The Five Hats of a CFO

An important step toward fostering business growth and success comes down to recruiting the right Chief Financial Officer (CFO). Whether you decide to outsource this position or hire internally, the role is essential for your business.

Here are five hats a great CFO will wear:

1. Financial Project Manager

An effective CFO’s role exceeds that of only just monitoring the systems and controls within your organisation. Their ability to take on board projects and situations that will have a significant financial impact on the company is imperative. Your CFO should be competent in responsibly looking at the company’s annual budget, liaising with team leaders, employees and various department managers to ensure the product or service reflects the real vision and offerings of the enterprise. Other activities such as mergers, acquisitions or potential capital investment opportunities all fall under the role of the CFO.

 

2. Manage Internal Systems

Cash flow, expenses and overheads is one component of this particular area for your CFO. They also look after any credit policies and work with current and potential stakeholders to negotiate agreeable payment terms. Execution of procedures needs to be handled effortlessly, while simultaneously implementing procedures to evaluate and measure inventory, milestones and sales. A great CFO will also take into account control systems to prevent any fraudulent activities.

 

3. Fostering Relationship with External Financial Institutions

A company must have a good relationship with banks, private investors and other types of lending groups and the quality of this relationship falls to the CFO. The CFO must communicate regularly with your company bank, and review various contracts and services to ensure that your business is receiving the best offer. In this case, your CFO should have effective negotiation skills to create the best opportunities for your business. They should always be thinking ahead as to how the company can increase revenue or avenues to source capital.

 

4. Overall Strategic Planning

Strategic planning and addressing core business issues have a large impact on the future of a company, which is why your CFO will also wear this particular hat. They will understand the vision of the enterprise. The CFO will know where you are going as a business and have plans developed to drive the organisation continually forward.

Under this hat, they may be involved in expanding your product’s scope and explore products - or services, which no longer meet the business’ objectives. Also included here, is the ability to manage employee performance and determine key players and address under-performing staff. Your CFO should be able to communicate with all employees and pinpoint incentives that will support each employee to stay inspired, perform efficiently and bring their innovative ideas to the table.

 

5. Be a Trusted Advisor

An effective CFO will be honest and always communicate the business’ situation regardless of where they currently stand. Your CFO should be able to illustrate the bigger picture to stakeholders and senior management in a clear and effective manner. With their sound business experience and financial knowledge, they will be able to offer up guidance around any economic decision-making processes for your team. A trusted CFO will be the CEO’s right-hand man, who can report all on areas of the business, provide insight into future investments and opportunities, but most importantly also relay to you when you must cut back, make quick financial decisions and how best to go about them.

While these are only five hats that your CFO will wear, there are many more to consider. If you would like to find out more or look into outsourcing the function of your CFO, download our comprehensive guide below.