These days, many companies are hiring a CFO or Chief Financial Officer to scale up their businesses. Many people are confused as they are not sure what a CFO does in general. CFO’s are senior executives who are responsible for managing and taking any financial actions in an organization.
The role they play in helping a company grow its business is crucial and one of the fundamental reasons many companies opt to hire one.
Who is a CFO?
One of a CFO’s primary tasks is to take care of a company’s financial planning and cash flow. They help the firm realize its true potential by letting them know of its strengths and weaknesses. During this course of action, they will also suggest some corrective measures and steps that help an organization perform well in the market.
A finance controller, a treasurer, does similar tasks as that of a CFO. Another responsibility is to ensure that the financial reports are generated on time by the finance staff. Once they are ready, they analyze and study the information to ensure that they are accurate. Some CFOs have the designation of a CMA.
In a corporate company, a CFO is a crucial person who manages the company’s finances. He works closely with the CEO and COO. They are other key players in the management team, and they make critical decisions of how the organization should run and where they should head.
CFO and CEO Work Hand in Glove
When it comes to financial firms, a CFO is the highest position of that organization. But, in other industries, a CFO, as discussed earlier, is one of three high-ranking positions.
Indeed, a CFO reports directly report to the CEO or Chief Executive Officer. There is a team of executives, team leaders, managers, and others working for them depending on their needs.
CFO helps the company by letting them know their income and expenses. For example, if the company is running a marketing campaign, they will check the finances to see if that is something possible and give insights if it is otherwise.
CFO assists a CEO in doing the following tasks:
- Cost-benefits analysis
- Getting funds necessary to run specific initiatives
Because of these and other benefits of having a CFO, many companies are looking to hire a CFO.
Fundamental Duties of a CFO
A CFO has to take care of so many crucial things in an organization. If you take time to analyze all the CFO duties, you will soon realize you can categorize the CFO tasks into the following categories.
A CFO needs to take care of the financial reports’ accuracy that the finance executives create or generate. Stakeholders, creditors, shareholders, and a host of others base their decisions on these documents’ accuracy.
Imagine how things can adversely affect a company or business if one of these reports is not accurate. Thus, a CFO needs to have a fair idea of how the company was doing from the past. They should look beyond the present situation of the company to prepare an accurate report.
Yes, this is one other crucial role of a CFO. They need to know how and where to invest the money to get the best or maximum return on investment (ROI). They also need to consider various risks involved, liquidity, and other aspects before taking things further.
Since the CFO oversees the firm’s capital structure, they know how to do the best mix of the debt to get optimal results and profits. If there are issues related to capital structure, it is the CFO’s responsibility to address them.
Forecasting and Economic Strategy
A company’s CFO not only thinks about the past and the present, but he also focuses on the future. Since the CFO knows the areas where a company is efficient, they will use it to scale the business. They make informed decisions using the past and present reports that they generate.
For example, a CFO of a bags company will indicate which of the bag models are doing exceptionally well in the market. They will assist the company in producing more of those bags to get more profit.
The future of the company or the business depends mostly on this kind of analytics. A good CFO can help you reach the companies goals. Their insights can help the company to become successful.
Skills of a CFO
Apart from finance skills, a CFO needs to have many more skills than finance. The person who assumes this role needs to be smart enough to analyze the records properly.
They also need to translate the data they receive to useful information that is easy to dissect and digest by the top senior management team. Having this skill will help the CFOs to make strategic business decisions for decisions.
Salary of a CFO
Since there are so many responsibilities that lie on a CFO’s shoulders, companies pay them a lot. The amount that a CFO draws primarily depends on the company they are working with within the US. Apart from the salary, they receive a lot of benefits and perks.
Inhouse Team Versus Outsourcing
Now that you understand the importance of a CFO, the next thing that should concern you is hiring a CFO to work for you or plan on outsourcing this aspect to a professional finance team. Here are the reasons why you must choose to outsource rather than hiring someone to fill this vacancy.
Benefits of Hiring a CFO to Work Inhouse:
Here are the benefits that you will get to enjoy when you hire a CFO to work for you:
Always Available to Assist
One of the best things about hiring an in-house CFO is that they will be available to answer all of your queries immediately. They will work closely with your finance team to ensure that they work on the reports quickly. They will give the senior management team constant updates.
