Every company should have a chief financial officer (CFO). The CFO is the most senior financial person in a company and is typically viewed, and relied upon, as a trusted, strategic advisor to the owner and senior management. In smaller and mid-sized companies, the financial controller is often the most senior accountant and financial advisor.
It is often very common in smaller companies for the controller to perform some of the functions normally performed by a chief financial officer (CFO) in larger companies. Larger and/or more complex companies, typically have a separate CFO function.
What is a Chief Financial Officer?
The chief financial officer (CFO) is ultimately responsible for the company’s financial accounting and reporting, and the internal controls that produce complete, timely, and accurate financial information. In addition to overseeing the controller, the CFO is typically responsible for the following:
- Strategic planning
- Financial reporting
- Annual budget process
- Cash management and cost controls
- Contingency planning
- Internal control system
- Corporate transactions, including mergers and acquisitions, ESOP transactions, and exit strategies
- Information technology management
- Insurance management and renewals
- Tax planning and interaction with tax preparers
- Banking and bonding relationships
- Investor relationships
- Audits with outside accountants, regulators, tax authorities, and insurance auditors
- Board meetings and finance committee meetings
Before you begin your CFO search in earnest, your team should outline expectations and required job duties to improve your odds of finding a candidate who has experience in the right areas.
Benefits of Hiring a CFO
In today’s workplace, most companies work in automated environments that facilitate or enable working remotely. As such, there is a greater demand for professionals that can work remotely or virtually.
By entering an independent contractor arrangement, employers reduce payroll taxes, insurance premiums, and other costs associated with having a full-time employee on the payroll. Many small-to-mid-sized businesses do not need a full-time CFO, so a virtual CFO will enable the business to ramp up the CFO’s workload during busy times and ease off during slower times.
The costs of a full-time CFO may be prohibitive to smaller companies, especially if the workload does not require a full-time presence. Further, it is very common these days for staff to turn over frequently, often within 1-3 years, which is disruptive to an organization. Engaging an outside firm like CFO Strategies to handle your CFO function, protects your company against staff turnover and the disruption and cost of starting over with a new CFO.
From the virtual CFO’s perspective, this structure can allow him/her to serve multiple companies anywhere in the country, giving him/her more knowledge of various systems and practices. That knowledge will be brought to bear at your company. Outsourcing your CFO function can provide a level of expertise that can otherwise be hard to get.
Independent CFOs for hire and companies that provide virtual CFOs often have extensive experience in many different industries. Finding someone locally who can provide that level of experience at an affordable price may be a challenge.
A CFO brings unique expertise to the table. While you may know the ins and outs of your business, a CFO that is outsourced, or hired from outside the organization, can provide a fresh perspective and help you identify areas of cost savings and future growth. By producing reliable data and recommending strategies based on the results, your virtual CFO can help you focus on what matters most.
Further, a seasoned CFO in your industry provides credibility with lenders, investors, regulators, and others that may rely on your financial information. That added credibility will enhance your company’s ability to obtain capital and financing and help in growing a profitable business.
Businesses don’t need to provide office space, a laptop, or other supplies to the virtual CFO. Virtual CFOs can often flex their schedules so long as certain critical tasks are completed by the assigned deadline.
Things to Consider Before Hiring A CFO
Before hiring a CFO, you’ll want to carefully define the role and your expectations. This ensures that you’re not overpaying for services you don’t want or need and sets the new hire to be successful.
In some cases, an outside hire will take over certain job duties from your current staff. In these situations, it can be worthwhile to ask staff members to complete at least a brief job description for their current position. This will allow you to mix and match various duties based on what you’d prefer your controller to handle. After you’ve made your hire, you can then amend your other employees’ job descriptions to reflect their reduced workload and assign other tasks as needed.
Some of the questions you may want to ask a candidate for the CFO position include:
- How do you manage time and how do you ensure that all deadlines are met?
- Have you ever missed deadlines and how have you handled that situation?
- What financial reports have you prepared and how frequently?
- What measures have you taken to control costs in other companies you worked for?
- What is your experience with companies of our size and/or in our industry?
- What control and procedural improvements have you made in your past jobs?
- Do you prefer to work independently or with a team?
- Do you have experience mentoring controllers and junior finance staff?
- What factors do you consider when hiring finance staff? Are you willing to participate in our organization’s hiring process?
- What software have you used? and describe your proficiency with spreadsheet software.
- Have you prepared forecasts, strategic plans, and annual budgets at other companies? Please give examples.
- What projects or corporate transactions have you been involved with?
These questions can give you a better idea of whether the CFO‘s experience and work style will mesh well with your organization.
CFO Strategies provides companies with accounting and financial reporting services financial services, including all functions performed by the CFO, controller, and bookkeeping, both on-site and virtually. Our services are generally designed for companies that need these services on a part-time basis, but we can also undertake full outsourcing engagements as well. Our cost-effective options are customized to fit each business’s needs, including the ability for full on-site services, full virtual services, or a blend of both. We have many years of experience providing controller services for a range of industries, including but not limited to, construction, architectural and engineering firms, transportation, and nonprofits.
To learn more about the benefits and impact we have made for our clients, read our client testimonials.
Contact us today to set up your consultation or just learn more about the services we offer.