Is it time to hire a CFO? Understanding the value a financial professional can bring

As your business grows, managing its finances becomes more complex and demanding. You may decide to add a chief financial officer (CFO) to your executive team as a result. A CFO brings specialized expertise in financial planning, risk management and strategic decision-making, which are crucial for navigating the challenges of a growing enterprise. With a dedicated senior leader focused on financial oversight, you can ensure that business resources are managed efficiently and sound financial strategies are developed to support your company’s continued expansion and long-term success. 

A full-time CFO fills a broad strategic role in business leadership and has a wide range of responsibilities. These duties include overseeing financial operations and efficiency, conducting financial planning and forecasts, and ensuring financial reporting and compliance obligations are met.

For example, a CFO working at a retail business might use historical sales data, financial analytics and economic indicators to accurately forecast sales projections and cash flow. They can negotiate with suppliers to ensure agreements contain favorable terms for your business and align with your revenue cycle.

The CFO serves as a senior leader in the business and provides ongoing stewardship of the company’s finances along with strategic counsel focused on achieving the company’s goals and realizing your vision.

While a CFO may not be necessary when the business is starting, the role can become critical as a company scales. CFOs also are crucial as companies mature and require a leader to oversee profitability, corporate finances, business strategy and diversification opportunities.

As your company evolves, having someone to oversee the finances can allow you to focus more attention on critical areas, such as developing new products, building your brand and fostering the right company culture. Every aspect of your business will demand more of your time as your company grows.

The question is whether your business is at the right point for a full-time CFO and the added payroll expense. Bringing on a new full-time senior employee may not be ideal for all companies. One option is hiring a fractional, or part-time, CFO for advice on specific projects or to work with external bookkeepers.

The return on investment for hiring a financial professional makes sense if the CFO gives you the bandwidth and expertise you need to unlock new markets, anticipate important business trends and access new sources of capital. A CFO may be especially important if you are seeking outside investment or complex financing. They can help navigate relationships with investors and other stakeholders and ensure your financial documents will pass muster during due diligence processes.

A full-time CFO can help you optimize cash flow, increase profit margin and analyze product lines by using their expertise to identify areas where costs can be cut or prices can be raised. And while you may not be thinking about it now, a CFO can also help position the business financially when you are ready to pursue an exit.