The business owner not knowing their financial numbers is a leading cause of failure and at a certain point in a business life stage, the Chief Financial Offer (CFO role) expertise is needed to watch over and sync-up the business cash-flow and profits with company operations.

Today’s episode covers a broad picture of the CFO role and why it is so important. Included are the dangers of not having a CFO, roles of a bookkeeper and tax CPA, the three types of CFOs, and a starting-line to get you ready to hire a CFO.

A Big Red Flag that a CFO is needed: The company operations is making money, but the bank account is shrinking.

 

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Show Notes

What is the CFO role?

Very simply, they are responsible for the total profits of the company. Sometimes this is called the overall financial performance of the company. That is, not just operations profit, but everything that impacts free cash-flow and profits on the three main financial sheets: Balance Sheet, Profit and Loss Statement, and the Cash-Flow Statement.

Three Basic Types of CFO roles

  • Accounting CFO – “Controller”, usually has a CPA license. They track expenses and make sure the money gets where the budget says, handles taxes and audits, etc.. Good for mature, stable companies.
  • Financier CFO – Their main focus is Investing and financing. They make deals, raise money, and help growth by buying other businesses, etc.. Good for start-ups, companies in fast growth stages, and owners chasing opportunities that require stuff like  ROI, IRR, and NPV.
  • Advising CFO- Combine the finances with operations to help build a better performing company. They look beyond numbers and instead of outward looking like the Financier CFO, they are looking inside the company to see how to improve cash-flow and profits. Best for the break-out stage or when finances and operations are out of sync.

 

Some Questions if you need a CFO and what type.

What are your annual revenues?

What is the maturity stage of your company? Start-up, break-out, growth, mature, the wall?

Do you have time to look over the three financial statements on a weekly basis, or at least monthly?

Do you have a bookkeeper to generate reports for the CFO?

Which of the three types of CFOs best fit to where your company is at today?

The answers to the questions above will narrow down whether to start a CFO search or not.

 

 

 

 

 

Resources

 

Related Episodes:

#166 Solid Foundations: Right-Size Your Company

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