The CFO is the chief financial officer of a company. It is an extremely versatile position that does not require a “conventional” background, but rather a great deal of expertise in finance, accounting, legal and human resources, as well as 6 to 10 years of experience. The CFO is a key position within a start-up. In this article we will discuss in more detail the role of the CFO and why it makes sense to hire an outsourced CFO on a part-time basis.
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The role of the CFO in a start-up
The Chief Financial Officer works closely with the CEO (Chief Executive Officer) of the start-up. His role is to supervise the financing strategy of the company as well as to develop it and make it evolve. This is why he will be interested in various subjects such as the general secretariat, accounting or legal matters.. The CFO also ensures the exchange and the relationship with the shareholders and investors.
Managing the finances of the start-up
The Chief Financial Officer is in charge of managing the cash-flow and optimizing money management. He supervises all financial operations. His main tasks include creating forecasting tables, estimating the financial risk of any investment project and participating in strategic choices. In short, he is the guarantor of the start-up’s finances ; therefore, it is essential that he establishes a relationship of trust and transparency with the CEO.
Carrying out the reporting
The CFO takes care of the relationship with the VCs (Venture Capital) who have invested in the start-up by regularly reporting on the company’s financial situation. This is the financial reporting. It gathers all the information on sales, expenses and teams that are essential to establish a monthly, quarterly or annual statement of the start-up. The financial reporting is also transmitted to the management and the board of directors. The CFO meets physically with the VCs at least several times a year.
Contribute to the company’s strategy
The Chief Financial Officer is responsible for thinking through and implementing a general strategy to enable the start-up to grow and evolve. He also has to attract new investors in case the company goes through a difficult financial period. To do this, the CFO performs financial and tax analyses and, based on the information collected, proposes strategies.
Managing the administrative side of the start-up
The Chief Financial Officer can take care of all the tasks that fall to the administrative assistant, as this position is often not present in a start-up. He usually takes care of doing the forms and documents that are related to accounting, legal and human resources.
Managing the legal side of the start-up
The CFO is in charge of negotiating and managing supplier contracts, following up on customer contracts, but also proofreading and correcting all documents with respect to the company’s rights. He/she then transmits them to the General Management.
Managing the start-up’s human resources
The Chief Financial Officer can perform the same functions as a HR manager. He can therefore take care of the recruitment of the start-up, the administrative follow-up of each personnel file, the individual support of the employees and even the management of the payroll. In short, the CFO must be very versatile.
What is an outsourced CFO ?
The outsourced CFO in part-time is an independent professional who performs the same functions as a salaried CFO within a start-up (cash management, expense management and payroll, regulatory monitoring, reporting, compatibility, etc.). Just like any self-employed contractor, he or she provides services on behalf of a start-up. Start-ups that employ CFOs often tend to assign them functions beyond their role, which can hinder the company’s growth. This kind of situation cannot happen with an outsourced CFO in part-time.
Why use a part-time outsourced CFO ?
Start-ups, just like SMEs, often have the desire to have a professional to manage their business development and growth issues without the immediate need to hire a full-time CFO. They do not necessarily require the expertise of the professional on a daily basis, which is why many CEOs prefer to turn to an outsourced CFO on a part-time basis. This also allows them to focus more on their priority missions and the company’s operations.
Moreover, start-ups do not necessarily have the means to hire a CFO for a permanent or even a fixed-term contract. They are much more interested in collaborating with an outsourced CFO to perform a few one-off missions or the execution of specific and temporary tasks. Generally, CEOs turn to the first option. The outsourced CFO will work on an as-needed basis, saving the company money.
The advantage of the outsourced CFO is that he or she is more efficient and experienced than an often junior salaried CFO. Also, his skills will not be limited to finance. They will also touch on human resources, business management or legal issues since they have generally worked in different environments. Most start-ups do not have the possibility to recruit such a rare profile. This is why turning to a part-time outsourced CFO is often the best option for them. Moreover, the outsourced CFO can bring some of his experience to the teams working on site. This can help start-ups improve their performance. Finally, the reputation and experience of the outsourced CFO can help the company gain credibility, especially with its investors.
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