Seeing Your CFO as a Strategic Business Partner

The role of a Chief Executive Officer or CEO is not for the faint of heart. You’re constantly faced with making tough decisions, many of which directly impact the growth of your business. However, hiring a Chief Financial Officer or CFO—even in a part-time or outsourced role —can be a strategic move that ensures your business’s success for years to come.

But how exactly do they help your company? Before we go into the responsibilities and benefits of having a CFO as a business partner, let’s first discuss what a CFO does in a business.

What Does a CFO Do in a Business?

In a nutshell, a CFO’s job as a business partner is to ensure that your company can grow and be more profitable. They assess its finances and help develop strategies to address its shortcomings and ways to improve outcomes.

How Do CFOs Support CEOs and Their Financial Strategy?

CEOs should realize that CFOs have one primary concern: To give the CEO peace of mind when it comes to their financial and operational strategy. As such, when looking for a CFO as a business partner, you can expect them to help you with the following when it comes to finances.

Developing the Financial Strategy

The CEO is the leader of an organization. As such, it falls to the CEO to set the financial strategy. While CFOs can (and probably should) be involved in the development of the financial strategy, CEOs will get the final say. But once that strategy is set, it is up to the CFO to make it a reality.

A significant element of the overall financial strategy is an operating plan that mirrors it and it is the CFOs responsibility to ensure this is the case.

The Operating Plan

An operating plan is essentially a budget that dictates how the company can align the business with the strategy— and according to Michael Porter of Harvard Business School, you should be able to see your strategy by looking at your financials.

This means allocating capital toward people and initiatives that will help drive your strategy. What does that look like? Let’s take IKEA’s financial strategy as an example:

IKEA, when compared to other furniture manufacturers, spends comparatively very little money on product development and shipping. This aligns perfectly with their mission to deliver simple and elegant self-assembled furniture items.

Likewise, your CFO should organize your budget according to your business’s unique strategy.

Keeping People Accountable

As a part of running the operating plan, CFOs will also monitor the different branches of the company to hold them accountable for those goals. To establish accountability, the CFO may look at performance metrics or hold regular meetings with employees. These metrics will help the CFO give the CEO confidence in their financial strategy and performance.

Supporting Financial Integrity

Financial integrity is the process of making sure financials are compliant, accurate, and meaningful. That way, CEOs and other executives can have the confidence that their decision-making is informed by the correct data.

While CFOs may not be the ones that always create financial reports, they will establish protocols and expectations for those that do. When managing financial integrity in reports, CFOs should manage to do two things with the data:

Ensure Accuracy: In this context, accuracy doesn’t just mean correct. It should also be relevant and timely to the current state of the company.
Organize it to Be Useful: Just because data is accurate does not necessarily mean it is helpful. CFOs should work with a company’s financial analysts to organize the data into actionable advice. And having a strategic financial mind on the team is crucial because every business is unique and needs customized metrics and analytics.

Managing Capital

To support financial strategies, CFOs will also help manage the allocation of money and people within the company, which we can simply refer to as capital management.

CFOs will ensure that the company has the right kind of capital (and the right amount) for the business to run properly. And while they won’t be in charge of managing every employee the company needs to succeed, they will certainly be directly responsible for staffing the finance team.

Capital Budgeting

CFOs will also help manage large ticket items. These are items or pieces of equipment that cost large sums of capital and require a look at the potential return on investment. CFOs ensure a healthy ROI but will ensure those purchases are also aligned with the financial strategy.

3 Benefits of Working with a CFO as a Business Partner

With these responsibilities in mind, what exactly are the benefits of having a CFO as a strategic partner in your business?

1. You Have a Source of Financial Insights

CFOs help your business succeed, and they’ll do their best to ensure that you’re making the right financial decisions. For example, they can offer tips on what marketing campaigns are worth investing in or not, or if it’s a good time to hire new employees or buy new technologies to boost your production rate. They could also point out tax deductions and other benefits that your company hasn’t taken advantage of yet.

2. Minimize Financial Risks While Increasing Profits

Because CFOs will help you make more informed business decisions, you can better protect your company from needless expenditures. But at the same time, they also can guide the company on which risks are worth taking to boost profitability.

For instance, they may recommend slightly lowering the price of a product or service that isn’t selling well. While this may temporarily decrease the profit earned for each item, it could also lead to higher sales volumes, making up for the lower profit margin, and help turn inventory into cash.

3. Ensure Long-Term Success

Working with a CFO as a business partner will lead to a greater understanding of your business’s finances and how to manage and invest your resources according to the financial strategy.

Even if the CFO is only working for you part-time, the strategies they help implement and the insights they provide can help you run your company more effectively in the long run and provide a path to greater opportunities to expand.

Get a Professional CFO for Your Business Today

Now that you understand the benefits of having a CFO as a company partner, you can determine whether it is time to recruit one.

At Amplēo, our CFOs will analyze your financial performance and provide tailor-made solutions based on your business’s needs.

Message us today, and let’s discuss how to have an outsourced CFO strategy planning with you.