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As a business owner, you have many responsibilities and probably not enough hours in the day to get everything done. Hiring a chief financial officer (CFO) can help you with the financial management of your company, freeing up your time to focus on other tasks.
What is a Chief Financial Officer?
A CFO manages all aspects of financial matters and decision-making, ultimately responsible for the company's financial health. They help compile financial reports and oversee cash flow management and general financial planning and operations of an organisation.
What are the main duties of a CFO?
Developing and implementing high-level strategies
One of the primary responsibilities of a CFO is to develop and implement high-level strategies, which involves looking at the big picture, determining a company's financial needs, and creating plans to meet those needs. A CFO has to ensure that they constantly monitor the execution of these strategies and make adjustments as needed.
Financial planning for performance and growth
The CFO is an executive responsible for the company's overall financial management. The CFO's primary tasks are to find ways to increase revenue, decrease costs, and manage the company's financial risk. The CFO is directly responsible for financial planning, risk management and specific tasks such as managing investments, coordinating debt payments and negotiating loans or lines of credit from banks or other sources.
Financial reporting
A CFO monitors and reports on all of the company's financial aspects, including income statement, balance sheet, cash flow statement, and tax returns. In addition to financial reports, they may also be responsible for preparing the annual budget and forecasting the company's future growth. The CFO will also conduct monthly analysis of all financial results and present these findings to management and other stakeholders in the business to improve operations and profitability.
Leading different departments
A chief financial officer should be able to communicate clearly and effectively with stakeholders, which means having excellent written, oral, and interpersonal communication skills. Companies may rely on the CFO to maintain relationships with financial stakeholders like shareholders and vendors.
What are the skills and qualifications of a CFO?
Financial education
A CFO should have at least some form of financial education, which can be through a degree or professional experience. A bachelor's degree, ideally in accounting, business or finance, will usually be the minimum requirement for a CFO role. Many chief financial officers tend to have corporate finance experience or strong accounting background. Taking CMA review courses is also an effective way to improve your knowledge and understanding of the accounting profession.
Problem-solving
A CFO needs to be able to solve problems. A good CFO can think critically, analyse financial data, and then make a strategic decision based on the information. There are many pitfalls that a successful CFO needs to navigate to keep the company afloat. They need to be able to think on their feet and act quickly.
Leadership skills
The CFO must have strong leadership skills since they are responsible for managing the finance team. They set strategic goals and ensure that their department works to accomplish these goals. They work closely with the chief executive officer and other senior team members to ensure clear lines of communication between departments.
Importance in hiring a CFO?
CFOs can help implement a financial strategy to cut costs, grow revenue, and ensure financial control in the business. They can identify ways of improving profitability and ensuring that cash flow is robust enough to withstand any unforeseen events or economic uncertainty.
The CFO should be aware of any regulatory requirements that influence financial reporting. They are responsible for ensuring compliance with these regulations on behalf of the organisation, avoiding potential reputational damage.
A CFO's duty requires them to keep abreast of accounting standards. CFOs should adhere to best practices when preparing financial statements and provide accurate information that investors will trust. Financial statements must show a true and fair view of the business. If not, it can impact financial planning and day-to-day operations, leading to liquidity issues and failure in the long run.
Steps to Hire a CFO
Write a job description
Clearly outline responsibilities and requirements for the role. You'll need someone with a high level of accounting and finance expertise, industry experience, strong communication and presentation skills, and substantial strategic planning acumen. Furthermore, knowledge of various accounting systems can be advantageous. Soft skills are crucial in an effective CFO as they will be a vital member of the team and have a financial leadership role in your company.
How to write a job description for a CFO
Writing a job description is an essential part of any job posting. A well-written job description can boost your company's presence in the market, draw in suitable candidates, and ultimately help you fill the position with a qualified candidate. As such, it is important to do this accurately.
Job title and summary
Clearly outline the expectation of the role. You'll need someone with strong financial expertise, relevant certificates and education, and, ideally, someone who knows your industry. Soft skills are also crucial in an effective CFO as they will be a vital member of the team and have a leadership role in your company.
Include a company summary that will give candidates an insight into their role and company culture. A comprehensive overview will attract the ideal candidate who will have a genuine interest in your business, reducing any misunderstandings further down the line.
Duties and responsibilities
Some duties and responsibilities include the following:
• Monitor cash balances and cash forecasts
• Developing long-term business plans based on these forecasts
• Arranging new sources of finance for a company's debt facilities
• Supervising staff, including financial accountants and financial controllers
• Producing accurate financial reports to specific deadlines
A CFO will have many more tasks which they will be required to perform and oversee, depending on the size and nature of your business. A smaller company may need the CFO to be hands-on and proactive.
Requirements
Here, you can narrow down your applicant by being explicit regarding education, experience and achievements. One thing to be mindful of is not to overload this section with unnecessary information. Having an extensive requirement section can deter more than capable candidates from applying.
Some requirements can include:
- a Bachelor's degree in any discipline
- qualified accountant (ACCA, ACA, CIMA) or have further studies in finance
- proven experience in a fast-paced executive role
It may seem trivial, but a well-written job description can make the difference in turning away unqualified candidates and attracting high-quality ones.
Finding a candidate
Post the job on social media and networking sites and reach out to people in your network for recommendations or suggestions. Given the role-specific complexities of the position, it may be best to get a recruiter to help with the hiring process.
Interview process
Think about the experiences and qualities you want in your CFO and ask the relevant questions to gauge the candidate's suitability. Ask how they have dealt with complex financial matters, motivations, and critical thinking skills. Leadership and ethics are essential characteristics of a board-level member. Consider asking the candidate how their past performance demonstrates these skills.
Find out what the candidate wishes to get out of this role to judge if the position will be motivating for them. You must build trust in the relationship with your CFO, given the importance of their role. It is always helpful to get a second opinion from someone else in the business to assess a candidate's suitability and cultural fit.
Extend the job offer
Send an offer of employment to your chosen candidate. The offer letter will cover what the employee and employer will want to agree on, define both parties' obligations and rights, and outline any particular key terms.
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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.
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