How can a cfo add value

While a company can always increase its long-term value by leaning on an experienced CFO, this role is instrumental during periods of transition, such as:. While some companies hire their CFO internally, others outsource the role to expedite the hiring process and reduce costs.

Hiring a consulting CFO allows a business to obtain all the advantages of bringing on an experienced CFO without the carrying cost of paying for benefits and other full-time employee expenses. They may also act as a fractional CFO performing essential financial functions on an ongoing basis or during specific transitional periods. A good CFO will find ways to improve cash flow, profitability, and the balance sheet to cover the added cost of a CFO and then some.

Controlling costs, improving productivity, and analyzing pricing strategies are a few ways a CFO improves profitability. The CFO will put an effective cash management system in place.

By managing the cash cycle, the company improves collections, pricing, and terms — all adding to increased liquidity. This includes managing capital and debt obligations, ensuring the ability to invest in new projects. Cash flow projections prepared by the CFO provide a means for the management of cash, which is the lifeblood of a company. Among the many reasons, a CFO will manage cash flow to:.

Sales and operations departments often distance themselves from company finances or financial strategies, but an effective CFO brings financial insights and leadership to help the company maximize profits by increasing cash flow and minimizing costs. A CFO will also oversee tax and compliance efforts to:. A CFO brings credibility with finance-based professionals and may act as a liaison with the bank to secure funding. Therefore, a CFO adds value by bringing knowledge to financing, leasing, and purchasing decisions.

They provide knowledge around issues like the advantages of operational expenditures over capital expenditures. This means a stronger position when negotiating with vendors. They provide knowledge around issues like the advantages of operational expenditures over capital expenditures. This means a stronger position when negotiating with vendors.

A CFO will know what steps are required to develop long term exit strategies and succession plans that fit the company goals and circumstances.

They help to prepare a company by having defensible financials and a logical strategy before an interested party is available. If needed, a CFO can:.

A CFO helps business owners identify and target potential companies for an acquisition or merger. CFOs can fill a critical role in the success of these initiatives by being a strategic growth advisor to the CEO. For companies who are selling, raising capital or acquiring smaller businesses for growth, the CFO plays a vital role at every stage in the deal process.

The most effective CFOs have the ability to build consensus, anticipate change, and manage surprises. As a problem solver with an innate desire to learn, they understand what initiatives are needed to help the organization move forward within its strategic vision.

They build and nurture productive relationships inside and outside of a company, act with integrity and transparency. The accounting department turns that data into usable information in the form of reporting. Further analysis of the reports provides knowledge about the behavior and performance of the business.

Such knowledge is key to making informed decisions about the business. The typical domain of accounting is in the handling of transactions, data, and reports. However, too many CFOs view their roles as ending there and leave the bigger decisions to someone else. Great CFOs spend the majority of their time learning and understanding the larger domain of the business and decisions that follow, adding substantially more value to the business.

Great CFOs look through the windshield, not the rearview mirror. At its most basic level, accounting is about recording the events of the past. Financial professionals attain significant talents and skills over the course of their careers due to a great deal of education, training, and experience.

However, many limit their potential by defining their roles too narrowly, simply as recorders of history. A timely, efficient, and accurate accounting system is critically important. However, the best CFOs make sure the numbers, controls, and reporting are all locked down by taking a leadership role in hiring and developing people, and implementing systems and procedures to ensure accurate and timely accounting information.

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