Think you need a CFO?
To generate sustainable financial success in business, and to maintain constant strategic leadership there is no one better positioned inside a company than the Chief Finance officer. This role will ensure financial success for the company as well as its stakeholders.
A CFO’s responsibilities include managing mergers or acquisitions, budgeting and making sound predictions, and most important strategy. A CFO has a profound understanding of your business model and your banking relationships, formulates comprehensive financial and management reports, collaborates with your board of directors, supervises tax planning, and sets policies around controls and payroll, and works with auditors
A CFO is particularly valuable for a company that is experiencing rapid growth, has a growing number of employees, and multiple product lines. The CFO is progressive as they consider economic, industry, tax, government regulation and social issues. When a company is considering an acquisition or arranging to be acquired, a CFO can add tremendous value. Determining the type of CFO or what level of skill is needed is dependent on the current position of the company and where it expects to be in the near future.
A very common reason for hiring a CFO is when a company is growing rapidly and possibly deciding to acquire investment capital. When this is the case, the CFO also becomes the consultant hired to keep investors updated on how the company is performing. The type of CFO hired will also be dependent upon the type of organization, whether it is in the public or private sector, and its history and culture.
CFOs perform a number of essential tasks including collaborating with the CEO to grow the business, making sure that profit and revenue is collected on time. They also develop relationships with sources of capital and help relieve the CEO of the burden of managing relationships with investors, lenders, and vital partners. They are the overall financial strategists.
Rapid growth is an important indicator that a CFO is needed. They are also necessary when developing new products, markets, or offerings. The CFO is looked to as a transition specialist especially because the future is more unpredictable than ever with the rate of technology growth.
The CFO helps to identify new opportunities and transform the company’s products and markets, capitalize and plan for future growth, create and effectively communicate the corporate growth story.
When you are unable to determine why profitability is not at an acceptable level a CFO is needed. Three ways the CFO can improve profitability are controlling costs, improving productivity, and analyzing pricing. Better decisions can be made in the company by improving visibility into profitability. The CFO can keep the CEO, board, and investors informed with past and current financial reports by managing the financial department.
When a company is unable to prepare and disclose accurate financial results and uphold its tax obligations, it may be time to hire a CFO. High net worth companies often face complex tax rules and regulations. A CFO acts as an advisor and helps to Interpret changes in the law and which decisions can provide benefits, analyze the tax benefits of investment and capitalization, provide guidance for any financial overlap between owners, shareholders and the businesses they own, improve current tax positions and build and preserve assets.
The CFO is a crucial partner in the planning process by expanding on the CEO’s strategies. The CFO can ensure that the financial constraints surrounding the strategy are not unlikely or pose too much risk.
CEOs are empowered with a financial executive in place who knows how to solve problems and manage the financial department. CFOs are perfectly positioned to help create a company that is financially strong, and creates wealth for its owners.