A business needs a chief executive who can lead the entire organization and make the right decisions when an opportunity presents itself. Similarly, an accounting and finance team needs a CFO, i.e., a Chief Financial Officer, who can oversee every aspect of the business’s financials. The role of a CFO cannot be replaced by an expert accountant, though it is often required and a must-have. Most people, usually startup founders, believe that a CFO is nothing more than a premium luxury for a business. They tend to think that an accountant who keeps clean records, organizes financial activities, and takes care of taxes is merely a minion who maintains compliance and keeps all the regulatory requirements in check. Well, it may come as a shock that finance and accounting are not just about crunching important numbers. It’s much more than just regular housekeeping. To grow a venture, one requires in-depth insights, financial analysis, and forecasting, which is the work of a CFO. Their job is not limited to a few aspects. Think big—if you want to go public, sell your business, merge with another corporation, or do an acquisition takeover, a CFO can help you do all this easily.
You can consult an outsourced accountant in Mt Vernon, NY, to determine whether to hire a CFO, as they understand the tenacity of a skilled professional when it comes to finances.
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Do You Need a Virtual or a Full-Time CFO?
A CFO is a financial expert who acts as the core advisor and assists the accounting, finance team, and CEO of a company. If you have decided to hire a CFO to take your business to the next level, then the question arises: should you hire a CFO full-time or on a part-time basis?
This again depends on the fundamental aspects of your company, your requirements, objectives, and overall budget. Business experts advise that if your organization files $1 to $2 million in taxes or your company makes $20 to $50 million in revenue, then there’s no doubt you have the budget. You can hire a full-time CFO for expansion and, more importantly, to ensure things are done right in your company. Prefer those with about 10 years or more of working experience in a similar domain within your business industry.
However, if you file around $1 million or less in taxes or your business makes around $1 to $10 million a year, you can allocate a budget for hiring a talented CFO. If that doesn’t work, you can opt for a virtual option, where the person operates virtually from any location. They charge based on their working hours, which is usually less compared to full-time employment. The fractional CFO works on a retainer basis, meaning you can use their services to benefit your company for growth.
Why a Good CEO Needs a Good CFO
People usually focus on the functional value of a CFO, but they bring a lot of value as a teammate, especially to the stakeholders and CEO. It’s evident that they lead areas like planning, budgeting, and allocating resources, however, they also bring pattern recognition and an ROI-oriented perspective that most boards of directors may miss. These patterns, behaviors, insights, evaluations, and data are relevant when making core business decisions. For example, during a business valuation when a founder is trying to sell their company, a CFO can help assess the present market value and the future discounted cash flow of the company accurately. Moreover, they can work on the methodologies to make an organization more hot and attractive to an investor. A CFO also helps determine the right and adequate funding opportunities, ensuring that you and your enterprise do not get entangled with the risky loopholes and the wrong VCS.
