The CFO: A Vital Role in the “Cockpit” of Your Business

Would you fly on an airplane without a pilot? What would the symphony orchestra sound like if the conductor didn’t show up? What would happen if one member of a tennis doubles team was unavailable?

In all these cases, the absence of a key person would have a material impact.

What about in business? Could a company survive without a CEO? Maybe… but after a while, the leadership vacuum will take its toll. What about a Chief Marketing Officer, a Head of R&D or a Head of Sales? Again, it will depend on the business and its stage of development.

But let’s talk finance. Finance strategy to ensure growth, stability and risk mitigation is critical, yet many businesses focus on compliance and reporting. A Chief Financial Officer (CFO) is charged with the following important roles:

All strategic initiatives such as acquiring a business, divesting of assets, raising capital, investing in research & development, hiring employees and launching new products have significant financial consequences. Senior management should be advised on the strategic direction by a competent CFO. Many ‘great business ideas’ don’t make sense in financial terms.

Management should know that the risk of fraudulent activity is minimized. But controls also ensure prudent cash flow management and spending practices. There may also be a need for credit policies for customers, improved payment terms, evaluation of inventory levels or other ‘performance measures’.

Senior management should not get drawn into long-term, complex projects which detract from other activities. Entrusting the management of these to a CFO is highly advantageous especially where significant analysis is required.  Budgeting, tax strategy, fundraising and scenario planning are obvious examples.

You may have key relationships with banks and investors which need to be managed. Often neglected, these relationships can have a huge impact on business outcomes.

The CFO will also spend time enhancing internal processes and skills so that the finance ‘engine’ runs efficiently. This may include planning, training and/or bringing in third parties on short-term assignments to fill a gap.

YOUR FINANCE TEAM are virtual CFO’s and positioned to help drive your business. It’s in our interests to see you succeed and the more we can be part of the process, the better! Get in touch to discuss how we can help you