A Chief Financial Officer (CFO) isn’t a role you take for granted. The role has many moving parts and requires quite a bit of experience and knowledge. This article should help you understand what a CFO is, the main responsibilities, and when is the best time to hire one for your own start-up.
What is a Chief Finance Officer (CFO)?
A Chief Financial Officer or CFO is considered a top-level executive role and the highest financial position. Their main focus is to make sure the company they’re working for is complying with regulations, receiving a strong return on investments, and managing the liquidity ratio/percentage.
They are responsible for tracking cash flow, and financial planning while also analyzing and correcting the company’s financial strengths and weaknesses. Other duties include recording keeping, reporting to stakeholders, financial risk management, and fundraising.
How do I Become a CFO?
Just like any C-suite role, becoming a CFO isn’t an easy path. To start off many CFOs have an educational background in Finance. That can include degrees in accounting and finance. It’s recommended that you also pursue education further than a bachelor’s degree. Quite a few CFOs have MBAs as well as professional certifications (CMA, CPA, CFA, etc.).
It’s equally important to also have the experience to go with your education. As stated previously, being a CFO isn’t easy and you need the experience so you can apply the right strategy in difficult situations. Most CFOs have 10+ years of experience before taking on this type of position.
What Skills Does a Great CFO Need?
The top skills a CFO would need fall under three categories. These categories are leadership, innovation, and strategy. The CFO would need to know how to lead a team. Not only a team but an entire department. The CFO’s leadership style not only has to align with the company but work effectively to unify your staff for a common goal. A factor to consider when looking at leadership would be your communication skills. Make sure your meetings have a purpose and are engaging, if a goal is reached make sure you announce it in a way that everyone can understand and allow feedback that way you can constantly evolve/change.
With innovation, a modern-day CFO can no longer operate based on traditional practices. You have to be able to create a community of creativity both internally and externally. This includes coming up with visionary ways to get the best talent on your team as well as encouraging your current staff to move in innovative ways.
Lastly, you have to think strategically. You have to be able to fully analyse a problem and see the solution from multiple viewpoints. You also have to be able to think ahead. This would be looking at current trends and forecasting what to expect in the years to come.
The Benefits Of Having A CFO
A CFO can evaluate opportunities and build strategies around markets, geographies, products and services, and competition. A CFO provides timely and accurate financials and metrics, and importantly, good interpretations of those numbers to guide actions. Every organisation needs right-sized risk prevention infrastructure to protect against fraud, errors, and business risks. An experienced CFO is crucial in managing risks through helping identity and mitigate exposure by establishing and enforcing appropriate financial and operational controls. While everyone has some responsibility in these areas, CFOs are the conductor on the train working hand-in-hand with all levels of management and staff to help track these metrics, and make sure performance is in line with company goals and strategy through management of growth, profitability, cash flow, and expenses.
When Should I Hire My CFO?
It depends. It’s an annoying answer but it’s the truth. It may be time to employ if you are going through rapid expansion and finding it difficult to handle finances, or if you feel that managing your finances is taking up a lot of your time and keeping you from doing what you do best. Don’t get me wrong, you do need someone to be in charge of your finances as your GreenTech scales, but it might not be a CFO. If you are in the beginning stages of your startup, it’s recommended that you have a controller before hiring for a higher position. You could look at a controller as a stand-in CFO. A controller would be responsible for the accuracy of the company’s financial accounting and reporting. Due to them tracking business expenses, they can help improve the company’s profitability.
A CFO is someone you should hire once your start-up hits a certain point financially. This is due to multiple reasons. One of those reasons being CFOs do not come cheap. According to Salary.com the average salary for a CFO is $416,641. One of the key signs that it’s time to hire a CFO would be when your business is seeing a fast amount of growth.
How To Find The Perfect CFO For Your GreenTech
With the cost of hiring a CFO being high, you want to make sure that the CFO you hire checks every single skill requirement your business needs. Once a CFO loses credibility in one company with investors, they become unattractive with other businesses and investors. A highly leveraged company, for example, may prefer candidates experienced within highly levered environments, who can address the various treasury-related issues. Business partnering, leadership, and experience interacting with the board are also among our clients’ frequent ‘must haves. We also see an increasing interest from boards in CFOs who have demonstrated that they have commercial and operational abilities and may be able to run part or all of the company one day. Boards also may be more focused on risk issues, such as data privacy, so they tend to be comfortable with executives who have a strong controls orientation. With all these preferences in a CFO, it can be tricky to find the perfect person. Storm4 have a vast candidate database with CFOs competent and qualified to meet your GreenTechs needs. Save time in searching for this candidate and partner with us!
At Storm4, we are specialists in connecting professional CFO candidates with successful GreenTech start-ups and scale-ups across the globe. If you have a senior-level vacancy you’re looking to fill, contact us here.