Welcome to Part 4 of our “Does my business need…” series, where we break through financial gobbledigook to help you figure out your business’s needs. Jargon out, simplicity in.
What does a Chief Financial Officer (CFO) do?
The role of the CFO (at larger organizations) is to manage the finance department as a whole, both operationally—ensuring accounting systems, tools, and finance employees are supporting the company’s short and long-term goals—and strategically—guiding the company through key business decisions and performing competitive market analysis.
A part-time CFO can help even the smallest companies strategize on capital requirements to fund an acquisition or some other form of growth initiative, or to help a fast-growing company decide whether it might be advantageous to go public.
The key is that you don’t need to bring on a CFO full time to reap the benefits of their expertise. (Seriously, why would you pay someone a six-figure salary when you only need them for a few hours each month?)
When do I need a part-time CFO?
You need a CFO when you are:
- Bogged down with interpreting the numbers and need strategic guidance
- Thinking about fundraising
- Looking to go public
- Looking to expand or acquire another business
- Developing a long-term plan to sell the business
- Facing cash flow issues and need to come up with a cash flow management plan
- Looking to scale and want to make sure the operational side of finance is ready for scaling.
A good example of a time to consider adding on a part time CFO would be a boutique clothing retailer that has expanded to open its fifth store and the owner/CEO is bogged down by managing the financial aspect of the business. If the CEO is too busy dealing with financing issues, it can take away from his/her ability to pursue and execute on the strategic vision of the company. Outsourcing a CFO with retail experience can help take some of the pressure of the CEO and allow them to focus on growth opportunities.
Frequently asked questions about CFOs
What type of education / work experience does a part-time CFO have?
Typically, CFOs have a Masters in Finance or Masters in Business Administration, but not always. For Paro’s network, we are much more focused on experience. It’s important to us that the CFOs we accept have actually done the job for at least 5 years. Many of the CFOs in our network have 15+ years of experience as CFOs.
How do I know if my CFO is doing a good job?
Your CFO should be asking insightful questions and delivering information to you in a digestible way. With matters relating to fundraising, cash flow management or whatever area you have hired them to provide their expertise, they should take driver’s seat, guide the conversation, and provide you with actionable recommendations.
As with any consultative or freelance arrangement, it is critical to set mutual expectations at the start of a project and check in frequently to make sure there is continued alignment.
Should I expect my CFO to manage my CPA / Accountant?
Yes, the CFO should manage the entire accounting function. In a part-time role, the CFO would work closely with the accountant.
How do a CFO and financial analyst work together?
Strategy and guidance will come from CFO. The heavy financial modeling and data analysis will be done by the financial analyst. Once the CFO has the data from the analyst, he/she can take the information and make some real business decisions and recommendations around it.
Think you need a part-time CFO? Schedule a free 30-minute consultation with one of our finance experts to talk through your business needs.