Don't just hire a CFO, invest for ROI

Investing For ROI – a Strong CFO Will Deliver Great ROI

Too many growing companies put off bringing a CFO on board for too long due to concerns around adding to expenses. This is, ironically, precisely the kind of strategic error having a CFO helps organisations avoid making. Of course, a CFO needs to be paid but so does a web designer, marketer or sales professional. All of these roles cast doubt as to whether they are fundamental investments that need to be made to allow the organisation to generate revenue.

For early stage businesses justifying whether a CFO is as fundamental enough investment to make, moreover whether it should be made as soon as revenues or other income streams such as significant investment are being generated is a difficult business case to build as most people do not know what a CFO does. Companies grow through the efficient management and reinvestment of revenue or income and the CFO’s role is to ensure that. Too many companies squander or fail to maximise a prospective start by failing to secure return on investment from initial cash flow.

How a CFO Generates ROI

Just as all CEOs, CMO and CTOs are neither cut from the same cloth nor have the same backgrounds or key strengths, the role a CFO performs can vary significantly in its emphasis and needs. The profile of the right CFO for a particular enterprise will reflect that. However, here are some of the key areas a CFO can make a telling difference to your organisation’s successful development:

  1. Accountancy: a CFO that is responsible for an organisation’s accountancy, or directly auditing it, will most likely come from a CPA or Chartered Accountant background. A CFO is not necessary for run-of-the-mill accounting but if your enterprise has a more complex financial structure and needs then a higher profile of financial expertise than the bookkeeping functions of a standard accountant can be invaluable. Being able to sleep easy in confidence the company’s accounts and taxes are fully under control frees up the rest of the board to focus their energies where they can have most impact. If a potential exit, major partnership or investment round is on the horizon, the correct management of an enterprise’s accounts this kind of CFO will bring can also make all the difference to those being finalised or falling at the last hurdle.

  2. Financial Modelling, Engineering & Strategy: the most common input of a CFO is less in the administrative nitty gritty of accountancy as the bigger picture of financial modelling and strategy. An accountant keeps your finances legal, and a CFO puts them to work in shaping the company’s development trajectory. In the same way the engineering of the turbines in a hydro power plant are as important to its ultimate energy output as the force of the water that flows into it, the financial modelling, engineering and strategy of a company is as key to its long term output as the revenues and other income streams flowing in. A CFO will ensure your internal financial engineering optimises what your company can achieve from the income at its disposal.

  3. Consultant/Advisor: perspective is the foundation of good business decisions and this is a core contribution provided by a CFO. It is all too easy for those at the helm of an enterprise to fall victim to tunnel vision or Groupthink. When it comes to the strategic allocation of limited resources this can be potentially fatal. A CFO can add both objective perspective and deep experience from your wider industry and/or their formal roles. This neutralises potential errors of financial judgement as well as providing an invaluable sounding board.

  4. Dealmaker/Negotiator: whether in a role central to bringing on board further investment or in striking key commercial deals, the experience of a CFO as a dealmaker and negotiator can make a huge difference to the interests of an enterprise. A CFO should have a much more complete awareness of industry norms and the value their company and its product or services represent than the rest of the board. This will allow them to extract maximum value at the negotiating table.

  5. Network: a CFO’s extensive professional background and the network that comes from that can also open doors to potential investment or commercial deals and partnerships that would otherwise be closed to an enterprise.

Flexible and Scalable CFO Input

Like tech or marketing resource, it isn’t necessary, or even always advisable, for a CFO to be a fixed expense while a company is young and/or in a transitionary growth phase. A CFO resource can be both flexible and scalable, contracted part-time on a ‘pay-as-you-go-and-need’ basis until the development stage of the enterprise justifies a full-time appointment. The qualities most needed in a CFO can also evolve as an organisation does, which means the flexibility of part-time or temporarily contracted professional can be the best fit.

Realising Your Enterprise’s Financial Potential

Investing in the nurture of structure, strategy, consultancy, negotiating expertise and network a CFO will bring to your enterprise’s finances and commercial activities can provide the best ROI of any single decision made on the allocation of resources to manage financial risk.

That’s the case for a CFO. It’s a convincing one.

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.