Many people are surprised when we describe some of the things we do, or have done, as a CFO.  Most people think of a CFO as a financial person who focuses on forecasts, financing, developing growth strategies, and of course the bottom line.  And in a nutshell, that is exactly what a CFO's primary focus is. However, a CFO's role is so much more, especially for small to  medium sized businesses.

CFOs tend to wear many "hats".  Their primary hat is of course the financial and accounting hat, which could actually be considered two hats. The "Finance Hat" focuses on growth, strategy, capitalization, financing, and investing.  The "Accounting Hat" focuses on daily and monthly processes, financial statement preparation and analysis, budgeting and forecasting-the list goes on.  These are the primary functions of a CFO no matter what organization they work with.

But did you know that the CFO often wears an "HR Hat"?  It seems that the CFO tends to be the decision point, especially in small to medium businesses, for HR compliance, policies and decisions. The role might be limited to choosing which HR firm to outsource the entire function, or it could encompass overseeing an HR specialist and/or small staff.  The CFO, especially of a small business, typically is involved with developing the company's HR policies and procedures, and ensuring that current laws are being monitored for changes and compliance.

The CFO also gets to wear an "IT Hat".  The CFO isn't a computer guru, but they tend to be the decision point for issues such as infrastructure design, implementation and conversion of new software, and ensuring that security measures are in place-after all, a CFO's job is to protect the company assets!

There's another hat CFOs sometimes put on: the "Disaster Recovery Hat". Organizations should always have contingency plans in place to handle emergencies and/or disasters such as earthquakes, tornadoes, and - especially here in Florida - hurricanes.  Typically, while the CFO will work with the CEO and IT Manager in developing a plan, it is the CFO who is responsible for ensuring the plan is disseminated to employees, that the appropriate personnel are properly trained, and the plan is kept up-to-date with corporate changes.

Are there any other hats that a CFO wears?  Yes, there are. We wear "Facility Administration" hats, "Administrative Coordinator" hats, and "Education/Training" hats.  Why do we wear so many hats?  So the CEO does not have to wear them!  The CEO needs to focus on two things:  operations and strategic growth.  If the CEO gets bogged down with all of these other issues, it is not possible to focus on those areas. By wearing all of these hats, the CFO has made it so that the CEO will only wear the two hats that a CEO needs to wear.

Did you know that Nperspective was engaged by a financially distressed client in March of 2011 in a part-time CFO role to assist in the renegotiation of the client's bank loans? Nperspective worked with the client's current team and added an attorney familiar with workout transaction to the team to help with the re-negotiations.

 

In working with the client on cash flow forecast, we became aware of operational issues that could easily be addressed with better financial budgeting and operational management of monthly financial results to budget. Our CFO put in place a program to review each month's financial results and the next months expected results to budget. Operational management's bonuses were adjusted to tie into performance to budget and the bonus payment frequency was moved to quarterly to provide immediate financial rewards for positive performance.

 

Nperspective have been instrumental in the renegotiation of the company's bank debt, improving cash flow and through July of 2012 the company has exceeded budget and is on track to have the most profitable year in the company's history.

 

Contact Janet Watson for more information.