Once your business reaches a certain size, you need to think about appointing a chief financial officer.
They’re not just in charge of your money. They’re a key figure in ensuring your business finances aren’t in danger.
But what does a CFO do that you couldn’t do yourself? With salaries for in-house CFOs reaching nearly $500,000, is it worth hiring one, or is your business at risk without one?
Here are five important CFO responsibilities you should consider to help you decide.
Ensure Adequate Cash Flow
One of the biggest CFO responsibilities is ensuring that there’s enough cash flow in your business to keep operations running smoothly.
That means having enough liquidity—that’s actual, available money—to pay your bills, pay staff, invoices, etc. A CFO might not have direct management of the money (that’s what delegation is for) but the buck stops with them.
If you don’t know the difference between a CFO and a bookkeeper, don’t worry. Check out our comparison guide to financial roles to help you figure out which is which, and which is best for you.
Share and Report Critical Data
The word “chief” should give you some indication as to the importance of a CFO in the organizational chart of a business—they’re part of the management team.
Another important duty of the CFO is to share critical financial data with other areas of your business management team, like the CEO. Financial data, like sales growth, help other managers respond and make their own decisions.
Ensure Financial Compliance
You don’t need to know whether the tax code has changed or not. It’s the duties of a CFO to know what your tax commitments are and prepare your business for them.
Tax filing and compliance with tax authorities, including during an audit, are essential chief finance officer duties. If you’re worried about the recent tax changes in the U.S. then our tax changes guide should help you stay informed.
Work with Stakeholders and Staff
We’ve already mentioned how important it is for a business to share data with management and work with them. What about implementation?
A CFO can help your stakeholders and staff when decisions are being implemented further down the line. For instance, if your business is struggling to decide on pricing for a product, a CFO can help use their own data to help.
Your CFO shouldn’t be kept in the ivory tower—they should be at the forefront of financial decisions in your organization.
You need to choose a CFO that can plan and prepare a strategy for your business that can get you moving. If you don’t, you’ll be one of the 96% of businesses that fail within their first decade in operation.
A CFO can connect the dots, from sales figures to staffing costs. They can help build a financial growth plan that can increase the potential return on any investments or ideas, like a new product launch.
Without a well-informed plan in place, your business can’t grow.
What Does a CFO Do? Remember the Basics
If you’re asking yourself, “what does a CFO do?” and you’re still not sure, then zero in on your own business and think about your financial health.
The role of a CFO is all about protecting that health. That’s what a CFO does. They keep your wealth flowing like a river, rather than drying up in a drought, but you don’t have to hire in-house if you’re worried about the high salaries.
Our outsourced CFO services could be what you need to put your finances in order, so get in touch.