What Does A Small Business CFO Do?

When you hear the title Chief Financial Officer (CFO), do you automatically think of Fortune 500s and their skyrise corner office suites?

Well, I’d be willing to bet that successful companies like that have a CFO.

But that doesn’t mean that a CFO is only attainable or needed by giant companies.

In fact, your small business can also benefit from a CFO!

Are you thinking, “Great, but how in the world can I afford what enormous multi-million companies have?”

First, please stop comparing your business or yourself to other companies that are older, more experienced, or more profitable. Comparison, after all, is the thief of joy. Secondly, think outside the box a bit!

With outsourced CFO services from Harrington Strategic Partners, you can access an affordable, expert CFO to partner with your business.

8 Responsibilities A Small Business CFO Will Handle For Your Business (So You Can Focus On The Things You Do Best)

Small businesses like yours need a CFO with startup, entrepreneurial, and small business experience and expertise. When evaluating someone as your small business CFO, consider their experience in the following areas.

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1. Liquidity

Your business’s ability to pay off its short-term liabilities depends on your business’s liquidity. This is the amount of cash an organization has to cover its immediate and short-term obligations.

A CFO will examine whether you are being paid for your products or services appropriately so that you can pay towards your own debts on time and in full. Plus, your CFO will ensure you have a proper cash flow strategy to meet all your financial obligations, both major and day-to-day expenses. 

2. Cash Flow

Often confused with liquidity is cash flow. While the two intertwine, cash flow and liquidity are not the same. In fact, cash flow is the money coming in and going out of your business throughout an accounting period.

A few aspects of your cash flow include expenses like:

•  Rent or mortgage payments
•  Stocking inventory
•  Utility and vendor bills
•  Payroll

While the money coming in and out may seem like an easy system, you’d be selling yourself short to operate under that assumption. For instance, a CFO will implement expert strategies to increase cash flow without costing you more money. A few common practices include the following:

•  Paying your bills on the last day possible without incurring late fees
•  Renting space and equipment rather than buying
•  Training your clients to pay on time or incentivizing them to pay early
•  Utilizing the right software to save you time and money
•  Identifying a legal payroll schedule that works best for your cash flow

The cost of an outsourced CFO will pay for itself with the amount of money you save.

3. ROI

Are you getting a return on all the investments you’re putting into your business?

CFOs evaluate proposed projects and investments with added context to determine whether the ROI will be worth the investment.

This gives business owners the confidence to make the right choices for their business. Moreover, knowing when to time these important choices with the help of a CFO make a huge difference in ROI.

4. Reporting

Are you familiar with reports like balance sheets, profit and loss statements, or cash flow statements?

For the sake of argument, let’s say you have a basic understanding of all three financial statements. While this is a great start, your basic understanding will only get you so far. Plus, mistakes could cost you thousands of dollars in fees and penalties come tax time.

Putting your business’s finances in the hands of “basic understanding” can be a costly error. You need a strategic CFO to help ensure they are correct at all times.

5. Controller

In larger companies, a controller runs the day-to-day accounting and financial operations under the oversight of a CFO. However, an outsourced CFO for small businesses can handle these obligations. Typically, a controller is responsible for creating reports to provide insight into a business’s financial standing. This can include accounts receivable, accounts payable, inventory, and payroll.

6. Treasury

Another role that you will typically see under a CFO in a big company is the treasurer. But, once again, an outsourced small business CFO will handle these tasks for your company. Overall, the treasurer is responsible for your business’s liquidity, debts, and assets. Furthermore, this can also include physical assets like buildings and expensive equipment and your financial investments.

7. Strategy and Forecasting

Strategy and forecasting is a role that typically works under a CFO at major companies. And it’s so important! Plus, it’s one of my favorite tools to use as a strategic CFO.

This role involves taking data and reports to advise on product development, human capital management, market expansion, capital investments, and more.

Moreover, strategy and forecasting will also implement exercises like scenario planning and FP&A (financial planning and analysis).

8. Scaling

Growing your small business is the ultimate dream, right?

Well, did you know that a majority of businesses that scale too quickly…fail?

Yep, you really need a secure strategy in that game. Plus, it’s so important to create a two-year plan for a slow and steady scale. A good small business CFO will look at your entire business to see that you have the right people, processes, and tools to scale without crippling the company.

Benefits Of Partnering With An Outsourced CFO

So we’ve reviewed the tasks and responsibilities that small business CFOs handle. Here is how an outsourced CFO will benefit your small business.

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Industry Knowledge

You need a CFO that specializes in framing KPIs and metrics for businesses like yours. A CFO with small business expertise in your niche industry will enable your business to stand out from the competition.

Assess & Manage Risk

If your business falls under the scope of industry regulations (FINRA, State Bar, etc.), then a CFO will ensure you remain compliant.

Additional Support

A CFO with knowledge of your industry will know when and how to call in reinforcements, such as a tax specialist, CPA, or tax attorney.

Experience

Want to scale your business to new heights? Then you want a CFO in your corner with a proven track record of helping businesses like yours grow organically and successfully.

Take Your Business’s Finances To Level 20 With Harrington Strategic Partners

Are you attempting a DIY approach or beginning to explore possible resources for your small business? Well, one thing is clear – you need an outsourced CFO. Because trying to do it all on your own isn’t the recipe for success. Instead, it’s a setup for burnout and, in way too many cases – failure. But I don’t want that for you!

You’ve invested time, energy, and money into building your business. It’s time to start implementing strategies that will do much more than simply keep it afloat.

To give your business the launch pad it deserves, I’m offering you a free copy of my guide, 6 Mistakes Every Business Owner Needs To Avoid. Download it today!