Do I really need a CFO?

Business owners often ask us – do I really need a CFO? When you run a business, you must be sure that every expense is worth it. We get your perspective, but is it the right thing to do?

A CFO adds significant value to a business – above and beyond what a CA or a semi-skilled finance team can add. While the need for a CFO in large companies has been evident for decades, we often neglect the impact a CFO can have on smaller companies – start-ups and MSMEs.

 

Start-ups

One of the most significant advantages of having a CFO in a start-up is the freedom it offers the business owner to focus on the big picture.

1. Freedom to plan

A highly experienced CFO can seamlessly deal with the day-to-day finance strategic areas resolving administrative bottlenecks, thereby smoothening the running of the business. This helps the business owner focus on critical business processes such as product development, customer acquisition and retention, and leadership development.

 

2. A Co-pilot to the CEO

A CFO can offer better insights into performance indicators and proactively encourage innovation. A CFO Centre CFO can seamlessly translate Key Performance Indices of the company into meaningful information for the CEO, transforming the CEO’s strategy into an actionable plan.

 

3. Building the financial backbone of the business

The long-term sustainability of a business depends significantly on its financial backbone – does the business manage its cash flow efficiently? A CFO brings years of experience and knowledge to manage a company’s burn rate to ensure cash flow optimisation. A CFO Centre CFO can assist in deciding when and where company funds are to be deployed. They can set up systems to help businesses function efficiently, eliminating any financial teething problems.

 

4. Scaling support

Scaling a business can prove challenging for smaller businesses, especially in highly competitive industries. A CFO with their vast network of connections with channel partners, expert knowledge and tried-and-tested processes can offer significant support to a start-up owner looking for scale.

 

 

Startups transitioning through scale-up

Start-ups transitioning within the MSME space through scale-up face a shortage of premium but affordable resources. A CFO Centre CFO can bring in decades worth of knowledge, experience, and connections to offer such companies the support they require.

1. Working capital efficiency with effective AR/AP/Inventory Management

Companies are often forced to incur unnecessary debt and other financial obligations to meet their short-term financial needs. A seasoned CFO can efficiently mitigate these problems through working capital optimisation. It takes significant cross-functional effort, and the CFO can step in with an appropriate strategy using current assets and liabilities to ensure the most financially efficient operation of the company. A CFO Centre CFO improves cash flow by introducing techniques to collect receipts quicker and streamline payment methods with Creditors and Banks.

 

2. Mitigating risks with consistent and improved Business Processes

As companies grow and expand, the need for flexible and efficient processes amplifies.  Therefore, a CFO needs to ensure that the operating model is flexible and that regularly existing processes are finetuned to add value to the business.
Due to the expanding regulatory environment, risk management has become one of the most crucial jobs of a CFO, as it is essential to maintain a strategy that is beneficial to the company.

 

3. Automation of commercial and operational activities

A CFO ensures that repetitive tasks are automated to spare the company from spending money and time at the lowest ROI. Technology transformation is one of the most effective ways CFOs implement to assist companies from linear to fast growth.

 

4. Implementation of budgeting and forecasting techniques

The most prominent beneficial aspect of having a budget and implementing it is the examination of cost drivers. A CFO understands how costs rise with revenue and how to add resources to effectively maximise returns. A CFO can forecast expenses, revenue, and gross profit for the next fiscal year by creating financial models. With a “forward-looking” financial strategy, a CFO Centre CFO can help organisations implement a higher level of forecasting, budgeting, and cash management strategies.

 

 

Companies on the growth path

Companies that have been on a scaling journey for a while can feel exhausted and stuck in a rut. A CFO can step in during this time, bringing their expert opinions and plethora of resources and connections to offer the boost a company may need to continue hitting its goals.

1. Providing strategic advisory services

A seasoned CFO can offer the strategic advice a growing company may need to edge out its competitors. Using their years of knowledge and an impressive network of financial experts, a CFO Centre CFO offers a unique outlook on solving problems.

 

2. Identifying cost-effective funding options for expansion and growth

CFO with years of experience boasts of one key achievement – their impressive network of investment bankers, VCs, and investors. CFO Centre amplifies each CFO’s personal network by inter-twining it within its global network of financial partners. A CFO Centre CFO can help identify cost-effective fundraising opportunities like no other.

 

3. Facilitate employee retention methods

Employee turnover plagues most growing companies as the need for an effective HR team grows more evident. A CFO can facilitate essential employee retention methods to improve employee-employer relationships. This further boosts the sustainable growth of the company.

 

4. Migrating to an integrated ERP

A CFO’s role is to improve how flawlessly a business owner or CEO can run the business. An experienced but progressive CFO can maximise efficiency by migrating all systems to an integrated ERP. An integrated ERP allows every aspect of a business to be managed from a single application – allowing all data to flow seamlessly within systems and teams – right down to the financial statement. A CFO Centre CFO has deep technical knowledge in conjunction with financial management and reporting skills needed for fast-tracking automation.