Just as the general landscape of running a startup has shifted over the last several decades, the roles and responsibilities that each person in an organization holds have also transformed. Wearing many hats is now the norm, and rather than adding members to your team who have a very narrow set of skills, each person who joins your operation at the early stages will play key roles across many areas of the company.
Today we’re going to look at one of the most important roles within a startup – that of a Chief Financial Officer. Once considered simply a numbers person, the range of critical CFO responsibilities now mean that this one position can truly make or break a startup.
Distinguishing Your CFO From a Financial VP
Before diving into what exactly your CFO should be doing on a day to day basis, it’s important to understand that they are not the only people in an organization who have their eye on the numbers. Many times the titles of CFO and VP of Finance are used interchangeably, but there’s a huge distinction between the two.
While both positions are largely responsible for tasks including bookkeeping, implementing financial controls, and maintaining a clear and accurate picture of a startup’s monetary position, your VP of Finance tends to look at past and present financial decisions in order to address the company’s current needs.
The importance of this cannot be understated, yet at the same time, it’s equally crucial that a startup has a plan for the future as well. Here’s where a CFO shines, as they’re able to use financial data to forecast the company’s future, monitor your burn rate, pinpoint fundraising opportunities, and more.
CFO Roles & Responsibilities
The task of determining a startup’s future is rather vague, so what specific concrete value can a CFO bring to a budding organization? Most CFO responsibilities, startup oriented or not, include offering operational guidance, ensure effective compliance, accounting, and treasury policies are in places and working,, and provide the much-needed financial clarity to evaluate future decisions.
Rather than being the person who sits in a cubicle and crunches numbers day in and day out, the CFO brings a dynamic and immense level of leadership to the table and is able to act as a data-driven link between financial and strategic objectives. Along with the plethora of tasks we’ve already outlined, an experienced CFO should also ensure that risk management is at the forefront of their minds.
Consider Your Timing
The value of a seasoned CFO is, to many startups, worth more than gold, but that doesn’t necessarily mean you should bring one in right away. If your startup is like most, you’re still figuring out some aspects of your business as you go, and your priorities may change frequently. In these situations, financial experts are a must, but a high-level CFO likely isn’t the right fit, as they’re accustomed to joining a company that already has their financial foundation firmly in place with the opportunity for a heavy role in guiding the company’s ultimate growth trajectory.
However, once you’re ready to bring someone into the fold to fill this important position, there are some specific CFO qualifications to keep in mind:
- Make sure to hire an individual who is well-versed in all aspects of the role, including treasury and tax functions, control responsibilities, A/P and A/R, and fundraising. While you might be spreading these tasks across various people initially, ideally they will all fall under the purview of your CFO.
- A CFO should be equally skilled in their ability to assess a startup’s current financial state to ensure that day to day decisions are made based on accurate data as well as experienced in future planning and projections.
- It’s highly recommended that your CFO acts as a true leadership partner rather than simply outsourcing their tasks to someone with a limited financial background. Among the many roles and responsibilities your CFO will undertake, their main goal is to work with you to advance your company to new levels of success.
- Someone who has led an audit process, managed transactions, and been responsible for other critical financial processes in prior roles
Financial Services At All Stages
Whether you’re at seed level and are in need of someone to help you develop the foundational financial basics for your company or you’re rapidly growing and looking for an experienced player to help scale your organization, airCFO can help.
From basic bookkeeping and monthly reports to financial projection modeling and more, we can provide your team with the expertise you’re looking for. Reach out to us today to learn more!