Faqs Of A C.E.O. About Chief Financial Officers
Posted on March 31, 2020 by Terry Eve
C.E.O.s have a different perch from which they view the world around them. This highlights some frequently asked questions (FAQs) of C.E.Os about their strategic partner, the C.F.O. and will provide some guidance with the answers.
Question: When do I need to consider hiring a CFO for my business?
Answer: Now, every business needs a CFO and can now have an affordable solution utilizing a B2B CFO®.
Question: OK, but what will a CFO really do for me?
Answer: An Excellent Question. Consider the following in your day to day business:
- Do you spend as much time with your customers as you would like? If not why not? Frequently this is due to being pulled into what we call “Minding Activities”, that is the day to day administration that takes a lot of time with little customer value.
- Do you get the financial information when you need it and is it right?
- Can you or your staff interpret the financial information?
- Who manages your banking relationships? Is your bank happy with what they get from you and when?
- Do you have a business plan and related financial projections that provide financial and goal clarity?
- Some day you will exit your business; do you have an exit strategy?
- Who is your sounding board for “Big” decisions you may need to make? Do you have a trusted long-term business advisor and strategic financial partner?
- Do you need help improving profit & cash?
- Who helps plug the holes in your “Cash Flow”? And is it a solution or a finger in the dyke?
Question: OK, I think I get it, but tell me more about this cash flow hole, we seem to have a really big one!
Answer: This is common in growing businesses. A business frequently “leads with it’s chin” in order to grow the business. They in vest in people, plant, and inventory and then convert those upfront investments to sales that grow accounts receivable. All of these things drain cash. From start to finish there can be a significant length in the cash cycle. I spoke with a banker about a recently purchased business that they financed and the purchaser was about to go into default without having made the first payment. A definite working capital issue that is avoidable.
Your CFO will have a good cash forecast, help manage receivables and collections and assure you have adequate and proper financing in place to grow the business or know when to throttle down a bit to keep from running out of cash. A growing business is a great thing, as long as you don’t grow yourself out of cash and ultimately out of business!
Question: There is so much on my plate; I guess I really do need someone to help keep tabs on the things that I could lose sight on, am I right?
Answer: Precisely the point. I had one client recently tell me that he was glad I was watching the things I had on our agenda for the day, because he didn’t have time to focus on those issues due to revenue growth and delivery during the peak of his business cycle. As previously mentioned, that is a reason the CFO is needed. And don’t forget about other day to day activities that need to be monitored, including taxation, business planning, etc.
Question: But what about my C.P.A., can’t he do this for me?
Answer: Not realistically. The roles of a C.P.A. and C.F.O. are different. The C.P.A. focuses on year-end financial reporting and tax returns and may not be available as needed during peak work periods like tax and audit seasons. Much of the work done by the C.F.O. would impair the independence of your C.P.A. and would prohibit them from issuing either reviewed or audited financial statements. Further, B2B CFO® partners do not do tax returns or other compliance reporting that would require their signature on a return. Finally, those C.P.A.s that do pursue this type of work do not have the resources of a National firm to back them up.
Question: But can I really afford a C.F.O.?
Answer: Not to be coy, but can you really afford not to have one?
After all, who has the strategic advantage, a company your size with a solid financial platform and advisor or one without?
Remember too, B2B CFO® will do a no cost or obligation phase one analysis to determine if and how we can help solve your business problems along with a report and the proposed cost. As your professional “Minder” we are not miracle workers, but with a cumulative knowledge base in excess of 3,000 years, there are very few if any financial issues we have not encountered along the way and we have the means to tap that knowledge base to help solve your problems.