Entrepreneurs are required to wear many hats in their business. Say hello to being the guru of finance, accounting, supply chain, marketing, legal, and everything else. Since this can prevent entrepreneurs from focusing on the hats they wear best, many elect to outsource CFO and other financial services. However, not all CFOs are created equal. In this article, we’ll discuss a few non-negotiables in CFO service that will help entrepreneurs distinguish the mediocre ones from the ones that become lifelong partners. 

1. Keep you out of trouble

A good CFO will help you avoid trouble spots, especially with the government. Since the CFO is the expert on sales tax, income tax, property tax, and industry-specific tax, she should inform you of potential risks and take precautions to avoid penalties. Most of these filings are routine and can be performed by clerical staff, but a CFO should oversee the systems and ensure that filings are on time and correct. This will help you avoid substantial penalties from the IRS. 

One way that many CFOs fail to keep you out of trouble is by using late tax payments as a cash flow strategy. This method often fails, and is met with severe penalties, interest, and lien. Although some believe that this strategy allows them to pull ahead, it usually does the opposite, so be sure to avoid a CFO who utilizes late tax payments as a cash flow strategy. 

2. Give you clean monthly financials 

Business leaders need access to complete, accurate financial statements to make decisions. A reliable CFO will have the month-end financials in your inbox soon after the month-end, to be sure that no critical decision time has been wasted. Even if your CFO doesn’t handle the bookkeeping, she should design and oversee business processes in a way that allows for immediate recording of transactions followed by an efficient month-end close process.

3. Identify, monitor, and interpret key metrics

In addition to supplying you with accurate month-end data, your CFO should provide you with daily and weekly indicators of success. These metrics should be focused on the aspects of your business that impact the bottom line the most, like daily sales revenue or gross margin. Your CFO should also be aware of these indicators and alert the CEO when one of them drops too low. This way, the CEO is at liberty to make split second decisions to reverse the trends. 

4. Match your business to the right software

In many businesses, the CFO is responsible for software selection and implementation. Choosing the right software is essential for categorizing expenses, preparing reports, and communicating with vendors. Your CFO should be familiar enough with your business to know which needs to prioritize when selecting a software. 

Although there’s no silver bullet answer for the best accounting software, we’d recommend looking into Quickbooks online. This option has intuitive inventory tracking, countless third-party integrations, and a streamlined process for sending invoices. It’s becoming increasingly popular, which means that more CFOs are familiar with the platform. Whatever you decide, your CFO should be familiar with a wide variety of software, allowing you the flexibility to choose your preferred software and make a switch if needed. 

5. Help you make informed decisions

A CFO should be more than just a bean counter. She should be a strategic partner who informs your decision making. She should combine her deep understanding of the numbers with a deep understanding of the business, the industry, and the economic environment. The CFO should be involved in all major decisions.

Many outsourced CFOs are afraid of putting on a decision maker hat, afraid they will overstep their boundaries or be liable for an incorrect decision. However, an adept CFO will play the role of counselor and informant, giving you the confidence you need to take initiative in difficult situations. She will give her professional opinion and respect your wishes as the decision maker.  

6. Prepare for growth

As an entrepreneur, your motivation is probably to make an impact on the world while getting a good return on the time and money you put into the business. Having the greatest possible impact and the greatest possible return usually means growing the business as fast as possible. 

When businesses start seeing this initial traction, they need to be prepared. Though the entrepreneur usually drives the growth, the CFO can enable growth by providing a foundation of effective procedures and processes. Timing is critical, and it takes an experienced CFO to get this timing right. You don’t want to add unnecessary cost and complexity before the business needs it, but you need to be prepared for growth.

 

You must have a good CFO at your right hand if you want to build a successful business. A good CFO can free you from the details and help you make good decisions. A bad CFO can get you in trouble or give you incomplete information for making decisions. At Nimbl, we take our CFO services seriously, providing the highest quality training for each of them. If you are a savvy entrepreneur looking for a CFO to remove some of the laid on your shoulders, give us a call.