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Wednesday, January 15, 2014

Top interim CFO solutions

Temporary CFOs are able to evaluate corporate financial objectives and processes
Interim CFO's evaluate strategic finance to add value
For many companies hiring a full time Chief Financial Officer is a luxury that either cannot be afforded or is not the best use of resources.  Hiring a full time CFO can be expensive and even if the role is needed it can be difficult to justify the cost of a full time individual. For these companies a temporary or interim CFO can be advantageous and cost only a fraction of hiring someone full time.

So why would I hire a part-time CFO? What can they do for me that my accountant can’t?

While your accountant is responsible for recording transactions and the accuracy of your financial statements the CFO focuses more on forward looking financial aspects and strategies of the business.  Typical issues that an interim CFO can help a company with include:
  • Managing financing: Often a CFO can help ensure that a company receives the most favourable financing terms available.  Banks are in the business of making money so they’re not going to initially offer the best terms possible.
  • Cash flow management: For many companies the management of cash is crucial to success as managing the timing difference of cash coming in and going out can be difficult.  A CFO can help establish effective cash projections and ensure the company does not over extend itself.
  • Understanding different strategies: Explicitly understanding the cash and financial impacts of different strategies a company may consider following can be complex.  An experienced CFO can ensure all angles of a strategy are considered and the implications clearly understood.  This may seem minor but even large public companies occasionally fail to consider all aspects of a strategy appropriately.
  • Improved controls and processes: Finance and accounting functions in a business can become cumbersome and inefficient.  An interim CFO can leverage past experience to implement best practices and often improve the accuracy and timeliness of financial information, providing management with better information upon which to make decisions.
  • Merger & acquisition support: For some small companies the opportunity can come up to either buy a competitor or be bought out.  This can be a very complex issue and having a full understanding of the different pricing strategies and tax implications is critical to making the right decision.  Having an experienced interim CFO to support management at a critical junction like this can have a significant bottom line impact.
The benefits of effectively managing all of these complex issues can have a significant impact on the success or failure of a business. Effective management does not however mean that a full time resource is needed.  Part-time CFO or temporary CFO’s may be needed anywhere from a few hours a month to a few hours a week, with some increased time up front while establishing processes and familiarity with the company.

A common mistake with many companies is that they only consider bringing in an interim CFO once they are already experience problems, i.e. low cash flows or strategies that aren’t generating the expected results.  While bringing in a CFO level individual can help you at this point it would have been far more beneficial to bring them in earlier to ensure that your company does not experience avoidable problems in the first place.  Every company that doesn’t currently have a CFO level individual as part of the organization should consider the benefits an interim CFO could bring to the organization.

About the author: CFO Business Growth Solutions, LLC provider of part time CFO and interim CFO Services plus nationwide accounting & bookkeeping services. For more information go to http://www.cfobgs.com/

Image license: Ken Teegardin, CC BY-SA 2.0