With the growth of a Startup, controlling its finances and driving it forward becomes a more complicated equation. The management of your books, the identification of growth opportunities, and protecting your bottom line can make even your general bookkeeping feel like solving pi. Your organization will eventually need to hire an individual who specializes in financial planning and analysis.
At some point, you will have to hire a chief financial officer (CFO). But when will that happen? And how to find a CFO for a startup?
When dealing with new recruiting and executive search to hire a CFO, this comprehensive guide seeks to answer the most frequent questions we encounter.
When is a CFO required for a startup?
This is a major concern for practically every company. Typically, a CFO will be hired ahead of a large fundraising round, such as a Series A or B. Investors look for firms that have well-developed financial systems and can scale up as the company grows. A CFO would often step in to reconcile the accounts and ensure that there are no imminent safety risks.
Role of CFO in modern times
Traditionally, people believed the CFO’s job was to notify them when they didn’t have enough budget or to merely report financial results after they happened. The CFO of today must break free from the stigma of the number cruncher and view themselves as strategic player in the organization. CFOs will always be required to balance the accounts, calculate statistics, and perform other essential functions.
Key Competencies for the Modern CFO
The daily financial emphasis is still important, but it is waning in comparison to the responsibilities of corporate leadership.
The following four basic pillars, support the needed competencies of the modern CFO:
Leadership – The role of CFO in modern times has evolved drastically. Today’s CFO must possess both leadership and communication abilities in order to be an effective corporate partner. They are frequently requested to lead group-wide transformation efforts and must be able to communicate complex material in a clear, succinct, and understandable manner.
Processes – they should have a thorough understanding of the company’s business model and industry, as well as the ability to apply that knowledge to provide an unbiased perspective and constructively challenge the operations teams, thus ensuring that business decisions are based on sound financial criteria.
Risk Assessment— In an increasingly global and volatile world with increased regulatory constraints, the CFO is frequently responsible for ensuring proper risk assessment and mitigation, as well as compliance with any regulatory or other legal obligations.
Strategic planning – CFO should assist in the creation of strategies and facilitating their implementation. The CFO is also responsible for prioritizing and ensuring that the plan is financially feasible. Finance knowledge is useful for developing prediction models, assessing macroeconomic patterns, and integrating non-financial data.
What does a Chief Financial Officer do on a daily basis?
The responsibilities of the CFO are outlined in detail below as we attempt to answer the question, ” What does a Chief Financial Officer do on a daily basis?”
· Planning and projection of financial statements – CFOs typically work with FP&A teams to evaluate current and historical financial statements before making strategic investments or reallocating cash.
· Financial management – The chief financial officer (CFO) oversees all aspects of finance and accounting, ensuring that all legal and accounting policies are followed.
· Financial reporting – CFOs ensure that financial reports are accurate, compliant, & timely.
· Treasury – The CFO evaluates the company’s financial position before making decisions regarding debt and equity.
· Financial transactions – CFOs assure that payroll, accounts payable, and accounts receivable are 100% accurate, current, and properly paid.
Are you ready to hire your next CFO?
As we have seen, the job of the CFO is transforming. The CFO of the future will be the most valuable business and strategic partner to the CEO. You’ll need to network with a lot of people in your business to find a CFO with the right abilities. Coffeemug.ai is one such networking site, allowing you to interact with hiring managers, business founders, and investors. Their valuable input can aid in the selection of your future CFO.
How to find a CFO for a startup?
As a business founder, your next quest maybe How to find a CFO for a startup?
When hiring a startup CFO, the following are the most important credentials and certifications to look for:
1. Tenure: Your CFO should preferably have at least ten years of industry experience. While this may be their first CFO position, they should have a strong experience in Corporate Finance, having progressed from Staff Accountant to Controller to Vice President of Finance to CFO.
2. Experience: Because the CFO profession has its roots in accounting, you’ll want a CFO who has spent at least part of his or her career with one of the major financial organizations. The framework, learning opportunities, and exposure to hundreds of Fortune 500 businesses’ audit and tax procedures provide an unrivaled training ground for a future CFO.
3. Qualification: An MBA in Finance is particularly beneficial since it demonstrates that the individual has been vetted in the areas of management, interpersonal interactions, and team building. Similarly, experience in CPA or CFA is an added advantage.
4. Past fundraising, mergers & acquisitions, and IPO experience: one of the most significant responsibilities of the CFO will be to guide the firm through its Series A, B, C, D, and hopefully an exit.
5. Ask some of the important strategic questions for CFO during interviews, namely:
· What are the CFO’s plans for the company’s growth strategy
· If there is uncertainty in the startup how can the new CFO assist in its resolution?
· Is the scope of your startup’s expansion adequate?
An ideal candidate will be able to respond productively to your questions and lead the startup to the path of success.
How can coffeemug.ai assist you in your CFO search?
Coffeemug.ai is a professional networking platform that allows users to connect with professionals all around the world. A founder might easily meet hundreds of individuals remotely and prioritize just the most qualified—allowing you to locate the people you want to interview more quickly.
FAQs
Q. What may be the catalyst for a startup CFO search?
· To raise funds, you’ll need to develop a financial model.
· Oversight of accounting is required.
· In-depth financial analysis and planning are required.
Q. What is the role of an interim CFO?
A. An interim CFO maintains the business working smoothly in a less-than-full-time capacity until a permanent CFO post is developed and filled.
Q. What are the advantages of hiring a fractional CFO over an in-house CFO?
A. The biggest advantage of hiring a fractional CFO is the cost savings compared to hiring, onboarding, and keeping an in-house CFO. A fractional CFO gives you access to senior executive capabilities without the high expense of a full-time position.
Q. What does “the startup CFO wears multiple hats” mean?
A. Startup CFOs are responsible for a wide variety of tasks. Finance, legal, HR, and operations are all under his control, and the CFO remains crucial throughout fundraising.
Q. What digital transformation investments should CFOs make?
A. CFOs should seek more possibilities to automate and digitize back-office tasks as part of their financial planning to enhance efficiency, boost agility, and improve or accelerate procedures.
