The business environment is extremely complex, and it is difficult as a business owner to possess all the relevant skills needed to transverse the business environment to achieve our business goals.
If you’re a start-up, you may have identified a problem and have a potential marketable solution for the problem but are struggling to go the next step to build a prototype or get to market. Alternatively, you may be a business that wishes to expand but must decide on a business model and a supporting the business plan and have a financial strategy to fund the growth. Or, you may be a mature business that requires a strategy to enhance innovation or manage existing risks to become more competitive or profitable.
We are all aware that time is a most limited resource. So, identifying the necessary help and skill sets required to assist our businesses in making the best use of time and resources is imperative.
Business fundamental issues such as deciding on an appropriate business strategy, the business model to use, or the financial strategy to adopt, is a large part of the principal domain of the Chief Financial Officer or CFO.
But what does the Chief Financial Officer do? Should I have a full-time CFO? What value will he or she provide? How is such a position different from the financial controller?
The CFO’s key areas of attention are strategic direction of the business, the general design of control and reporting systems of the business, financial management including funding issues, and liaison with statutory stakeholders such as external auditors, ASIC and the ATO.
The responsibilities of the CFO differ from those of the financial controller who typically deals in detail at the transaction level of the business by maintaining policies and procedures, managing the accounting staff where applicable, completing the day-to-day accounting functions such as bank reconciliations, issuing credit, making supplier payments, collecting customer receipts, and managing outsourced functions. However, activity will often overlap between the two.
CFO functions will typically involve:
- liaising with the board or business owners regarding strategy;
- attending to management reporting and annual financial statements;
- liaising with auditors;
- overviewing the filing of relevant statutory information with ASIC and the ATO;
- managing the budgeting and forecasting processes;
- reviewing and assessing capital investment into new products, business businesses, and or new equipment;
- implementing operational best practices;
- providing financial analysis;
- developing performance measurements;
- reviewing systems and mitigating risk with those systems;
- formulating financial strategy;
- formulating tax strategy;
- formulating management risk management strategy;
- assisting in the negotiation of acquisitions
- maintaining banking relationships;
- arranging for debt financing;
- investing business funds,
- maintaining insurance coverage;
- encouraging innovation; and,
- prioritise the allocation of resources within the business.
The CFO activities and functions will vary in priority and intensity over the operational, financial reporting cycles of the business. Also, these activities and functions take time to act upon and implement. However, without the appropriate skill set, it is very difficult for a business to apply resources effectively to these areas. Often, a business must be strategic in the selection of the services and the systems it chooses to implement given its resourcing.
What is evident, is that to be a successful long-term business you cannot survive without the help and skill set of the CFO.
Have you identified the skill set that you must have to take your business forward? Do you require those skills in-house or can outsourcing acquire them?
What are your business’s priorities? And, who is there for you to turn to for help?
At Accru, we’re here to help, whether working alongside or as your companies CFO. Contact one of our offices today to find out more.