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The CFO – Your essential numbers nerd

Updated: Mar 10, 2023

A growing enterprise is every businessperson’s dream. Starting with a small niche and then growing to a broader market usually comes from untiring diligence and determination.

Although aspirational, taking your business to the next step is like jumping from basic math to high-level geometry. It is accompanied by new angles and perspectives, strange words or languages, and more significant volumes of information you need to process and compress.

As your business gains momentum towards earning 7-figures, you will need a professional who will provide you with timely information and expert direction so the company can maintain traction.

Who is the CFO?

The CFO – or Chief Financial Officer – is an executive leader and maybe well-identified as the financial captain of the business. The most crucial roles of the CFO can be neatly summarized in three words: forecasting, planning, and analyzing.

Forecasting sounds more accessible than it does. It is not merely glancing at a crystal ball to get a glimpse of the future. Nor is it wishful thinking of what is hoped to be achieved. CFOs forecast using their professional experience and economic foresight. CFOs know when to make the most of an opportunity on the horizon. But most importantly – and crucially – is that CFOs can sense risks in advance to maneuver your business out of potholes or bump roads.

Planning is the actionable by-product of a CFO’s forecasts. From delegating tasks to realigning your business resources, the CFO works closely with you as the financial spokesperson that translates numbers into a concrete game plan.

Analyzing is where CFOs roll their sleeves up and supervise that financial records are up to date, compliance requirements are met, and your tax legislation is duly observed. CFOs can be relied upon to ensure that your accounting systems run efficiently and that your tax returns are filed accordingly.

What does a CFO do?

While forecasting, planning, and analyzing are a glimpse of what CFOs are essentially trained for, their specific activities involve the following:

  • Designing and maintaining an efficient accounting system.

  • Analyzing the data generated by your business’ accounting system.

  • Managing financial risks and opportunities.

  • Performing regular check-ups on the business’s overall financial health.

  • Coordinating departments in creating and projecting budgets.

  • Identifying measurable key performance indicators and implementing them.

  • Analyzing performance variances and improving on them.

  • Communicating with stakeholders and engaging in stakeholder dialogue.

  • Keeping abreast of tax laws and regulations.

  • Ensuring that the business is tax compliant.

And plenty more!

When do I hire a CFO?

Working through your finances is essential from the start of any business. But before you start scouting for your trusted numbers guy, remember to match your operations’ demands to the kind of financial services you need. While you may need all the expert help you can get, hiring a full-time CFO may drain your business resources even before you start!

The rule of thumb is as follows - have a CFO on board when your sales hit a million. At this point, your business is not just for your stockholders. Lenders, suppliers, customers, potential investors, and government regulators all have a stake in your company. You need someone with professional stamina – one who has earned their stripes through experience from various industries – not just to keep your business afloat but to bring it to new heights.

Not all CFOs are made the same. You have transactional CFOs, one who steps in to address a specific business problem or turn around a business situation. You have fractional CFOs, enriched experts with expansive business knowledge and industry know-how, who will design your strategies and catapult your business to the next level; you would hire this expert to be part of your leadership team in a perpetual manner. You get the benefits of having a 6-figure executive on your leadership team for a fraction of the price.

Finally – you have reached the pinnacle of enterprise, and you have a full-time CFO who is in-house, staffed, and trained to have an intimate understanding and loyalty to your company.

In our next blog posts, we will discuss the differences between the three.

If you feel like you need a CFO but still have queries or concerns, please send us a message today!

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