A CFO, or Chief Financial Officer, oversees the financial future and health of a company. They engage in activities that enhance performance, facilitate growth, increase profitability. Sounds great, right?
For large businesses, CFOs are common. But it can be hard to determine, if you are a small or medium sized business, if you need a CFO.
You probably already have a controller or CPA (or group of CPAs) helping you manage your finances already. And it probably is working very well! You should keep using them! A CFO doesn’t replace these vital roles. Let’s examine a few of the differences to get a better understanding.
· Manages accounting staff
· Monitors transaction recording
· Produces financial statements monthly
· Forecasts trends and growth
· Manages cash flow effectively
· Plans future growth
· Risk management
· Supervises controller/CPA
· Manages treasury functions
· Reports to CEO and/or shareholders
CFOs take a high-level approach to the company’s financial health and controllers/CPAs are tasked with the everyday tasks of business accounting.
So, why can’t I have my CPA take on the same responsibilities as a CFO? Ideally, this would make sense. However, CPAs are legally required to remain independent from certain business functions to ensure accuracy and truthfulness in their accounting. CFOs have more than just accounting experience. They also need to be able to manage, understand HR, facilities, productions, contracts, negotiations, and so on.
Every year thousands of small businesses fail. According to the most recent statistics from the Small Business Association, 70 percent of private start-up companies fail within their first two years of operations. Often these businesses fail, not due to a fundamental weakness in the business itself or even the changing economics of their industry, but due to a lack of even the most basic financial management. Without sound financial management, companies are simply not able to realize their potential or manage risk. A CFO provides the big financial picture and a clear vision for optimal growth.
Its difficult as a small business owner to imagine hiring a CFO. It can be expensive, time consuming and frustrating. Fortunately, there are CFO services available for hire. You do not need a full time CFO on staff if you are small, so CFO services can give you the services you need, when you need them.