The article below is interesting on a few levels. First, because it gives you some good advice on how a CFO (chief financial officer) can help a business outside of the usual role they are typically hired to play.
The other two reasons are more subtle, however and interesting from our particular small business accounting perspective. The second reason the article is interesting is because it makes us wonder who is filling these roles if your company doesn’t have a CFO, which turns out to be probably somewhere around 98% or more of all businesses.
Without a CFO does it mean that no one is doing these three fairly important functions at all or that they are being done by someone else? My guess is that in most cases they simply aren’t being done.
The third reason we particularly find the article interesting is that all three of these things that it supposedly requires a CFO to do are things we routinely help our San Diego bookkeeping service clients with all the time.
In our minds, these are important tasks but not ones that need to be done by or require a CFO. What they do require is someone who has a solid understanding of the business in question, the financial aspects of that business and a firm grasp of business in general.
All of these are things we can provide any client after establishing a working relations hip with them and an understanding of their business. The best part is, we don’t charge CFO rates (which easily run $200+ an hour or more in most cases)!
In our experience, the best CFOs have expanded well beyond traditional accounting and balance sheet management and taken on new roles. Here are three:
No. 1: The CFO as Chief Opportunity Officer
Successful CFOs build a team of analysts, typically found in the financial planning and analysis (“FPA”) function, which builds a solid fact base around the company’s businesses and its markets. Good CFOs use this fact base as their primary tool to facilitate strategic conversations with the rest of the management team—including the CEO, Head of Sales, Head of Operations, and business unit leaders. They consistently identify profit growth opportunities and partner with the rest of the management team to develop execution plans to drive those profit improvements into the PL.
No. 2: The CFO as Chief Investment Officer
In this role, the CFO provides financial tools and analysis to evaluate various investment opportunities, whether they are capital investments “bubbled up” from the business or acquisition opportunities in the marketplace. The CFO is in a unique position to provide useful context and compare one investment opportunity vs. another to ensure the highest return.
No. 3: The CFO as Chief Metrics Officer
The CFO can deliver the critical data that’s empowers management and staff to make better day-to-day business decisions. Providing the right metrics and soliciting a conversation around how the various parts of the business can influence those metrics, can drive better business performance.
Do these new roles mean that the CFO can abandon the typical bean-counter role? No, but the CFO can certainly delegate those responsibilities including accounting, compliance, balance sheet management, and the treasury function to a capable deputy. Doing so will enable the CFO to spend more time and energy being a partner to the management team and driving value in the business.