For entrepreneurs who’ve never worked with a CFO – either full-time, part-time, or outsourced – taking the step to hire one can be daunting. The CFO has deep specialized knowledge the entrepreneur doesn’t have. This can lead to a feeling of being at a disadvantage and of not having as much control over the business as previously.
It shouldn’t be this way. Working with a CFO should give you more control over your business.
The key for the entrepreneur is to know what the CFO can and should (as opposed to can’t and shouldn’t) do in their role as a senior business advisor and member of the management team. This first step is to recognize…
Your CFO Is Not The Same As Your CPA
The CPA (in public practice) has two main responsibilities – to certify your financial statements to third parties and to keep you in compliance with tax laws. The CPA’s primary focus is on reporting results.
Your CFO (who is often a CPA, but not in public practice) is a member of your management team with responsibility for financial operations of your business. He or she also analyzes how decisions will effect outcomes. The CFO’s primary focus is on directing results.
There can be overlap between the two – CPAs will often be trusted advisors and CFOs will often be involved in tax compliance – but no one person can, or should, completely fill both roles at the same time.
You Are The Ultimate Decision Maker
Whether your CFO is full-time, part-time, or outsourced you, as the owner of the company, are the one who makes the big decisions for the business.
Your CFO should bring their knowledge and experience to bear in helping you discover problems, analyze opportunities, model different scenarios and inform you as to probable results for various options. He or she does not make the decisions for you, and if your CFO ever tries to do so, it’s time to find a new one. In fact, despite the common belief the CFO is the person who always says “No”, they should not do so unless given express authority to do so by you.
Understanding The Lingo
Like with any industry or profession there’s a great deal of insider jargon associated with finance and accounting, especially acronyms. You as the business owner are not responsible for learning this lingo.
Your CFO should be able to present information to you in terms a layman can understand. Being able to effectively communicate technical or specialized knowledge to a non-specialist is a sign of deep understanding of the subject matter AND good communication skills. It is the CFO’s responsibility to be understood, so if you come away from a meeting with your CFO feeling like you didn’t understand what they were saying it may be time to upgrade.
Having An Effective Partnership
Getting the most out of your relationship with your CFO requires work by both of you. Your CFO should bring ideas to the table, analyze those ideas AND the ideas you bring, recommend solutions and then let you decide on a course of action. You need to make decisions and then see that they’re implemented.