Do you have a Chief Financial Officer (CFO) in your business? If you’re a small business, chances are, no. Few small or medium businesses have a CFO.
A CFO’s role in a business is to use the financial information of a business to drive and improve it. The financial information of a business is the key to the strategic direction and improvement of every business.
More than likely you have a bookkeeper or possibly an accountant. Bookkeepers are primarily responsible for data entry. Accountants, having a greater degree of expertise are able to prepare accounts, including the various accruals and other entries required to prepare a more comprehensive accounting report. Both may attend the payroll functions, manage banking facilities and other transactions.
Strategically speaking, if you can’t measure it, it’s not worth doing.
At the heart of it, you’re in business to make money. Some people may be fortunate to have passed the point where they need to work and are now working only because they like to work, but even then, at the heart of most businesses is the desire to make money. Making money doesn’t happen by accident.
Rather than looking backward as most financial information does, a CFO will use the historical financial information to set a path for and drive the future direction of the business using many tools and processes depending on the circumstances and the objectives. Some of these may include:
- Establishing financial strategies
- Benchmarking business performance and setting strategic measurable financial targets
- Establishing Key Performance Indicators (“KPI’s”) and developing a financial performance dashboard to achieve those KPI’s
- Establishing and implementing incentive plans for all key people of a business
- Structuring the business for the most efficient operation
- Eliminating waste in business operations
The trouble is, CFO’s don’t come for free. While bookkeepers cost anything up to $60,000pa and good accountants up to $150,000pa, a CFO’s will usually start at $200,000pa upwards.
With the development of technology, the cloud and web enabled software like MYOB, like with most other commodities these days; the “virtual” CFO is now possible, if not essential.
A virtual CFO doesn’t need to be based within your business; rather they can live in the cloud, allowing you and them to access and manage your financial information remotely, no matter where your business is around the world. You also don’t need to employ a virtual CFO full time, which means cost efficiencies.
Can you afford to have a CFO?… or can you afford not to have a CFO?
Marc Loftus | Director, Private & Entrepreneurial Clients – BDO
BDO provides Virtual CFO and strategic Performance Improvement services.