Small and mid-size companies are finding they need the expertise of a CFO these days, but the challenge is finding ‘big-company’ experience at an affordable cost. Without a financial officer, mid-market and small companies are at a competitive disadvantage. They might be meeting their bookkeeping needs, but the global nature of business makes a CFO with strategic financial insight a must.
Often, the company’s president, CEO or business owner tries to fill the shoes of this key financial position. Regrettably, the task may distract him or her from other critical duties they are far more skilled to manage and direct.
A middle management accountant, no matter how skilled at managing and balancing the books, cannot provide the necessary level of insight and expertise. In addition to a budget, key business areas, like sales, marketing and operations, need timely key financial information and smart planning to strategically allocate funding for the overall success of a company. An experienced CFO is critical when companies deal with current and potential investors and with financial institutions and regulatory bodies. Ensuring the management team has the right financial information at the right time is essential to ensure the most effective business decisions are made.
While consultants can be helpful in identifying problems and prescribing a course of action, they often do not participate in this role cost effectively. A better solution is to engage a part-time or interim CFO who becomes part of your management team. The position may require executive-level expertise, but not for enough time each week or month to justify a full time position. A seasoned part-time executive with relevant experience can help the organization grow until it can justify the cost of a full-time CFO. The company gets the highest level of expertise, but only for as long as required. When the business grows and the role expands to require a full time person, the part-time CFO can assist in recruiting, selecting and transitioning the new CFO into the management team smoothly and seamlessly.
Since these individuals have sound previous experience, they can hit the ground running. The part-time CFO can provide advice and support to the CEO in areas such as financing, cash management or pricing, allowing the CEO, and other management team members, to focus on the business issues. It never hurts to have a financially focused strategic thinker at the management table.
Part-time and interim management roles are becoming more prevalent as organizations realize their value.. And with the increasing emphasis on cost containment and growing demands on small to mid-size companies to respond effectively and with sound financial expertise, the value of this approach continues to grow.
Osborne Group Principal Ken Goodwin is a highly experienced finance executive who has filled the CFO role for numerous organizations in the private and not for profit sectors on a part-time or interim basis for several years.