7 Myths debunked
It is a well-known fact that an alarming number of Startups and SMEs fail due to lack of financial foresight. So why is it that many young companies do not prioritise or even trivialise this function of their business?
In a survey we conducted in Dubai, 50% of the respondents said they have no idea what a CFO is, let alone what they do? While this pains us, it does not surprise us. One business owner even said “I know I have more money coming in the bank than going out, so why do I need a CFO?”
Against the backdrop of limited resources and uncertainty, there are also some stereotypes that abound the CFO role. We want to debunk some myths and misconceptions about our role and really give you some insights into what CFO services can do for your business.
1. Just a glorified Bookkeeper
The position of bookkeeper is considered a reactive role, focusing on historical transactions that have already been performed by the organization in a past accounting period. An experienced bookkeeper would be able to provide different solutions on how to record cost elements, identify accounting discrepancies, ensure bill are paid on time in addition to improve the accounting processes for day to day activities. The natural role of a CFO will encompass a much deeper understanding and broader skill set. Where we focus on the bigger picture of the organization by transcribing strategies into short term tactics. We are business savvy, able to navigate cross functional complexities with ease, understanding financial and non-financial business risks and how to successfully mitigate them. Arguably most CFO’s may start their careers as accountants, but not all accountants have the skill set to become a CFO.
2. CFO hides behind spreadsheets
The CFO has a bad reputation. Often the general perception is at best a more experienced accountant who is inflexible in their approach, a creature of routine and habit that hides behind a spreadsheet, and a bit of technophobe to top it all. However, per Longitude Research Report commissioned by Oracle it highlights that modern CFOs are in fact the ones taking the lead in business transformation and growth strategies, and are technology evangelists advocating for the use of advance analytics and modern mobile, social and cloud technologies. Hiding has never been an option. We have to be forward looking and often find creative ways to take advantage of tools and techniques to maximize corporate value, revenue streams and stream line operational processes that are robust and agile to remain competitive and can adapt to the fast changing landscape.
3. CEO’s decision is undisputed
Some describe the relationship between CEO and CFO as of Pilot and Co-pilot when in fact the CFO is also managing the whole airport. In the same way that the co-pilot supports the pilot and the airport manager makes sure all the ground staff, crew and passengers are taken care of to ensure a successful flight, the CFO keeps abreast of the situation internally and externally so the company is on course for on-time and successful arrival.
Our role as the stewards and catalyst of a CEO’s decisions can create the misconception that we are only here to expedite may not necessarily be to the liking of all stakeholders. The truth is the CFO and CEO form an indispensable pair that enables the CFO to challenge the decisions of the CEO supported by an impartial well-substantiated business case. Whether for or against, it will equip the CEO to make the most informed decisions in the best interest of the company.
4. No cost benefit
There is often a misconception that only large multinational organizations really require or can afford a CFO among the management team. In reality, these services offering forward thinking financial administration are critical to smaller organizations and can be obtained on an affordable basis. Where effective cash management, careful budgeting with strategic planning and rational decision making are the difference between success and bankruptcy.
5. Obstacles to progress
Are we really troublemakers that want to ruin the party or simply misunderstood? Saying no is not as easy as it seems when individual department approaches with their plans and great ideas. In fact having the access to information that provides a holistic view of the company’s position to see the bigger picture, we cannot afford to be granular but instead have the responsibility to make sure all the party planners are aligned and on the same page without going off road, each component has to happen at the right place at the right time so that the corporate goals are achieved and a bigger party can be had by all.
6. Emotionless robots
It is common for a CFO to be thought of as emotionless and ruthless, but this could not be farther from the truth. People mistake the display of control for lack of emotion whereas this control is to instill calmness within the organization especially in turbulent times. All this is changing. The Finance profession is entering a new era where CFOs are encouraged to embrace their soft skill set and in additional to their role and responsibilities move toward coaching, mentoring, storytelling, creatives thinking and networking. According to the EY survey title “Do you define your CFO role? Or does it define you?” the CFO role is under intense pressure, with the common thread being people. Humanizing the CFO and developing a people focus is already essential to sustained success.
7. Everything can be done at a press of a button
Streamlining complicated scenarios into simple numbers which can easily be interpreted by non-financial personnel are what we do, but as a result it has lead to an expectation gap that these are simple numbers and can be changed within seconds. If only we can do everything and run all the reports at a click of a button we would, however, the truth is that we are not magicians and what you see as one number modification is linked to multi layers of scenarios filled with facts and figures it affect and which needs careful consideration, and with various systems used by different department this one change frequently turns into a time consuming task. Building an aeroplane requires time, parts, tools, technical knowhow and patience, the same can be said with finance, only we do it with numbers to ensure the business is backed by solid and meaningful data that has integrity.
Changing the perception
So what is holding business owners back from hiring a CFO? Is it fear of affordability, fear that they might not be the right fit, fear that they might not have the right credentials, or that they just do not know what finance professional services they need, when they need them or where to find them?
Marc Kramer, author of 6 books on business including the highly-praised “Small Business Turnaround”, conducted in-depth interviews with at least 100 CEOs of public and very large private companies. When he asked the question ‘What’s the first really great business decision you ever made? 80%+ of the CEOs responded (in one way or another) ‘Getting an expert financial advisor.’
The truth is CFOs are creatives and many are entrepreneurs at heart that cannot resist the invigoration and fulfillment presented by SMEs and startups. From our experience we have seen that business owners that have crossed that Rubicon of not just wanting to start a business but to pursue relentless and sustainable growth for a business that they are passionate about, realise that this is the service they need.
On-demand CFO services to the SME World
So where can one find a qualified Finance Professional that they can rely on? There are many talent and virtual service platforms such as Upwork, CountUp, Sage Match, QuickBooks ProAdvisor, Xero Adviser Directory, and LinkedIn which all offer a marketplace of talent to choose from. But how will you know which is the right professional to choose? This is one of the many reasons why we founded The Scalable CFO. We want to provide access to curated Finance talent that offers ‘Big 4’ standard customer service to ambitious business that do not want, or do not need a full time CFO.
By bringing together our financial expertise, we aim to introduce SMEs to a new breed of CFO, to contribute financial foresight and to take every opportunity to empower business owners by sharing sound financial management practices with them every step of the way.
If you’d like to know more or just want to share your thoughts on this topic, we’d love to hear from you.
About The Scalable CFO
TSC was founded in 2016 by Linda Luu, Fadi Halwani and Oreabetse Matlhare. A team of Professionals aiming to provide the first dedicated source of flexible Finance Experts for Startups and SMEs in the UAE. TCS introduces customers to a new breed of CFO, and through meaningful collaboration, provides a service that is essential to a market that cannot afford or does not meet the service qualification threshold of large professional service firms.