What Does a CFO Actually Do? (And Why Your Business Needs One to Grow)
When you start a business, you quickly realize there are a lot of different roles handling your money. You might already have a banker, a CPA, a controller, or a bookkeeper… but what about a CFO?
CFO stands for Chief Financial Officer. If you want a simple way to think about them, the CFO is the voice of money at the leadership table.
When big questions come up in your business, the CFO is the person on your accounting team who takes care of them and gets them answered. They are the ones tackling the tough questions like:
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Can we afford that?
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What is our break-even point?
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Can we open a new office… or can we hire a new salesperson?
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How will we afford all those things?
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Can you help us build a budget?
A good CFO does not just understand numbers: they take those numbers and help you think in a forward-looking fashion. They think strategically, and they are often highly experienced at leadership. Those are the exact skills you should look for when you are ready to bring a CFO onto your team.
The Foundation: What is an Accounting System?
To get the most out of a CFO, you need a strong foundation. In our company, we often fix broken accounting systems… but what exactly is an accounting system?
An accounting system has three distinct parts:
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1. The Software: Usually, this is QuickBooks. However, it could also include your project management software, timekeeping software, or your CRM. It is any software that captures, uses, or creates financial data.
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2. The People: This includes the bookkeepers, the controllers, and the CFOs. But it also includes your sales team and your project managers: anyone who comes into contact with that software to create data or use it to do their jobs.
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3. The Procedures: These are the processes and behaviors that all those people use to interact with the software.
Putting It All Together
A highly functioning accounting system is simple: it is great people using great software and following great processes.
If any one of those three parts of your accounting system is weak, unexamined, or poorly functioning, it is very hard to scale your business. Why? Because you are not operating at full strength and full efficiency.
Understanding the role of a CFO and keeping your accounting system healthy is the ultimate secret to growing your business with confidence.