The importance of CFO’s in businesses large and small

By April 2, 2019 May 6th, 2019 No Comments

Financial security is vital for all businesses, whether they’re small, medium or large. Having a strong cash flow as well as a solid financial plan will ensure that your business not only survives but thrives.

However, many organisations don’t employ CFO’s, nor do they consider how important the CFO’s role is when it comes to running a business. A lack of resources combined with a misunderstanding of a CFO’s role cause many small and medium sized organisations to overlook this key role; they don’t see the value of employing a CFO which often stops organisations from reaching their full potential and achieving their long-term goals.

For many small and some medium sized businesses, it’s a bit like the chicken and egg scenario.

Although company founders and CEO’s are rarely equipped to handle financing strategies, budgets etc. and they recognise the need for a CFO, many don’t have the financial resources to employ a CFO on a full-time basis. This has a negative affect on their financial situation because their finances aren’t properly managed. If they had sufficient financial resources then they would have the ability to employ a CFO to manage their finances correctly and so it goes on.

What does a Chief Financial Officer do?

There’s more to a business than just managing the income and expenses. In order for an organisation to have long term sustainability and expand its operations, it needs to plan for the future. A CFO is a senior executive who’s responsible for managing the financial actions of an organisation. The CFO’s duties include tracking cash flow and financial planning as well as financial analysis; the CFO will analyse the company’s financial strengths and weaknesses and propose corrective actions if required. The CFO also manages the company’s finance and accounting divisions and is responsible for ensuring that the company’s financial reports are accurate and completed in a timely manner.

Why are CFO’s so important?

The CFO has significant input into the company’s investments and capital structure, in addition to how the company manages its income and expenses. The CFO works closely with other senior managers, (most likely CEO’s or Founders within small businesses) and plays a key role in a company’s overall success, especially in the long term.

CFO’s not only have strong accounting backgrounds, they will also have considerable financial management experience, and that’s where their importance to an organisation comes into play. Many small businesses only have the resources to engage a bookkeeper, but more often than not this isn’t enough to ensure long term sustainability and to plan for the organisation’s future.

The CFO works with the CEO in regards to forecasting, cost–benefit analysis and obtaining funding for various initiatives. This may not currently be on the radar when it comes to small or medium sized businesses, but this is one of the ways that smaller organisations expand their operations down the track.

The CFO is responsible for reporting accurate information because many financial decisions are based on the data the CFO provides. The CFO is responsible for managing the fiscal activities of a company and adhering to generally accepted accounting principles (GAAP) established by the Australian Securities and Investments Commission (ASIC). ASIC is an independent government body that acts as Australia’s corporate regulator, it enforces and regulates company and financial services laws to protect Australian consumers, investors and creditors. CFOs must also adhere to regulations that include provisions such as fraud prevention and disclosing financial information.

All of these functions and responsibilities are hugely important when it comes to running a business and ensuring that your business is not only financially secure but also legally complaint. More often than not, small or medium sized businesses struggle to cover all bases without the vast experience and knowledge that CFO’s bring to the table, putting them at risk.

The role of the CFO is hugely important, regardless of the size of the organisation, so if you don’t have the resources to cover this role full time, why not consider bringing a CFO into your organisation on your terms? Organisations like xxx (company name) have created a model where they provide CFO services to businesses of any size, based on their needs and the resources they have available. Whether you want a CFO to take on a certain role within your business, or you want a CFO to take on the full responsibility for a certain time, xxx (company name) can tailor their CFO services to your organisations needs.

The CFO role has emerged from focusing on compliance and quality control to now playing a key role in business planning and process changes; the CFO is a strategic partner to the CEO and plays a vital role in influencing company strategy. Even if you are a small business, you shouldn’t under value their importance; they are key to your organisation’s success, not only now but in the future.

If you’re looking for an experienced CFO to not only oversee your company’s financial strategy, but to play a vital role in your company’s overall strategy then go no further. xxx (company name) will provide you with one of the most qualified CFO’s in the industry, according to what your organisation needs; whatever your requirements, we’ve got you covered. There’s no need to stress any further, we’ll provide you with the resources you need to grow your business, without the financial strain and added pressure. We have what your business needs.

Jake Elliott

About Jake Elliott

Jake Elliott is a Chartered Accountant with extensive experience offering Outsourced CFO and other consulting services to businesses. His background working "in-business" allows him to provide clients with insights into their operational and financial performance beyond the capabilities of their accountant/bookkeepers.