A CFO can manage the funding requirements of a business. Negotiating, meeting ongoing bank reporting requirements and ensuring all repayments are made might be straight forward enough to manage, but some businesses need more complex or multiple finance arrangements that need more oversight.
Apart from debt, there might be other funding sources a business pursues. Business grants, bringing on investors or pursuing other capital raising opportunities often requires a deeper level of specific financial and management presentation and reporting. These types of funding arrangements need a strong grasp and ability to analyse and interpret financials, but also the ability to manage corporate governance issues to meet ASIC, board and shareholder requirements.
A CFO can help share the load in terms of having another senior analytical mind. I say share the load, because a business owner has oversight and ultimate responsibility. However, a CFO is someone to share responsibility for monitoring the performance, as well as controlling the financial management aspects of the business. Every business owner worries about cash, and if they’re not financially-minded they probably have the added nervousness of not knowing what they don’t know.
Bringing in the skills and expertise to compensate for that is good business and will help the business owner relax a little more. It will also allow them to focus on running the other areas of the business that match their strengths and interests.
The smart and successful business owners are the ones that understand their limitations and employ people to do what they can’t do, or that they don’t have time for. Experience indicates that business owners need this expertise in the early stages of business, as soon as the above tasks are beyond their capability and that of the senior executives in the organisation.
So how do businesses do this when there are limited financial resources in the business?
Business owners that are unable to employ each of these three roles on a full time basis, due to size and financial constraints, will make do with what they can get. However, they aren’t aware that they can employ the resource on a part time basis or outsource it. This becomes a cost-effective way to gain the expertise the business needs without breaking the budget. It also means the business owner can have all the information needed to successfully manage the business.
Matthew Murphy is a director of MPR Accounting & Advisors, a business that specialises in providing Virtual CFO and outsourced accounting services, as well as business advisory, tax, grants and funding services and to small and medium enterprises.
