The Importance of a CFO in Businesses Large and Small

It’s not just FTSE 500 companies that recruit CFOs. The role of CFO has evolved with lightning speed in the last decade, evolving beyond spreadsheets to become the CEO’s second-in-command. Companies of all sizes are recruiting CFOs to build financial resilience, develop data-driven strategies, and navigate through economic challenges.

The rise of flexible working is seeing more CFOs working on a part-time and remote basis, making them accessible to companies large and small. Companies can choose to define the role and responsibilities of the CFO to fit their specific needs, skills gap, and long-term vision.

At FD Capital we work with companies of every size to connect them with CFOs who can take their company to the next level. We’re exploring the importance of a CFO in businesses large and small, showing you how a CFO can add value to your company from day one.  If you’re weighing different models, fractional FD provides a practical comparison.

Why You Should Hire a CFO

Every company – whether they have 50 or 500 employees – can benefit from recruiting a CFO. They’re a senior financial executive who can have a positive aspect on every part of your business, from overseeing cash flow to making your operations and supply chain more efficient.

Most CFOs will start in a new company by conducting an internal audit to identify any problems and implement more effective infrastructure and systems, including investing in AI and automation if appropriate.

The everyday work of a CFO is changing. They’re looking beyond the finance department to take on an increasingly operational role. While their responsibilities are expanding, CFOs are now operating on both a part-time and full-time basis. Hiring a CFO on a part-time basis gives SMEs access to their skills and experience without the financial burden of a full-time C-suite salary.

Recruiting a CFO can be a game-changer for SMEs. They can implement immediate changes to the operations and financial systems within your organisation. We recommend that companies take the time to define the role of CFO to suit their company needs, both in the short and long term. Possible responsibilities can include stakeholder engagement and fundraising.

Companies who wish to engage with financial intuitions and private investors will want to hire a CFO to prepare their organisation and build financial credibility. Private equity houses and investors are more attracted to companies that have a CFO on board as they’ll engage with them to provide a high-level view of the company’s finances.

Hiring a CFO adds transparency to your financial systems and gives your leadership team someone who will oversee the company’s financial health. They’ll provide real-time insights into your financial situation with data-driven forecasting that grounds the company’s decision making.

Working with a CFO Recruitment Agency

Internal recruitment isn’t always the answer. It can be more time and cost-effective to outsource the process to a specialist recruitment agency that can tailor the process to the needs of your business.

Most CEOs will be actively involved in the recruitment process. You want a candidate who will fit into the company’s culture and understand its long-term mission, particularly in an SME.

The CEO-CFO relationship is crucial to this, allowing both to work in unison to deliver the best results. A CEO is working in the dark without a CFO to provide the financial forecasting and data insights to direct their decision making.

Working with a recruitment agency will streamline the process. Our recruiters at FD Capital will advertise the role, shortlist applicants, and screen potential candidates. Our portfolio of candidates are available to work on a part-time and full-time basis, either in-house or on a remote basis.

The Role of a CFO

The role of CFO is rapidly evolving, moving beyond spreadsheets and number crunching to take on a greater strategic and operational role. Companies large and small can choose to define the role of CFO to make it work for their specific needs.

There are several roles that every CFO plays in future-proofing their company and enabling it to achieve its short-term goals.

1. Boosting Company Valuation and Profitability

CFOs provide an unbiased perspective on the company’s finances. Their primary role is to oversee the company’s financial health. SMEs may choose to hire a CFO to overhaul existing financial systems and invest in technology.

A CFO will implement a strategy and financial systems that provide financial resilience to help future-proof the company. A key part of the CFO’s role is to identify and communicate risks and mitigate them.

They will work to optimize the company’s profits and values while creating key performance indicators (KPIs) to provide real-time insights.

The current economic instability means that having adequate cash flow is vital. A CFO will add value to a company of any size by implementing measures that boost profitability

SMEs commonly recruit interim CFOs to investigate financial problems, conduct internal audits, and oversee debt refinancing.

A CFO’s day-to-day activities focus heavily on the company’s financial health. They’ll oversee the financial department, including cash flow, payroll decisions and regular auditing of company finances.

2. Accelerating Company Growth

Forecasting and strategy are two of the key responsibilities of any CFO. Today’s CFOs are increasingly investing in AI and automation to boost their data and provide real-time insights. A well-positioned CFO will enable the company to accelerate their growth by becoming more efficient and leaner. The systems that a CFO puts in place will identify potential areas of underperformance.

A CFO is a second-in-command to the CEO, providing them with data and insights to ground their decision-making process. It’s their advice that will determine whether a company should explore a merger and acquisition or adapt its systems to account for changing consumer behaviour.

Small and medium companies will typically recruit a CFO when they are experiencing rapid growth or preparing to expand their business.

3. Building financial credibility

Every company will want to recruit a CFO before embarking on fundraising efforts. Most financial institutions and private investors will only engage with companies, regardless of their size, if they have a CFO on board.

