Get the Most From Your CFO – November 2014

This topic concerns strategy.

A Chief Financial Officer (CFO), whether permanent or temporary, is more than a mere scorekeeper. A good CFO can help influence the strategic direction of a business as well as its profitability. In choosing a CFO, executive management must insist on several attributes.

The view of the CFO as a scorekeeper is nothing new. The traditional view is of one who slaved over a calculator or key board all day in an attempt to save costs and equip management with data about which costs to cut. Although this view has changed at many large, successful companies (GE, Honeywell, 3M, J&J to name a few), it remains prevalent at small enterprises and start ups. It need not be this way. CFOs at these firms can be strategic partners of all the firm’s executive functions.

A constructive way to view the CFO is as a valued business partner rather than overhead. A good CFO’s contribution begins with solid analysis of the relevant data; logical recommendations that have the trust of other key management team members; and a “home run” solution that adds value for the entire operation. This framework is relevant in many functions including:
• Financial Management
• Treasury and Cash Management
• Strategic Planning
• Systems Design
• Risk Management
• Valuation
• Financial Reporting

The CFO need not be a charismatic political type to drive organizational value. However, one does need to pursue objectives outside the comfort zone; understand how the business works; and convert financial data into useful information utilized to devise a plan that provides positive change and performance for the company.

Such success is driven by several attributes which a business owner should insist on in the CFO:
• Stands up for his/her beliefs even though initial resistance is likely.
• Doesn’t take no for an answer unless there is a reasoned, provable explanation.
• Will perform any task that will drive a project’s success to the benefit of the entire organization.
• Willing to explain and justify the benefits of analytical tools with which management is unfamiliar.
• Understands the business from the perspective of a generalist and, therefore, is willing to consult with people in the organization that are impacted by the CFO’s ideas.
• Does not present an idea unless it can stand scrutiny throughout the organization.
• Takes responsibility for the outcome of the idea he/she champions.
• Is happy to give credit where credit is due regardless of the recipient.

Having a CFO with such attributes, gives the small business owner a right hand man that can help influence the strategic direction of the company and enhance its long term profitability.

Capitol CFO Solutions serves clients in Washington, D.C., Maryland, and Virginia. Please contact us for a free consultation.