What is a Chief Financial Officer?

A chief financial officer is an individual responsible for delivering comprehensive financial management and strategic guidance within an organization.

Accounting stands as a pivotal part of business operations. While engaging in bookkeeping suffices for some enterprises, it may fall short for others. For a deeper understanding of our business financial activities and to implement strategies for profit optimization, the role of a chief financial officer becomes indispensable.

When your business reaches this stage and needs a qualified professional CFO owners wonder when the right time is to hire a CFO, not wanting to waste valuable resources. Here is an indication of when to start thinking about a CFO or even hiring one.Your annual revenue reaches $2 million in revenue. But most of the time, a business’s size is not the only factor in its eligibility for contract CFO services. Other variables, such as specific financial needs, can determine if you need to contract this service.

To help you understand whether your business could benefit from contract CFO services or a fractional CFO, read on to learn a few specific factors that could indicate that it is time to hire a chief financial officer.

You have an income-producing service:
Generally, a CFO will need to analyze your existing revenue streams to provide financial insight and guidance. If you do not already have a reliable sales stream in place, you may not need an outsourced CFO yet.
However, the exact turnover you need to reach before hiring a finance officer can vary depending on your type of business. For example, some companies hire an outsourced CFO once they get to $2 million, while others take advantage of these high-level finance services once they reach $500,000 or more.
Additionally, if your company has exceeded a specific sales range, you may want to hire a full-time CFO rather than a part-time, fractional, or interim financial manager. For example, organizations that have reached $50 million in annual sales may require an in-house, long-term finance officer to provide ongoing expertise.

You have special accounting needs.
Companies hire a CFO when they have complex financial needs that a traditional accountant cannot handle. Hiring an upper-level accountant is an excellent way to ensure that your financial data and reporting are accurate, no matter how simple or complex your company might seem.
The industry your business is in may warrant a more experienced financial team simply because your income streams are complex. For example, an agency in the healthcare industry may need help with complicated financial reporting for insurance companies or managing tax payments.
Hiring an outsourced CFO could take some weight off your current accountant’s shoulders and provide more tailored, professional guidance if you have complex accounting needs.

You need help developing a strategic business model.
Some professionals only suggest hiring a CFO once you meet a specific revenue goal.
However, your company may need help achieving the growth necessary to reach those goals.
As a result, you may want to hire a finance officer to rewrite your company’s strategy and maximize profits.
A chief finance officer can provide the following benefits to help your cost strategy:
Turn your finance reports into insights
Guide you in strategic business decisions
Help you connect your goals to your current circumstances
Provide objective guidance and analysis

All in all, an outsourced CFO can do more than just provide financial statements. They can also create a strategic solution to improve your profits and support your growth. If you need help creating a profitable business strategy, a CFOs can give you the necessary guidance and resources.

Help analyze your financial data
Financial reports show your profits, costs, assets, and liabilities. However, you may not know the best ways to interpret these numbers and use them to your advantage. CFOs can help you break down your pricing systems and perform a detailed analysis of your books. They can then use their expertise and experience to advise you on what strategy to follow to maximize growth and reduce costs.
Paying an accountant to manage your books without knowing how to review those books is a waste of your money and time. If you do not feel confident analyzing your finances yourself, adding a CFO role to your team could be the perfect solution.

You need assistance with cash management
Cash flow administration is the process of reviewing all the money coming into and going out of your business. Often, companies struggle with this process once they reach a specific revenue bracket. So, reviewing the flow of money on a weekly or even monthly basis can become time-consuming. If you struggle to manage your cash flow and costs, it may be time to hire a financial officer to take this responsibility off your shoulders. They can help you with forecasting profits and cost-benefit reviews.

CFOs can help you make changes to cover the extra cost of adding a CFO to your team. Schedule a consultation with us to see if it’s the right time to hire one. Outsourcing CFO may help your firm even if you do not meet the standard requirements.
Whether you are looking for interim, ongoing contract CFO services, or something in between, we can help. Our firm offers all the financial management and accounting services you need to stay on top of your goals.