What is the Value of a CFO to a *SME?

THE VALUE OF A CFO TO A *SME

By Chris Carl
Regional Director at The CFO Centre

^*Small and Medium Enterprise

Can a part-time CFO really add value to a small or medium sized company? If you are like most people in a SME, your thoughts probably fall simultaneously into two categories:

1) Large companies have a CFO, so they must add value and

2) They are an expensive overhead (especially the experienced ones).

In my experience as a CEO, and even being a CFO for SME’s for the past 30 years, I would add a third thought which is often cited but is always wrong:

3) I can get by with a Controller because I already know the business and I just need the numbers.

I would not think badly of any business leader, or Director, for having these thoughts.  Unless you already have a successful CFO within your company, you might naturally draw these conclusions based upon your perceptions of the accounting role within your company and a natural focus on costs.

In this article, and in a series of articles that will follow in the coming weeks, I would like to tell you that for an SME, the value of a good CFO is immediate and creates value well beyond the cost!

I believe this:

“A good CFO can find enough ways to improve cash flow, improve profitability and improve the balance sheet of just about any company to cover the added cost.”

BUT, I have a second even more important belief:

“For SMEs, a great, highly experienced, “part-time” CFO can find ways to improve cash flow, improve profitability and improve the balance sheet of just about any company to cover many multiples of the added cost to the company.”

For SME’s, next to continually communicating with your customers and satisfying their needs, hiring a part time CFO is probably the BEST investment any company can make.  They cost a fraction of a full-time CFO but add great value and profitability.

Your reaction still might be, “But I already have a great Controller so why do I need to add more overhead? After all, I can’t add the hourly cost a CFO to my billings, or to my recoverable COGS.”

My answer to that:

Keep your Controller but hire a part-time CFO.  Together they will generate huge improvements to your cash position, to your profitability, and to the condition of your balance sheet (something your banker will love).

And just how will they do all this, you might ask?  While there are many detailed reasons (12 of which I will cover in the upcoming weeks), the simple answer is this:

A part-time CFO is to an SME what a doctor, a physical trainer, and a world-class coach is to a superstar athlete.  The superstar athlete will always be good – but they will only be great if they are sure they are healthy (the doctor makes sure of that), they are in great physical shape (the trainer takes care of that) and that they know how to compete at a world-class level (the world-class coach takes care of that).

This is exactly what the value of a great part-time CFO is for your company:

1) They make sure your company is healthy and where they are weak, they help make them better.  We call this Business Support.

2) They help the company make better-informed decisions to ensure they are financially fit to go out and compete at a world-class level.  This is Operational Skills.

3) They help the company create, and achieve goals that only the greatest companies in the world have a track record of achieving.  They make the company world-class through Strategic Planning.

In the coming weeks, this special series will examine the role of a part-time CFO and how the immediate and measurable impact of an experienced CFO increases the value of your business. The CFO Centre is delighted to bring this special series to our valued subscribers.

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Chris Carl has a 30-year career growing manufacturing based companies with novel technologies both as start-ups and within Fortune 500 companies. Having held both CFO and CEO roles, he has raised a combined $500 million in debt, mezzanine and equity financing in private and public companies listed in Canada, the US and Europe.   

The CFO Centre provides highly experienced, part-time CFOs to small and mid-market organizations at a fraction of the cost of a full-time CFO. We are committed to helping companies work through complex financial issues, in order to maximize profit and provide senior financial leadership.

Our global team has over 400 CFOs across 13 countries; our services include business and strategic plan development, financial reporting, cash flow management, internal control, risk assessment and mitigation, training and development, and negotiations.