7 Compelling Reasons Every SME Should Have a Chief Financial Officer

Posted on 24th January 2022

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A clear understanding of a company’s financial health is essential to becoming a leader in any industry. It’s especially true for small to medium businesses, which often don’t have the resources to hire a full-time Chief Financial Officer (CFO).

Having a CFO is crucial to growing your business. This person coordinates the company’s finances, ensuring that the business makes money, operates at peak efficiency, and has a good budgeting process. Luckily, you don’t need to hire someone to work full-time for this job because you can find providers that offer CFO services for small businesses on a part-time basis or even virtually.

If you’re unsure about this role in your business, read on to know the most compelling reasons every SME should have a Chief Financial Officer.

1. Assist With Expansion 

Owners of SMEs don’t want to stay small. Many entrepreneurs dream of expanding to other areas and even globally. The CFO is the person that could help determine if your business is ready for expansion. You’ll need this executive as part of your team, even on a part-time basis, to help prepare you for the financial challenges ahead with the expansion.

2. Handle Financial Matters Efficiently 

Anybody can take care of the company’s finances, especially if the business is still small. Many online tools can help with accounting and other related matters. However, despite technological advancements, an app may still not be enough to provide you with the best insight into your company’s financial affairs. 

But a CFO, who has a deep understanding of business numbers, could help bring down the cost of sales, assist in negotiating payment terms with vendors, and even take care of quality control and operational efficiency to help boost your company’s success.

3. Enhance Your Company’s Credibility

You’ll need investors or get big-time B2B customers to grow your business. Thus, it would help if you improved the credibility of your business to attract them. Large corporations want a supplier they can rely on, so they typically award contracts to enterprises that display financial stability, regardless of size. With the assistance of an experienced CFO, small companies can look big by improving their day-to-day operations for more robust fiscal performance.

4. Untangle Cash Flow Problems

Cash flow problems are usually one of the main reasons why SMEs fold. Especially during the pandemic, countless small and big businesses have struggled to make ends meet. Don’t throw in the towel yet, even if your company is struggling financially. Maybe you can improve your situation and even find an investor to pump in much-needed cash through the help of a CFO. Again, you don’t need to hire someone full-time. Just finding an expert who can offer part-time services may be that light at the end of the tunnel you’ve been waiting for your enterprise.

5. Help With Critical Decision Making 

Entrepreneurs who are not experts in financial matters tend to make decisions based on their gut feelings. Sometimes, it pays to listen to your instincts. However, trusting your gut may not be the right thing to do in most situations, more so if you’re on the cusp of making significant financial decisions. 

You still need to seek solid business advice about investing in expensive machinery, transferring production to developing countries, or even accepting offers from investors. Again, a CFO is the best person to help you navigate through these instances so you can make an intelligent decision about your business.

6. Paint a Picture of Your Financial Position

Like an artist, a CFO can paint a picture of the fiscal health of your business so you may gain a better insight into your financial position. This person can study your financial statements and translate those complicated reports in plain language so anybody can understand the numbers. You need financial information to know whether your company is in the red, breaking even, thriving, or in an excellent position to expand.

7. Offer Oversight In Strategy Development and Execution 

In a small business, the owner is typically responsible for developing, conducting, and executing strategies to boost profitability. But before implementing such steps, having a CFO participate in the planning process could provide vital oversight, particularly in cash flow constraints or risky financial plans.

Conclusion 

Keeping your business running smoothly is just one of the countless benefits you can enjoy when you have a Chief Financial Officer on board. It’s a role that even small companies can no longer neglect to include in their team. Bear in mind that you cannot do everything on your own. So, it’s better to ask for assistance from experts to make better financial decisions for your growing business.