Not all companies have CFOs, and there is a common attitude that only large enterprise-level companies need them and can afford them. However, many growing businesses need the help of a CFO before reaching the enterprise level. Understanding the role of a CFO can be the first step in gaining the expertise of a person who can literally make the difference between the success or failure of a company.
The main functions of a financial director can be summarized in six points:
1. CFOs are responsible for managing the finance function of the company, which would include overseeing things like transaction recording, cash flow management, internal controls management, and legal reporting, management, and development. finance department staff, external auditors and tax advisors.
two. The FD manages the financial and business planning of the company, including budgets, forecasts, strategic business reviews, financial strategy, financial and cash requirements, and formal business plans that may be presented to third parties such as potential investors.
3. FDs manage relationships with important external stakeholders, including funders, bankers, outside investors, lawyers and corporate financiers, as well as the aforementioned auditors and tax advisors.
Four. A CFO with commercial business experience can often contribute to and manage functions such as IT systems, legal, human resources, property, and other facilities. Special projects, such as mergers and acquisitions and internal change management, are also often handled by the CFO.
5. The DF will be the interpreter and translator of numbers. A good CFO will not only produce good quality numbers using solid and robust systems and processes, but will also be able to describe what the numbers mean. In addition, this interpretation encompasses not only what has happened but what could happen in the future, using key indicators and metrics. Translating numbers into facts on the ground is probably the biggest differentiator a good CFO has over a good CFO.
6. Finally, but crucially, the FD is perfectly placed to be the MD’s number two business, the ideal business partner, the devil’s advocate, the conscience, the voice of sanity and, when necessary, the brake. A good FD can discuss finances with finance people, as well as present financial issues that affect the day-to-day running of the business in a clear and concise manner to the management team.
It may be logical to conclude that with all these responsibilities, a CFO is a full-time position required by larger companies. However, more and more companies are discovering that there is a crucial period in the life of a growing business when the skills and experience to provide the above services are required, but not full-time, and that a CFO flexible is a cost-effective, low-risk bridge between using a combination bookkeeper/accountant and acquiring that first full-time FD.
What is a “flexible” CFO?
A flexible or part-time FD does just about anything you’d expect a permanent CFO to do, as long as it’s not illegal, unethical, or immoral! Some clients have just one bookkeeper, others have a financial controller who leads a financial team, and the financial director is flexible to adapt to the client’s resources.
Flexible CFOs typically work continuously with clients on projects of strategic value, but are also happy to oversee the entire finance function.
Also, a flexible FD does not go native as they do not work within the company full time. The main advantage this provides is the ability to retain an outside perspective on problems. This can be very important when SME management teams are often very overworked and don’t have quality time to step away from problems and see them in a new light.
Ultimately, having a flexible FD model enables growing businesses to afford that critical expertise at a fraction of the cost of a full-time CFO.