158. What is the role and what are the responsibilities of an FD/CFO?

Soundbite: A FD/CFO is a highly experienced finance profession who is responsible for the strategic financial management of the business.

What does this really mean?

We can view this as two main areas:

  1. Tactical – Helping you understand where the business is – right now: this is the crucial task of ensuring that the finance function works for the benefit of the business (and not the other way round) by having the right resources (people, systems and processes) in place to provide a clear understanding of its financial position at very short notice. In essence, it involves budgeting, forecasting and regular analysis of performance against forecast. This will lead to recommendations for changes needed to optimise the financial performance of the business.
  2. Strategic – Setting the long-term financial strategies of the business: Otherwise known as strategic leadership, an FD/CFO will work closely with the senior management team aligning the financial goals with the objectives of the business. They can identify potential opportunities (and risks) and develop appropriate financial strategies to ensure long term and sustainable growth for the business.

So an FD/CFO is your eyes and ears as to what is happening to your business and is there to minimise the risk to the business.

While we are at it, let’s face up to some of the jargon flying around and decode it:

What’s in a word?

While others might seek to dress this up as something very complicated, really it is not. And here’s why:

  • A ‘Finance Director’ (FD) is basically the same as a ‘Chief Financial Officer’ (CFO) – we will use the hybrid term “FD/CFO” meaning the same thing.

  • Part time’ means the same as ‘fractional’, or, indeed, ‘plural’ – we will keep up with the times and use the buzzy “fractional”.

  • Interim’ is usually doing something on a project basis – typically for a finite and limited time.

We have distilled our thinking down into a series of brief articles which, again at the risk of making assumptions, seek to address the questions that you will have about how best to manage your finance function – and if you are not asking these questions, then could we perhaps suggest that you should be asking them?  Try these related ones for a start.

  1. What are the main differences between a full time and a fractional FD/CFO?
  2. What are the 4 key benefits of having your own fractional FD/CFO?
  3. Signs to look out for which could mean that a fractional FD/CFO might be the right solution for you.

Don’t let your limited resources hamper the growth of your business. The benefits of working with a FD/CFO (full time or fractional) are clear and with them as part of your management team you will be able to make informed decisions based on real data and, ultimately, be able to sleep easy at night knowing that that bit of the business that you may not fully understand is in safe hands.

About Tectona

Tectona Partnership helps business owners sleep at night by embedding one of our 18 commercially minded FD/CFOs in your management team.

Very often, a part time (or fractional) FD/CFO is the most effective solution.

We make sure you have the necessary management information and strategic insight to make informed decisions and reduce risk; and we will absolutely tell you what you need to know, when you need to know it.

Posted in Business Development.