What Makes a Great CFO? [Blueprint Building Block #4]
“My CFO is really good at day-to-day accounting, but not at forecasting or seeing the big picture — help!”
We run into this conversation quite often for the clients we serve in the world of small to midsized businesses.
Our response: “Are you sure you have a CFO?”
Let’s look at five traits of a great chief financial officer (CFO) — and what makes them different from a bookkeeper or accountant.
This is the fourth installment of Blueprint Building Blocks (B³): the series where we explain hot topics in the CFO world. Missed the previous building blocks? Catch up here:
5 Things a Great CFO Must Do
1. Historical Stuff
This entails all the bookkeeping- and accounting-related items, such as:
Invoicing
Collections
Payroll
Paying bills
Managing cash
Financial reporting
At Blueprint, we call this the “rearview mirror stuff” — things in the past that someone needs to make sure are reported accurately and timely.
This is a critical role, as you can’t do #3 to #5 below without accurate and timely information.
However, most so-called “CFOs” fit into this bucket alone.
There’s no shame in being a great bookkeeper, accountant, or controller — heck, Ken and I were in those roles at one time or another as we moved up the chain.
But using the title CFO for someone who only does historical stuff is a misnomer. It’s actually unfair to them, as it sets higher expectations than what they are qualified for.
2. Internal Controls & Processes
A smooth-running organization is a cash-generating business.
As a CFO, you need to make sure all assets and processes are in place to create efficiencies throughout your organization.
We joke that a CFO’s jurisdiction is anything with a $ sign in front of it. This is really true, as $ signs exist everywhere you go.
A great CFO will safeguard all assets across the organization, from those on your balance sheet to your intellectual property to your business’s secret sauce.
3. Strategy & Forecasting
A CFO must be able to answer, “Who are we, and where are we going?”
As noted in our last Blueprint Building Block, every business needs a strategy — and a methodology to implement it.
A big part of that is being able to forecast the future.
Owners often tell us, “We have a business that is hard to predict beyond the next month.”
Not true. A great CFO can pull together historical and current business economic trends, along with the strategy to piece together what your business will look like in the future.
Seeing an analysis of what you can accomplish is invaluable — and it’s not that hard to put together.
If you don’t have a five-year cash forecast in place, get in touch with us ASAP.
4. Analysis, Taxation, & Business Support
Remember that a CFO’s jurisdiction is anything with a $ sign in front of it.
All decisions should have both a quantitative and a qualitative element.
A great CFO is actively engaged in the business — not just sitting in their office.
They’re on the ground, helping other leaders make decisions, analyze outcomes, and contribute to the success of the business.
5. Growth & Exit Strategy
“What do you want to do when you grow up?”
This is a question we ask a lot at Blueprint.
Knowing where you want to go will help your CFO set up the structure and funding necessary to get you there:
Do we need to make an acquisition to set ourselves up for that exit?
Do we need to parse off a product line?
Do we invest more heavily in equipment, R&D, or feet on the street?
For all great CFOs, this is the fun stuff.
Do You Have a Great CFO?
If not, let’s set up a chat.
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