What is a CFO?

What is a CFO?  What does a CFO do?  

These are questions CEOs, COOs and business owners ask me all the time.  Recently, a COO I worked with left his company and became COO at another company.  He wasn’t extremely happy with the CFO at the new company.  He told me, “I get a lot of data and no analysis…and there is no one to tell us we are doing a good job.”  That’s when it hit me.  At the simplest level, that is what CFO does…tells you if you are doing a good job!  The CEOs, and owners are the chief story tellers, the ones with a vision.  Their main job is to tell the story of the business; over and over, to everyone, all the time.  If the business is large enough to have a COO, well, he helps run with the vision.  He puts all the parts in place to make the machine go.  And then, there is the CFO.  The CFO helps tell the story of the business, measures progress against the vision AND THEN TELLS YOU WHEN YOU ARE DOING A GOOD JOB.  

Yes, CFOs are numbers people, but I like to think of the CFO as someone who tells the story of the business using numbers and graphics and charts.    How does she do this?  Here are some common ways:

  • Ensures the right financial systems are in place to measure the results of operations;
  • Prepares and maintains regular financial reports;
  • Presents financial information in a way you understand it, with graphs, charts and statistics that are easy to understand and explained;
  • Ensures the right non-financial data is available to identify operational drivers and make projections;
  • Acts as a confidential sounding board, to owners, executive teams and boards;
  • Provides analysis of financial results;
  • Develops strategic and tactical recommendations;
  • Maintains good relationships with investors, bankers and partners;
  • Makes sure there is enough cash; and
  • Tells you when you are doing a good job (and when you aren’t)

A good CFO will have sufficient background in your industry to help implement and integrate the systems you need to get the right data, reports and analysis.  They will have worked with many systems and providers so be sure to involve them in the decision making process in all areas of operations before you sign up for new services or new systems.  They can help you understand the money flow and reporting requirements for your industry and evaluate which accounting systems can accommodate them and which cannot.  They will tell you all the things that will go wrong when you migrate to a new payroll processor mid-year and help prevent or catch the errors.  They can tell which popular ecommerce platforms will drop data out of your sales reports but can’t explain why.  They can tell you the better banks to work with and will likely already have good relationships with them.  The will know some investors and which ones you might not want to work with.

And what if you are not doing a good job?   Well that’s OK.  Sometimes the job of the CFO is to help turn things around.  That’s when the CFO can say you’re not doing a good job, but there is hope.  In these circumstances, the CFO will rally their resources, relationships and technical skills to find a path forward or a graceful exit to something new.  The CFO will help you revisit the vision, realign it and revive it. They will help you run again with the vision or pivot to a new one.  And as things start to turn around, they will let you know you are doing a good job.