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HomeHuman ResourcesLeadershipHow a CFO Adds Value and Pays for Themselves

How a CFO Adds Value and Pays for Themselves

Photo by Sora Shimazaki: pexels

The role of the CFO is often overlooked. It’s not uncommon for the role to be underestimated as a glorified financial manager. Instead, the position of CFO is continuing to evolve and grow in importance. CFOs are becoming one of the first appointments start-up CEOs are making.

It’s becoming increasingly clear that CFOs add value to a company. Many CFOs pay for themselves by helping companies evolve and reach their potential. One of the best investments you can make in your company is to hire a CFO.

The world of work is changing – including that of CFOs. Flexibility with interim, part-time, and remote CFOs means that every company can take advantage of the value that a CFO can add. The CFO is the financial leader of the company and the second in command to the CEO.

How you recruit your CFO is key to the value that they’ll add. FD Capital is the leading financial recruiting agency with a reputation for curating its recruitment to the specific needs of each company.

The role of the CFO is vast and one that can be tailored or project-focused. We’re exploring the different ways that a CFO adds value and how they pay for themselves. A CEO without a CFO is like a swordsman fighting with one hand behind their back.

Accelerating Company Growth

Forecasting and strategy are two of the principal responsibilities of a CFO. Their goal is to oversee the financial health of the company and track its progress. The value of a CFO comes from their ability to make a company more efficient and cost-effective. They can identify areas of under-performance and overhaul systems that are ineffective.

These insights from a CFO are vital to the decision-making of a CEO, helping to accelerate company growth. It’s why many companies choose to hire a CFO at times on change or growth. An interim or permanent CFO is often hired at times of rapid growth or when a company is planning an expansion.

A CFO will offer leadership within the company and create a system to boost profitability and raise more capital, if necessary. Your CFO will pay for themselves in the financial insight they will bring to your company. Their work grounds the decision-making process of the CEO, enabling the company to achieve its long-term goals.

Boosting Profitability and Cash Flow

CFOs are expected to provide an unbiased perspective on the company’s finances. Many are hired to overhaul poor financial systems and to make their company more effective. They’ll create a strategy that aims to boost productivity and cash flow to future-proof the company against potential challenges.

A CFO will identify and communicate any risks or threats to the company’s financial health, including how to mitigate them. Creating robust financial systems will boost the company’s profitability and cash flow, making the CFO’s value even greater. Every CFO will work to optimize the company’s profits and create key performance indicators (KPIs) to monitor this.

Cash flow is more vital than ever for businesses as they prepare for a recession and the cost-of-living crisis. CFOs add value to companies by ensuring adequate cash flow with a strategy to increase liquidity through pricing and financial strategy.

Skilled CFO will pay for themselves by creating an effective cash management system. Many CFOs are hired on an interim basis to help change the fortunes of companies struggling financially. Increasing liquidity can be achieved by managing capital and debt to re-direct funds.

CFOs pay for themselves by creating cash flow projections that can feed into the company’s strategy. The day-to-day activities of a CFO focus heavily on boosting profitability and cash flow. They oversee the financial department, including payroll decisions and exploring potential fundraising opportunities. 

Oversee Fundraising Projects

CFOs add value to companies by exploring fundraising opportunities. Whether you’re a start-up or a business looking to scale, this is where CFOs often add their most value. Banks, investors, and PE houses are more likely to work with companies that have a CFO on their leadership team.

Smaller companies typically have their CFO act on their behalf when working with banks. They’re the direct line of communication to banks and investors, keeping them updated on the company’s financial health. Nurturing these relationships can enable the company to access funds and loans on better terms.

Fundraising is an essential part of any growth strategy. A CEO is more likely to succeed in this area with the help of a CFO. Most investors will want to work directly with the CFO and value their perspective on the company’s finances and growth strategy.

Provide Forward Thinking

CFOs bring a wealth of experience and knowledge to a company. While CFOs are often seen as financial managers, their work extends beyond spreadsheets and numbers. They provide forward thinking and a new perspective on the company’s direction and mission.

The best value will come from CFOs who work closely with their CEOs to create a financial strategy that provides the company with direction and trackable goals. Proactive CFO will pay for themselves by acting as the CEO’s financial advisor and business strategist. They’re the missing piece of the puzzle that will align the company’s financial forecasting with its strategy to optimise growth and profit.

Overseeing Mergers and Acquisitions

CFOs can enter companies at different stages of their development. Many are brought on board as a company is beginning to scale. It’s becoming increasingly common to see CFOs being one of the first major hiring appointments for start-ups and scaling businesses.

They add value to companies by working with the CFO to identify growth options, including potential mergers and acquisitions. A CFO will pay for themselves as a strategic growth advisor for the company. Their focus on the company’s financial health puts them in the best place to oversee fundraising, debt management, mergers, and acquisitions.

Finding a CFO who will add value and pay for themselves starts with the recruitment process. You need to identify the specific needs of your business to find the candidate who can add the most value. The best way to achieve this is by working with a boutique recruitment agency that specialises in CFO recruitment, such as FD Capital, which offers Interim and Part-time CFOs. Hiring a CFO is one of the best investments you can make in your business.

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