Provide Right Direction to Your Company
Yes, this is one of the key reasons why a company would want to hire a CFO. They will make decisions that will help the company steer towards their goals and make strategic decisions to help a firm scale. A business can fair well in the market when they know what it is their strengths and limitations.
These are some of the reasons why many companies prefer to get a CFO. Big companies and ones that are doing well in the market do not mind hiring a CFO. Small and medium businesses cannot afford to hire a CFO. They do not have the budget to afford to hire a CFO.
In this case, the best option that they have is to choose an outsourced CFO service provider instead. Many companies that offer this service do not charge a lot of money to provide it. If you want your business to scale up, it is best to go for an outsourced CFO service provider.
A lot of companies are providing this service. One should take the time to study and research before picking one to work with them. Never choose a company that is not upto the mark as it can only pull your company downwards instead of forward. There are specific steps that one needs to follow when searching for outsourced CFO service providers.
Here are details of the steps you should take when searching for the best CFO outsourced service provider for your reference:
Check With Your Connections and Peers
Yes, this is the best route you must take if you plan to source the best CFO outsourced service. Connect with friends of the same size and check if they are using an outsourced CFO service.
If the answer is yes, you should take the time to speak with them further to understand what kind of experiences they had from the time they started using it.
Check with them to see if they are happy with their services. Only if they are giving positive responses about the firm must you ask them to introduce them to you. If you do this exercise, you will soon find the best one. Take your time to prepare the list with names of the companies that your connections recommend to you.
Do Your Research Online
If you are not comfortable following step 1, you must take your time to look online using phrases such as the ‘best CFO outsourced service providers near me,’ ‘Outsourced CFO Services,’ and so forth online. When you use words or keywords such as this, you will soon find numerous options.
It would be best if you took the time to visit their website and check the reviews and ratings available online.
Doing this exercise will help you filter out companies that are not upto the mark or those that are not trustworthy. Never skip this step when you are looking for the best and well-reputed outsourced CFO service providers. You are going to find the best companies when you follow this step. Filtering out terrible companies is possible when you pick this option over all others.
Check Their Website
The next thing you should plan on doing is to look at their website to see some of their services. Take time to browse through the webpages. Doing this will help you understand both their experience and expertise. Check the clients that they are presently serving. It will help you know what kind of company you are planning to partner with in the future.
Meet Them In Person
It would be best if you took the time to meet the representatives of the company in person. Speak with them in person to understand what they can do for your company or business. Ask them questions to understand their scope of work and what they will do for you. Once you have all this information, you will know how beneficial it will be to partner with a company offering outsourced CFO services.
Get the Quote
Lastly, it would be best if you asked them to share a quote with you giving all the details of the work they will render and how much they will charge you per month. Tell them to specify to you if there are any hidden charges.
Indicate to them that you will meet other vendors and ask them to give you a competitive price. Many people are ready to provide you with the best deal when you let them know that you are actively prospecting.
Compare the Quotes
Get quotes from two or three companies and compare the pricing to see who offers you the best deal. Doing this exercise will help you understand the market price. If you do not do this exercise, you might end up paying a vendor exorbitantly or above the market rate.
If you follow this step, you can decide whether you want to go with a particular company or further negotiate with them. It is always good to get quotes from two companies that are of the same size and reputation.
Quotes from companies that are of different sizes and reputations might vary considerably. Hence, this is something that you must keep in mind when you approach the companies. Ensure that both the companies are quoting for a scope of work that is similar.
Get a Contract
Finally, take your time to get a contract in place so that you can take things further. Do not proceed to work with an outsourced CFO service without first obtaining an agreement in place. Include all the clauses that you think are relevant for your partnership.
If you are not comfortable with specific clauses, have them remove them from the contract. Review the agreement with your legal team or advocate before finalizing it. This way, you are going to protect yourself from unforeseen issues that might arise.
These are some of the things you should do to find the best company that offers CFO outsourced services. If you follow these steps, you will avoid making any errors when picking an outsourced CFO service provider.