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When your business finances aren’t in a good place, it can result in damage, leading to you closing your doors forever.
To avoid such a consequence, many company leaders build a team of financial experts that can help them keep their finances on track and in a position to grow. In particular, a Chief Financial Officer (CFO) can give any business impressive financial insight and direction.
Whether you’re opening an eCommerce store or running a home decor business, the right CFO can give your business the leadership it needs to excel financially.
Their extensive knowledge in managing company finances and their leadership abilities make them more than capable of driving your financial department.
To make the best CFO hire for your company, let’s look at a few key benefits CFOs provide. Additionally, we’ll include a few tips for when you should consider hiring one and what to look for in applicants.
The Benefits of Hiring a CFO
Hiring a CFO ensures that your finances are approached from a realistic perspective.
Washington State University explains how the duties of a CFO are split up into three main parts:
- Controllership duties — presenting quality financial data that is accurate, timely, and full of insight that aids future financial decisions.
- Treasury duties — deciding how to best invest company profit, keeping the financial landscape in order, and managing the mix of debt, equity, and internal financing within the company.
- Economic strategy and forecasting — identifying financial strengths and weaknesses, reporting findings to key company leaders, and predicting financial success.
This combination of job responsibilities can be beneficial because they contribute to the strategic financial planning process adopted by most companies.
A CFO can help you do things like:
- Create a budget for your business and effectively manage and maintain this budget
- Conduct cost-benefit analyses of things like inventory tools, manufacturing costs, or marketing strategies.
- Confidently forecast your financial future.
- Implement IoT for cost-effective ways to collect and transfer data
- Shape financial goals and policies that drive revenue growth
- Cut costs where appropriate
What to Look for in a CFO Applicant
To hire the right CFO, you must look for specific qualities in your applicants.
Financial planning experience, an ability to report financial data, keep organized financial records, and risk management are qualities of a top-tier CFO.
Here are a few more skills and attributes to look for in your CFO candidates:
- Traditional accounting management
- An advanced degree in accounting, finance, or business
- Extensive written and verbal communication skills
- An analytical mind
- Decision-making ability
- An ability to lead and manage others
- Results-oriented with the job experience to back it up
- A proven history of creating and assessing financial documents and company budgets
- Adept in finance laws, regulations, and rules
- A passion for all things finance
When to Consider Hiring a CFO
Getting help for your business is key to ensuring your financial house is in order. You can start with a bookkeeper and/or accountant, but at some point, your success will necessitate the growth of your finance department to include a CFO. The decision to bring a CFO on board should be well-thought-out and suitable for where your business is today and where you want it to be in the future.
You should consider hiring a CFO when:
- When you can afford it. CFO’s have a significant price tag attached to them and for good reason. Whether you’re bringing them on at an hourly rate, paying them on a per-project basis, or shouldering their retainer fee, only bring on a CFO when you can afford them. You also should understand the advantage that comes with their knowledge and ability, so you aren’t undermining their value.
- When it’s the right time. If you’re just starting your business, it may not be the right time to hire a CFO. On the other hand, the right time may be when business is going well, and you want to polish your financial portfolio for investors. Or when you’ve come into a windfall of profit and want to invest it properly.
- When it’s the right fit. Don’t just bring a CFO on board for the sake of doing it. You must ensure the person you hire meshes well with other team members. You also want to be confident that this person fully understands your financial goals and can get you there.
Hiring the right CFO can give you the financial expertise you need to scale your business. Look for applicants with a solid financial and accounting background, as well as proven leadership skills. Hire a CFO when it’s the right fit for business, at the right time, and only when you can afford them.