Is it time to replace your CFO?
Your chief financial officer should be working closely with the CEO to develop business processes, marshal resources and drive the business. If that's not what you're getting, it might be time to take a hard look at who's in that role.
What do you expect from your CFO?
I've seen far too many businesses dramatically overpay someone who’s been given the C-suite title but is essentially a glorified accountant.
A good chief financial officer should have the strategic chops to propel the business forward. Of course, they should handle all routine financial company operations. But those who deserve the title are also constantly looking for ways to finance new initiatives to drive growth.
I’ve seen my share of poor CFOs — and it’s not always their fault. I once worked with a company that hired away their accountant away from her accounting firm and installed her as the CFO. It was worst of both worlds: Not only did she not have experience with the kind of strategic thinking needed to advance the business mission, she also neglected some basic functions of the job such as ensuring that clients paid their bills.
It was a bad fit and she's no longer with the company.
I urge companies to take their time hiring a new CFO. They should be put through an intense interviewing process where they’re challenged to devise solutions to real problems they'll face in the job. For one: How do you advance this (you name it) business objective while keeping short- and long-term cash flow where they need to be? I'm reminded of the old adage: Hire slowly and fire quickly.
Are you rushing to fill a position you may not need? Frankly, there are many companies that really aren't big enough to justify a full-time CFO role, and the hefty salary it requires. I've seen firms pay their CFO upwards of $200,000 a year for a job that realistically could be handled in 10 to 15 hours of weekly work.
This person should be should be developing processes, marshaling resources, and working alongside the CEO to drive the business. This is far more than glorified accountant work. If that's not what you're getting out of your CFO, it might be time to take a hard look at who you have in that role.
For more information about building a strategy for the CFO role, please contact Bruce Willey, JD, CPA, here or at https://www.americantbp.com/contact-american-tax-and-business-planning.