July 18, 2023
Every business aspires to create sustainable financial success. Whether project-based or a permanent solution, hiring a Chief Financial Officer (CFO) can be your best asset to achieve this goal.
A CFO is a senior executive responsible for the financial affairs of a corporation or institution. Here we explore what CFOs do and how they can help companies reach and exceed financial goals.
A CFO must consider economic, industry, tax, government regulation and social issues. This is especially valuable to a quickly growing company that has a large number of employees and complex product lines. CFOs channel their financial expertise into a strategic leadership role to create financial success for the company and its stakeholders. They have a deeper understanding of a company's business model and banking relationships.
A CFO can:
Specifically, CFOs perform a number of essential tasks. If necessary, a CFO will act as a right hand and sounding board for the chief executive officer (CEO) to help the business grow. This position can relieve the CEO of the burden of managing relationships with investors, lenders, and key partners. It is their job to help nurture relationships with sources of capital and ensure timely collection of revenue.
Keeping a business funded is a key role that CFOs play in assisting a company. Because business is more data-driven than ever, CFOs provide analysis of this data and offer key insights. They assess your processes and operations, suggest improvements and implement changes.
When a corporation or nonprofit is experiencing rapid growth, this is an important indicator that a CFO is needed. An expansion of automated systems, and additional capital and financing is necessary for growth. With the potential for increased complexity, a CFO is well suited to handle rapid revenue growth. They will handle the interpretation of the investment and technology and the terms of acquiring capital.
CFOs will analyze the current financial position, market trends to implement the best strategies, and improve cash flow and profits of the company in order for the company to grow more quickly. CFOs have become an important resource for companies experiencing rapid growth.
With a future that is more unpredictable than ever, you need an expert to turn to. Shifting market dynamics, new leadership models and disruptive technology require an ability to adapt. This is why a CFO is often referred to as a change specialist.
It is a CFOs responsibility to develop new products, markets, or offerings. They are there to identify new opportunities so that they can transform the company's products and markets. These opportunities also assist them in capitalizing and planning for future growth as well as creating and effectively communicating the corporate growth plan.
A team is needed to evaluate a company's potential merger and/or acquisition. In many instances, this task will be outsourced to a firm that will also perform the financial and regulatory due diligence.
The reports prepared by this firm will be reviewed and interpreted by the CFO who will tailor the terms according to the findings. In turn, the CFO will communicate these findings to a potential investor or lender and be prepared and anticipate any questions. This will help speed up the process of any merger or acquisition. It will also alleviate other members of the company from the burden of having to deal with this complex financial procedure.
When your company's profit margins are not at a desirable level and you are not sure why, a CFO can be invaluable. This resource can improve profitability by controlling costs, improving productivity, and analyzing pricing strategies. Better decisions can be made across the company when it has a better understanding of its profitability. Having a CFO oversee and manage the financial department can keep the necessary players informed with past and current financial reports.
Upholding a company's tax obligations is of the utmost importance. Preparing and disclosing accurate financial results weighs heavily on a company's integrity. If it is becoming difficult to perform these tasks, it is time to consider hiring a CFO. Tax rules and regulations can become complex and convoluted. A CFO will act as an advisor and assist you in interpreting and following them.
They can provide these services:
Most companies and nonprofits need a good financial model that represents their strategy. Strategic planning requires an investment in people and technology to support business processes such as budgeting, forecasting, and long-term planning. Having an effective CFO can support this process by balancing their role of strategist across the business.
Nonprofits can benefit from having a CFO help them with their strategic planning by bringing a high-level perspective to the organization's finance and accounting needs. They can ensure that the financial constraints surrounding the strategy are realistic and not too risky.
A CFO is at the center of developing any good strategic plan. CFOs will work with others within the company to communicate business performance and issues to those who need to know. They help in facilitating discussion and decision making amongst the company ranks to ensure efficiency and keep them motivated.
To that end, because the CFO is more knowledgeable about the company's finances, it can outline the details of a strategic plan, test it, review its viability, and advise on potential changes to it. If necessary, they are usually skilled enough to take over the planning all together if it proves to be too complex. This will relieve other members of the company or nonprofit from having this workload so they can focus on the other necessary aspects of the business.
If your business's capital is not growing and you need someone to take charge of it, you may need a CFO. Determining the specific investment strategy and the asset classes (equities, bonds, or cash) is something that the CFO can determine. CFOs can help execute an accurate forecast, evaluate your terms, segment your customers, suppliers, and inventory, and set up and enforce a payment discipline.
In order to make the proper operating adjustments, you have to be able to understand your company's margins. From gross profit margin to net margin, there are a lot of details and calculations involved when determining these figures. It can become quite complicated and tedious if you are not familiar with the process. Having a CFO at your side can help ease the pain and stress of being able to figure out and understand your company's margins.
If the company is lacking detailed financial data, it may be time to look into hiring a CFO. This information is critical in making sound business decisions. If you do not have this information, you may be making decisions partially based upon intuition and gut.
Not being aware of industry, economic or regulatory changes could drastically affect your business. This lack of information could also prevent you from being able to generate accurate financial reports required by bankers, suppliers, shareholders, investors, and partners.
It is the CFO's responsibility to provide the company with the detailed financial data it needs to avoid these detrimental situations.
When considering CFO Services, you may want to look outside of the company. Outside hires are valued for their experience in mergers and acquisitions, independent thinking, their external networks, and strategic insight. Many of them have already served in or with professional service firms such as investment banking, consulting, or private equity for a large portion of their career.
Here at Bowers, we have been providing financial services since 1978. We may be the strategic partner you need to move your business forward! Give us a call if you would like to discuss our CFO services in further detail.
Bowers aims to offer helpful information to our clients and friends. Learn more about how we can help should your business need CFO services.
Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.