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Don't Have A CFO? You're Probably Running These 5 Risks
What happens when a business does not have a CFO, outsourced or internal? Of course businesses that are starting out do not have a CFO on their books yet for a variety of reasons. They are not big enough and financial tasks can largely be done by the founders on their own or through outsourcing some tasks to an accountant. Moreover, most startups can't afford a CFO as they largely command high salaries. At a certain point as a business scales, CFO services become essential for the successful continued growth of a business, whether through outsourcing or employing internally. However, many businesses don't hire a CFO, or they do so, but do it later or earlier than they should (Which we talk about in our free-to-download guide, Outsourced VS Internal CFO). In this blog post we look at the 5 risks which your business faces by not turning to a CFO when it should.
The 5 Risks You Run By Not Having CFO Services
- Inadequate time allocated to diverse CFO duties
Many companies take on financial duties themselves, doing the bare minimum. They may have an external accountant or even an internal book-keeper. However, nothing compares to what a CFO can bring to a company in terms of driving growth and optimising cash flow throughout a company
- Lack of financial expertise and knowhow
CFOs glean their experience from a multitude of roles and come with a diverse skill set. This unique experience is one of the main reasons why they are now seen as the key driver of growth in modern-day corporates. CEOs for instance often juggle CFO duties with their own, without the relevant experience, knowledge or financial expertise to do so. Other finance department positions, such as book-keeper for instance, are often turned to for more elaborate finance necessities that require a different level of expertise. A great book-keeper does not make a great CFO.
- Lack of diverse range of skills now needed for the various roles the CFO is charged with fulfilling
The modern-day corporate CFO occupies three roles: one, agent of change; two, financial gatekeeper; and three, key business partner. Through the unique viewpoint that the CFO position provides, he/she is able to successfully fulfil these roles which are now viewed as crucially important in the ultra-competitive modern business landscape. These roles cannot be diluted among other employees.
- Loss of optimisation of cash flow management and driving business growth
The CFO secures equity investment funding, negotiates rates, and oversees where and how to allocate company capital. Streamlining cash flow is key to a company's growth and requires an expertise rarely provided from any figure in the company apart from a CFO.
- Loss of key strategist and change agent skills
To provide support to the CEO, to guide a company's strategy and to implement change when necessary in a company, it is the CFO upon whom such tasks befall as his/her unique skill set is seen as crucial in order to carry them out successfully.CFO services, whether hired internally or outsourced can represent significant capital expenditure. However, the hiring process should be done in an informed, patient manner as hiring the right CFO for your company represents "one of the most important decisions a company will ever make", as our CFO at Kantox, Laurent Descout, has described it. The CFO is an investment in the protection and maximisation of company profits and savings. The CFO role is now of such critical importance, that getting the appointment process right can mean the difference between posting a profit or making a loss, or of turning profits into runaway profits, and ensuring your company does it correctly will mean avoiding the risks we have outlined.
