The roles of the Chief Financial Officer (CFO) vary significantly between industries and businesses. The position requires different experiences and skills to push a business forward efficiently. A good CFO is an excellent strategist who thinks outside the box. Their main task is to help with the financial direction of the business while implementing a mindset of growth in the company to develop ways to boost business growth.
The Chief Financial Officer is the highest position in the financial department. Usually, the CFO reports directly to the Chief Executive Officer or the CEO.
Being a CFO does not only entail handling all the financial aspects of the business. The modern CFO should have a more business-wide leadership approach and must be ready to adapt to changes.
Value-added skills of a good CFO
Being a company’s top financial officer, a CFO is responsible for putting together the company’s budgets, tracking expenses and revenues, analyzing financial data, and providing the CEO and the board of directors with a report on the findings. The CFO is the liaison between banks, lenders, investors, and financial institutions. They see to it that the company is always financially healthy.
The highlight of the CFO’s many responsibilities is their leadership and advice while working alongside the executive team in making major business decisions that would affect the company, its partners, and its employees.
The CFO’s most important job is to correlate financial and operational information to determine the effect of the business decision in real-time and to relay it to the executive team.
The responsibilities of the modern CFO have also expanded. In larger corporations, the heads of HR, legal, and data may report directly to the chief financial officer.
Several years back, the chief financial officer usually worked behind the scenes. They were the ”enemy” of other departments because they often said no to proposals due to costs. Their main tasks in the past were to handle the company’s records and books, prepare financial reports, and ensure that the company adhered to statutory compliance. They did not engage in strategy and decision-making activities.
But the CFO of today is strategically relevant to the company. They now lead the company’s direction and success.
With the availability of financial software and other tools, the chief financial officer can extensively analyze financial data and use it to influence operational strategies and decision-making. They may even perform the tasks of a chief operating officer (COO), and work side by side with the CEO to push the company forward.
Skills of the new CFO
While the core functions remain intact, the modern chief financial officer should have other skills that are more focused on business leadership. Here are the new skills the modern CFO should possess:
Today’s CFO should have strong communication and leadership skills to become an effective business partner. They should be the voice of reason while giving advice and counsel. Since they now take the lead in transformation programs, they must be capable of translating detailed data into concise, clear, and accessible information.
- Control and risk management
Competition induces the market to become volatile. The company also has to contend with various regulatory and legal requirements. The CFO’s job is to see to it that sufficient risk mitigation and assessment, as well as regulatory compliance, are in place. The CFO now has to understand both the financial and commercial risks, and should be knowledgeable and adept at risk management.
- Strategy development
The modern chief financial officer should be active in strategy development and its implementation. They must ensure that the company strategies are well funded, after careful analysis of business and economic trends and other relevant information. It is also their task to inform the external investors and other stakeholders about the new strategies and their progress.
- In-depth understanding of business operations
The modern chief financial officer should have an intimate understanding of the industry and the organization’s business model. They can give an independent perspective and provide a challenge to the operations and commercial teams so that business decisions can be based on sound financial standards.
They can now offer financial analytics and create predictive scenarios that can help the executive team make decisions. They should have the skills to find business growth opportunities and go for profit improvement through benchmarking against other companies in their niche and regional and product line profitability analysis.
Hiring a CFO
A smaller firm may not be able to afford the salary of a full-time CFO. But you can always find an excellent part-time CFO who can provide you with the same services for a fraction of the price. You can get expert and professional help by visiting www.gsmaccountants.co.uk. With an experienced CFO, your business can benefit from intelligent insights into your operational, managerial, and financial practices, to ensure that you attain higher profitability.
The unique financial needs of each company differ, and finding the right CFO is vital. Depending on which stage your business is in, you may or may not need a full-time CFO. You can use the following examples as your guide.
If your business revenue is just over £1m, you do not need to hire a full-time CFO. You can outsource the service or hire one on an as-needed basis, for instance, when you need a financial model or business plan to present to a venture capitalist.
If you are earning around £1m-£10m, you fall under the Series A & B category. At this stage, you need a full-time financial officer and periodic support from a part-time CFO. You would generally require the CFO when the CEO needs to prepare for board meetings, major enterprise contract tenders, acquisitions, and investment rounds.
When you reach £10m to £40m in revenue, you can still maintain a financial officer and hire a part-time CFO. But it would be ideal to hire a full-time officer when you are experiencing rapid business growth.
If your revenue is more than £40m, you must have a full-time CFO.
A CFO is a company executive and your business partner to ensure the growth of your business while avoiding costly financial mistakes on the road to progress.