investors to ensure you raise the appropriate amount of capital required to support your growth plans. They should also prepare presentations of the company’s financial information that allows potential investors or lenders to clearly understand the data so they are comfortable with the business’ performance

Tax Planning

Are regular communications occurring with the company’s tax advisor to maximize all tax-related strategies?

Your CFO should maintain consistent communication with tax preparers in an effort to minimize your company’s potential tax liability.

Ongoing Analysis & Review

All of these responsibilities should be viewed as ongoing processes that need to be revisited on a regular pre-determined schedule and modified based on the most recent financial information available. Furthermore, all of the results should be measurable in order to track the success of the analysis being performed.

The Bottom Line

There is infinite value to the company if their CFO is providing the forward-looking financial analysis listed above, as the ultimate goal of each is to maximize profitability and value for the business. If managed and measured properly, companies with the appropriate financial infrastructure are aligned for–and able to support–significant growth.

We Can Help

If your business requires any (or all) of the forward-looking financial analysis mentioned above, but you’re not in a position to hire a full-time CFO – we can help. Our highly experienced accountants can act as your entire accounting department (CFO to staff accountant), or complement your internal accounting staff, to provide the ongoing accounting support and forward-looking financial analysis necessary to effectively run your company, analyze operations, and guide business decisions. Contact us today for a free consultation.

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