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What is a CFO?

three women sitting beside table

By Kyle Smith, CPA

Without overcomplicating it, a CFO (chief financial officer) is the senior-level executive that leads and is responsible for managing finance and accounting activities critical to the success of the business, including cash flow planning, budgeting, forecasting, and negotiations.

 

Ultimately, a CFO is responsible for making sure the numbers are accurate and correctly categorized and for the framing of critical short and long-term business decisions that directly affect the direction and financial performance.

 

What value do they bring?

 

A valuable CFO should be able to most usefully present different financial situations of the business, and provide analysis and recommendations based on that presentation.

 

For most small and medium-sized businesses, cashflow planning, budgeting, and forecasting will be the first and most valuable services that they would consider getting CFO-level expertise to help deliver (If you’d like more information on the difference between budgeting and forecasting, see our previous blog post about using dynamic forecasting to increase profitability).

 

When would I need a CFO?

 

It’s crucial to assess and re-assess the current state of your business to decide when you can benefit most from CFO services.

 

A business owner typically starts as the all-purpose utility knife, wearing the CFO hat and many other roles. Or, there may be no time at all for CFO duties, and that strategic financial side of the business is neglected.

 

This strategy of wearing many hats or simple neglect is manageable up to a point. Still, as your business grows, you need to focus more on higher-level strategy, and CFO-level expertise becomes essential to help make critical decisions.

 

Can I afford to hire a CFO?

 

Unfortunately, finding room in the budget to hire a full-time or even half-time CFO is not feasible for many businesses, even when the business owner benefits significantly from CFO activities.

 

That’s where Strata Cloud Accountants provides an excellent option, as we package the most valuable CFO services, namely forecasting, budgeting, and cash flow planning, into one-time, quarterly, and yearly services.

 

Since we can offer these CFO services in different timeframes and service options, it is much easier for a business to select what is most valuable to them specifically (with a transparent up-front cost within their budget).

 

For instance, if a client were interested in us helping them build a yearly budget, we would present a one-time up-front price and then work together to develop and refine a yearly projection into a budget. We would then build that budget into their Financials package moving forward to measure, analyze and react to variances, etc. That way, the business owner can have more transparency, make better decisions, and pay only for the CFO service that is most valuable to them.

 

Conversely, many clients use Strata Cloud for ongoing, dynamic monthly scenario analysis. In this case, our client pays a fixed monthly price, and they can come to us at any time with any new business scenarios, and we will update or create a new projection to provide insight and make pivotal decisions more straightforward.

 

Interested to learn more about our CFO services? Connect with us today!