You may not need a CFO on day one, but as your business grows, you’re going to hit a stage where expert financial guidance becomes integral to your operation. Whether it’s cash flow management or handling investor relationships, a CFO can take on these roles and more. For many small to mid-sized enterprises, an outsourced virtual CFO offers a smart and flexible option. You’ll have access to high-level financial expertise at a fraction of the cost of a full-time employee.
What is the role of a CFO?
The role of a Chief Financial Officer (CFO) goes beyond looking after the books and recordkeeping. Their job is forward-thinking, strategic and designed to help a company thrive financially. While an accountant focuses on documenting what’s already happened, a CFO focuses on and handles what’s ahead.
- Develop strategies to help shape the financial direction of a business in the long term.
- Supports better decision-making by building realistic budgets and financial forecasting.
- Keep track of cash coming in and out of the business to ensure the company always has funds and stays liquid.
- Identifies potential risks and develops the appropriate solutions or mitigation efforts.
- Develop strategies to encourage investors and raise funds to support business operations.
- Sets key performance indicators (KPIs) to help measure a business’s financial health.
Your chief financial officer will make sense of the numbers you’re dealing with and help you use them to make confident business decisions.
How will you know your business needs a CFO?
If you’re serious about preparing your business for the unexpected, you should upgrade from a bookkeeper or general accountant to a CFO. This is especially true at the stage when the financial needs of your company have outgrown these roles.
Rapid growth and scaling challenges
Business growth is what every entrepreneur wants, but it can’t be chaotic because of mismanagement.
- You see an increase in revenue, but the profit doesn’t follow suit.
- Recruitment is at an accelerated pace, incurring higher overheads.
- Business operations have grown complex, making it harder to make a decision fast.
Lack of KPIs and financial blueprint
A company running without a clear financial goal is practically going nowhere.
- There’s a lack of a financial roadmap or goals for the next 6 to 12 months.
- Success is measured primarily by sales, with no other metrics to rely on.
- Monthly reports lack data that can help make better decisions.
Cash flow problems
- You’re constantly hitting the wall where payroll or supplier payments are concerned.
- The gaps between invoicing and payments are growing with no way of bridging them.
- Investments or recruitment are restricted by unpredictable cash flow.
Complex financial operations
As the business expands, so do the financial needs that you have to face day in and day out.
- Multiple locations, revenue streams and cost centres running simultaneously.
- Going global means risks associated with foreign exchange and international payments.
- Dealing with compliance requirements, claiming expenses or financial audits.
The moment your financial questions can’t be answered by the current systems and staff, hiring a CFO is the next best step. As your company expands, you’re going to need financial strategies that will keep your business afloat and in the black. Don’t let the hiring cost stop you from partnering with experts. Acclime New Zealand offers Virtual CFO and finance functions that are cheaper than an internal hire, but no less exemplary.
