Why Startups Should Hire an Interim CFO and How to Find One
What is an Interim CFO
Whether you hire an in-house CFO or ride the technology wave and hire a virtual CFO, a CFOs responsibilities will be to take care of your shareholder relationships, forecasting, establishing operations, optimising the financial performance of the company including liquidity and more.
They will also be in charge of analysing future performance, establishing policies and procedures, assessing any financial risks, focusing on debt & equity fundraising, optimising the cash flow, and measuring profitability with a vision to improve the overall business.
A CFO is all about the numbers and the companys bottom line. A good CFO can be an oracle to your companys finances.
Why should you hire an interim CFO?
Financial stability is really important for a successful business.
While a financial controller takes care of the day to day finances, your CFO will act strategically, ensuring the right goals, procedures and reporting are put in place.
They are also a prime source for advice on how to grow financially through each stage of your growth cycle, focussed on your objectives and long term goals.
As a Startup company Raising Capital is key; the skills of a seasoned interim CFO is essential for the process of getting funds, whether it be seed funding, loans or other types of investment.
An interim CFO will know how to prepare your story for investors, ratios, and forecasts in readiness for the due diligence process which can be challenging for many entrepreneurs.
What to look for in a CFO
How well this is done will be an important factor in the decision that your financiers make to invest in your ideas.
A seasoned Interim CFO will know how to show your present financial health with a clear path ahead that includes your goals, financial needs, exit plan and how you plan to go about succeeding.
Potential investors will be asking for a detailed breakdown of all finances, projected forward to five years with a clear exit plan, it is the role of the CFO who has the experience, the knowledge, and the data, to engage in answering all the details for your potential investors.
A good CFO will establish healthy business relationships with potential investors and create positive contacts that will last a life time as your enterprise may need further rounds of funding as part of the initial plan.
The Benefits of having an FD / CFO
Understanding Financial management, what makes a good systems, and attractive to external investors is both a science and an art. Additional benefits include:
A CFO will establish an efficient cash flow system and process
By looking at expenses, profitability and income, the CFO will advise what contracts are worth pursuing, dropping or renegotiating.
Overall expense management, identifying where savings can be made through changes in policies or change of vendors.
Departmental accountability, allows you to make your senior management team accountable for overspending and keeping within budget.
Help educate you on the pitfalls and best practice for problems that you will encounter throughout your growth lifecycle.
Be paramount in the planning and strategy process, acting as a devils advocate to ensure the plans hold true and are given the resources needed to succeed.