The Chief Financial Officer (CFO) holds the top-most financial position in a company. A CFO assumes various responsibilities, from handling the finances, managing and assessing financial risks to bookkeeping, and making final reports. The risks associated with capital and operations of small business is also under the supervision of a CFO. They represent the organization when it comes to answering stakeholders and investors. And as the organization moves towards future growth, the risks concerning suppliers, buyers, workforce, and shareholders start increasing. Thus the role of a CFO becomes even more prominent.
The CFO creates a more secure, monitored, and faultless financial system and aligns the financial strategies with the organization’s long-term goals. As the business establishes, your company’s need for a CFO increase.
Is your company in the midst of a financial crisis? Have you come to the point where you need a skilled CFO? Here are six signs that will tell you that you need to hire one ASAP!
- Dubious profitability
The profitability of your business determines the efficiency and effectiveness of the operations of your company. And, it is not an easy task to estimate correct profits, even in small businesses. So, if you are sensing an uncertainty in the profitability, it is time to consider hiring a CFO. An officer with expertise will deliver professional financial reports, correct accounts of payables and receivables, and strategic insights for proactive planning. Moreover, a cash flow statement checked by CFO is more likely to be errorless and useful in predicting future profitability ratios. Eventually, the reduction in risks and costs will optimize the productivity of your business.
- Growth of the business
It is possible to experience sudden growth in a business because the market demand is always fluctuating. And you are required to make quick and effective decisions to maintain market share and a steady growth rate. Due to growth, your business will require dedicated employees performing specific tasks to increase efficiency. And a CFO is one such job that needs to be filled. For improved training and vertical growth of employees within the company, you can urge your management level staff to take up courses and degrees to flourish their careers. A bachelor of finance online is an excellent option. Such degrees are useful in polishing essential skills and offer the flexibility to work and study simultaneously. In the long run, training existing employees can be more fruitful and less expensive than hiring a brand new resource at a top tier position.
- Unhappy investors
Your company’s stakeholders are your most valuable assets, especially investors, because they have invested money into your company. Unhappy investors are a sign of bad returns due to poor financial performance. If this is the case, you need to consider hiring a CFO.
A CFO can tackle these situations professionally as they have the right qualification to deal with issues requiring intricate financial knowledge. A CFO would help identify and understand the problem and address the opportunity leading to a successful conclusion.
- Lack of monitoring
A good manager is responsible for proper monitoring and supervision of their department, but it is not always that they succeed impeccably. The biggest issue arises when all departments need to collaborate to carry out a specific program. If you sense inefficiency within your finance and accounts departments, take a hint and do the needful. CFOs, as the name suggests, help in financial decisions, but they are also capable of supervising operations and functions as managers. They have experience in dealing with sales, marketing, and even manufacturing issues, which is why they are most likely to improve all related departments’ productivity.
- Planning to increase capital
Suppose your company is undergoing major financial restricting for the better or worse. In that case, a CFO will be your key to success. Increasing capital is one of the most efficient ways to protect your company’s financial future, and there are numerous ways to do it. Acquiring credit, bank loan, or increasing equity by going public – all of these activities require a thorough financial analysis. And a CFO can be of great help in any such situation. They make sure that the bookkeeping is accurate and updated to attract more investors. And if the company is going public, auditors might approach your financial data. Expert financial reporting is required to convince auditors that your company is responsible and answerable for all the monetary transactions, and CFO is capable of doing so.
- Missing a long-term financial plan
A company without a long-term financial plan is no different than the Titanic! Initial economic forecasting is very likely to differ from your company’s current financial position. And the reasons behind it are infinite – from obsolete strategies to lack of supervision. However, it is essential to have a long-term financial plan that aligns with the organizational goal to minimize cost and maximize ROI. If your company’s operations indicate a lack of specific directions, then it’s time to hire a CFO. The chief financial officers have abundant knowledge and understanding regarding the importance of financial strategies. They are experts in collecting and analyzing a company’s historical data and projecting future trends based on that information. They formulate a SMART and effective financial plan, which is specific, measurable, attainable, realistic, and time-specific. It is what brings your company closer to achieving its goal successfully.
Suppose your company’s operations and functions start exhibiting any such signs. In that case, a highly skilled CFO is needed for decision-making. However, don’t rush into hiring someone right away. A practical option would be to go for outsourcing a CFO. It is common among small business organizations because it is more cost-effective. Though, hiring one is better for the long-run.