Finance & accounting expertise, marketing spend ROI, operations, raising capital, economic analysis, and even IT familiarity make CFOs powerful executives in today’s business environment.
Chief financial officers (CFO) do much more than count beans and prepare financial reports. They evaluate financing options, monitor industry metrics (KPIs), improve operational efficiencies, and identify where risks and opportunities exist.
Financing and growth options (including capital raises) are everyday CFO concerns. Furthermore, as organizations seek to boost revenue, they must also be aware of what’s happening in the markets. It’s important to read between the lines and understand what comes with the money being procured. Sometimes there are strings attached. With debt, there often come covenants that a company must comply with. The CFO must protect the company and ensure its compliance. The details matter, and the CFO must take responsibility for that.
CFOs also monitor how other financial experts are feeling about the market, the economy as a whole, and the industry they are operating in. The marketplace is dynamic, and plans have to be constantly evaluated given the evolving, fast-paced marketplace. The CFO must constantly be communicating with the CEO and other managers on these facts and trends so that they can make better decisions for the future. Competition is fierce!
In addition, a range of external metrics is routinely monitored by CFOs as they advise their companies. Benchmarking is crucial, and the CFO must also decide what data is to be benchmarked (a critical decision). Monitoring the industry and the competition is paramount to understanding the performance of the organization.
For example, a good CFO will monitor margins of the competition or the overall industry. Is pricing becoming more of a constraint to profits? Are there pressures on price increases? Are labor costs increasing? Another important item to review is R&D spending and the cash position of other companies. How is the organization investing in itself as compared to the competition? Does it have the cash and financial strength to keep up? How long until it gets left behind? All these factors can be very telling as to where the competitive landscape will be in 12-36 months.
On another front, CFOs are much more involved in today is information technology. For CFOs, IT has always been a consideration, but the required attention has intensified in recent years as cloud computing and other platforms have expanded.
For the contemporary CFO, it’s not uncommon for the CFO to help with planning marketing & business development initiatives. A strong partnering with the marketing group gives CFOs greater opportunity to collaborate and make data-driven decisions around what’s working and what’s not working with regard to media strategy. A lot of organizations bleed money through marketing spend without appropriate ROI measures. CFOs have to closely monitor this spending!
The decision to hire the CFO role can be complex. For a smaller organization with plans to grow, the CFO will likely need to be part-time, until the organization can afford a full-time CFO.
Most organizations need a controller-level person to manage the books, oversee basic reporting and handle other day-to-day financial tasks. The trigger point for developing a CFO position is often linked to the type of expertise the organization needs. Growth of the organization is often the tipping point. For the most part, companies are either shrinking or growing, and the need for a CFO can be determined by how intense that shrinking or growing is. And, no organization should even consider implementing an aggressive growth strategy without sound CFO engagement.
Certified Public Accountant (CPA)
Accredited in Business Valuation (ABV)
Contract Chief Financial Officer (CFO)
Registered Investment Advisor