What does a CFO actually do?
A good part time CFO will focus on providing high level, value-added strategic financial advice to businesses.
By the very nature of the part time role, the businesses that benefit most will be primarily at the smaller end of the SME spectrum from start-up, through growth and on to potential exit.
The role will vary through the life cycle of a business but will include:
- Establishing a system of reliable and regular financial information and forecasts to enable the business to make sound decisions
- Setting up robust financial and business processes to ensure efficient running of the organisation
- Accurate cash management and forecasting
- Identifying the need and quantum of finance and introducing lenders
- Strategic and corporate governance advice to the CEO and the Board
- Assistance with managing key stakeholder relationships (e.g. lawyers, auditors, banks, shareholders, customers, suppliers)
- Advice and experience in the lead up to a successful exit
The most immediate priority for an incoming part-time CFO will be to establish credibility and strong relationships with the founder/CEO and the Board.
This should include discussion of the long-term goals of both the business and key individuals. A deep understanding of the business environment is also critical and this will be accumulated by talking to the team across the different business functions.
An early identification of weaknesses and the areas for improvement should be established based on the knowledge and experience of the part-time CFO. This will then lead to reviewing other areas where value-added advice can be given; for example, improving business processes, driving efficiencies, formulating strategy and, ultimately, delivering enhanced financial performance.
After addressing the immediate priorities, the part-time CFO will then drill into other areas, which might include:
- improving the financial processes to get quicker, more accurate and reliable monthly management accounts and KPI’s
- For businesses in the start-up and early growth phase, cash is king and advice to improve cash management is a key value-added opportunity.
However, overall it is the ability to think strategically and use the experience gained from other similar businesses they have worked with; and, through interpretation and analysis, guide the CEO and the Board to make informed decisions based on real data (rather than seat of the pants guesswork).
What Challenges does the part time CFO face?
Most part-time CFOs will be working with a number of businesses at any one time. So an overarching challenge is to manage their portfolio to enable them to be, and be seen to be, providing seamless support to their businesses when needed, even when off-site. So every part time CFO needs to be comfortable juggling several work-loads.
In addition, they must remain focused on the most important areas where they can add value to the business in the limited time available and be adept at retaining key financial information and knowledge about each business. Robust time management is crucial to ensure this aspect of the role is handled effectively.
So, what Skills are required?
A part-time CFO needs to be:
- a great communicator
- ready to question and challenge
- able to rapidly identify and focus on key areas where they can add value
They should be commercially minded and a strategic thinker who can focus on the longer term.
And be able to quickly identify where improvements can be made.
Strong interpersonal skills are important to be able to build relationships at Board level, with the CEO and other key employees.
And it helps to be part of a strong Support Network
The role of a part-time CFO can be a lonely one, so being part of a strong support network is really helpful in a number of ways.
First, it is often important to bounce ideas off other senior finance people to help find solutions to problems or just to check that the proposed approach is right.
A network will facilitate introductions of key professionals with appropriate expertise and knowledge.
Independent CFOs (not working as part of a team) must rely on their own (smaller) network of contacts and ensure that they are fully up to date on a variety of different financial and business topics and trends. This can be time consuming and difficult to achieve, particular when the CFO will be busy with client work.
The establishment of an online site where ready access to a pool of similarly minded CFO’s is an exciting prospect and can help the part-time CFO to find solutions quickly, discuss topics and save valuable time. Networking can also help provide future business opportunities for additional roles.
Several groups of part-time CFOs exist – such as Tectona Partnership which provide a readymade support structure – great if you are a CFO and the knock on effect is the enhanced service they can then provide to businesses.
All Tectona CFOs are recruited based on their skills, experience and temperament coupled with demonstrable commercial experience gained over decades of real life financial roles in a number of businesses.
Contact the Tectona team if you want to join us or if you are a business owner who thinks that the above resonates and you would like to meet us.
Tectona Partnership helps business owners sleep at night by embedding one of our 15 commercial finance directors in your management team. Very often, the part time solution is the most effective for small businesses.
We make sure you have the necessary management information and strategic insight to make informed decisions and will tell you what you need to know – when you need to know it.