The title of this post is “Are you too small for a Chief Financial Officer (CFO)”. Maybe another way to look at the question is “Will you get much bigger without one ?” A large number of small to medium sized businesses (+- R40m to R200m turnover) that I have advised over the past few years have struggled with this question, with some employing a bookkeeper or appointing an external accounting firm in order to reduce costs and give them a sense of comfort that the CFO role is being addressed.

This model works quite well while the business is performing adequately, but will this model contribute to growth, improved cash flow or identify red flags which may impact on future sustainability?

What is your view of the CFO

The bookkeeping function is important to ensure that your financial transactions are accurately recorded and reconciled.  The external accounting firm also plays a critical oversight role and in some cases can prepare standard management accounts for the business.  However, in a fast changing world with increasing economic uncertainty, it is definitely becoming more risky to make executive decisions without involving your finance officers.

The historical role of the CFO has been to concentrate on risk management, financial controls and processes.  Today this role is expanding to include that of strategy definition and performance management.  Whilst the technical aspects of financial reporting, risk management and compliance have not been diluted, the modern CFO also plays a greater role in commercial leadership and assists in day-to-day management responsibilities.  The board and other stakeholders are also increasingly expecting the CFO to work in partnership with the CEO to drive stakeholder values and provide feedback on financial as well as non-financial matters.

The strategic CFO needs to be able to look forward and should be actively involved in identifying future investments such as acquisitions, or new growth markets and products.  A strategic CFO focusses on gaining a thorough understanding of the company and the environment in which it operates.  This means understanding the target market, competitors and suppliers as well as changing economic, political and technology trends in order to evaluate and present strategic alternatives.

Your CFO can be your partner!  Instead of costing you more money, the right CFO can help you to make more money!