In a recent article, I described the role of a Chief Financial Officer as a navigator of a ship. In that article I touched on how absolutely critical their role is to the success of the enterprise. As a business owner there are certain things you should expect from your CFO. At a minimum you should expect the following:
- Absolute honesty, integrity, and objectivity– The effectiveness of the CFO hinges on these three areas because they guarantee every other expectation in this article.
- A focus on accurate measurement of results– Every business owner must know the exact financial condition of all facets of the business at all times. Improvement is impossible otherwise. The CFO is the person who ensures that all areas of the business are measured and the results communicated accurately, good or bad.
- Constant attention to CASH– The CFO should always be aware of the current cash position. Even more importantly the CFO should oversee and forecast the future cash position even up to twelve months in advance, constantly re-forecasting and adjusting as business conditions change. A business will fail without adequate cash and funding sources. Advanced preparation in this area is absolutely critical.
- Instant notification of bad news– I cannot emphasize enough the importance of communicating bad financial news. No one likes to deliver bad news to the company CEO; however, the success or failure of the company is at stake. Every effective CEO wants to know bad news timely, so the process of research and correction can begin. An effective CFO will help ensure good sleep for the CEO when he does his duty in this area.
- Devotion to profitable growth– A good CFO will support the growth of the business through accurate analysis of pricing strategy, development of forecasts showing the financial impact of the allocation of resources to support growth, and ensuring that the finance area treats the sales and marketing team as one of their most important customers.