Investors want a ‘safe pair of hands’ within your organisation. Many of them rely on CFOs to offer them an unbiased and high-level perspective on the company’s finances and to act as a bridge between them and the CEO.

Smaller companies can also use CFOs to act on their behalf with traditional financial institutions. The relationship that a CFO can nurture with banks will typically make it easier for the company to access loans and additional funds on better terms. The credibility that a CFO brings to the table is invaluable for businesses big and small.

4. Provide Forward Thinking

Today’s CFOs have earned the nickname of ‘Chief Future Officer’, providing forward thinking to the company’s strategy. Hiring a CFO can bring a fresh perspective to your company, including its short-term direction and mission.

CEOs will want a CFO who they can form a partnership with and who can become their chief business strategist and financial advisor. A CFO will put the systems and structures in place to foster better decision making and provide the company with a long-term focus.

A CFO will have their finger on the industry pulse, preparing for potential hiccups up the road and identifying opportunities for growth and expansion.

5. Overseeing Mergers and Acquisitions

A company will also want to recruit a CFO when they’re preparing for a merger and acquisition – regardless of which side of the transaction they’re on.

Your CFO will prepare your company’s accounts before the M&A, ensuring that you’re getting the best valuation for the company and preparing for the transition period. The CFOs involved will ensure that all regulatory requirements are met and oversee the risk management of the transaction.

Companies with a CFO on board during an M&A are more likely to experience a positive M&A process with a smoother transition period. The CFO will ensure that the companies synergy match and that the M&A is successful through to the future.

Navigating Tough Economic Circumstances

Companies of every size can prepare for economic uncertainty by recruiting a CFO to be responsible for crisis planning. Their scenario planning will seek to prepare the company for any potential economic outcome, including a recession or supply chain disruption.

CFOs will build incorporate company-specific risks into their strategy, accounting for aspects such as consumer behaviour, cash flow, and supply chain resilience with contingency planning.

Navigating tough economic circumstances and industry challenges requires the CFO to develop a war room within the company. They’ll work closely with stakeholders and their colleagues to understand every aspect of the business to ensure risk management.

Survival Strategy

Another way that CFOs are important to businesses is through the survival strategy that they put in place. Their scenarios will account for all possible outcomes, including liquidity management. They’ll account for internal and external risks, including industry-specific factors.

CFOs will ensure that they have access to short-term funding if required. They can navigate uncertainty by building relationships with financial institutions and industry leaders. Part of a CFO’s risk management strategy will be to account for factors such as non-payment and changing consumer behaviour.

Balancing the Books

Every company needs to balance the books, regardless of its business size. Cash flow and liquidity are vital, particularly during times of economic hardship. A new CFO will hit the ground running by implementing systems that prioritise cash flow management and ensure that every penny is accounted for.

Exploring Opportunities

Having a CFO on board enables companies to explore opportunities if they have the financial stability to do so. They can utilise periods of economic downturn to outspend their direct competitors with research and marketing.

CFOs can work with the operational team to restructure the supply chain and work on getting more favourable terms and rates.

Upskilling Your Finance Team

A CFO isn’t only an advisor to the CEO, they’re also a company and departmental leader. Hiring a CFO also means that you can upskill your finance department and prepare your company for the future.

1. Introducing reverse mentoring

CFOs play a vital role in introducing new technology to their organisation, including ensuring that employees can adapt to this evolution. Introducing reserve mentoring is a cost-effective way of training older employers by pairing them up with younger colleagues who are digital natives to enable them to understand AI and automation.

Reverse mentoring can also foster a more cooperative workforce and prevent generational divides, providing a means to upskill staff without training costs and time spend off-site. It also opens the doors to two-way mentoring between colleagues.

2. Encouraging Independent Work

CFOs can upskill their team by providing them with the ability to work independently through internal and external projects. Providing scope for independent work brings new ideas to the table and can boost employee retention, making the organisation more productive and efficient.

3. Implementing Department Rotation

Today’s CFOs are increasingly working outside of the financial department. They may choose to upskill their colleagues by implementing departmental rotation and rotating the finance team throughout the organisation to gain skills and experience within other departments. It allows CFOs and the leadership team to take a more holistic approach to the organisation.

4. Redesigning the Company’s Working Environment

CFOs no longer hide away in cubicles and corner offices. The demands for remote working means that CFOs are helping their companies redesign their working environment. They want to create a cohesive atmosphere and encourage hybrid working, including through investing in cloud-based software.

A company’s CFO will want to create a virtual and in-person working environment that encourages easy collaboration and remote access. They can redesign the working environment bby investing in tech stacks, implementing mentoring programs, and incorporating hot desking.

Connecting companies with CFO candidates

FD Capital connects companies with highly skilled CFOs throughout the UK and beyond. We work with companies of every size to help them unlock their potential with the help of a CFO.

Start the process of recruiting your full-time or part-time CFO today by contacting our team at recruitment@fdcapital.co.uk or 020 3287 9501.