2018-01-10 00:00:00 Firm Management English Learn about the duties of a CFO for small businesses, and how your accounting firm can step in to provide these services to an expanding... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/01/Small-business-owner-talks-with-acting-chief-financial-officer.jpg https://quickbooks.intuit.com/ca/resources/firm-management/small-business-chief-financial-officer/ Acting as the Chief Financial Officer to Small Businesses

Acting as the Chief Financial Officer to Small Businesses

4 min read

As small businesses grow, their financial needs often become more complex than the owners or staff can manage on their own. This offers a prime opportunity for your accounting firm to step in to act as the business’s chief financial officer (CFO). Large national corporations usually have an in-house CFO to guide all financial decision-making, but most smaller businesses only require this type of service on a part-time basis. Acting as a business’s CFO means understanding its current financial status and long-term goals while helping the owners to make decisions about budgeting, growth, change, and investments.

CFOs Keep Track of Budgeting

Budgeting for a small business isn’t just about revenue, although as businesses experience increased revenues, they’re more likely to need a CFO. A business of any size should have someone it can count on for financial analysis once budgeting becomes more complex than simple expenses and sales.

A business that makes millions of dollars in revenue per year from big-ticket sales on a single type of item still has a relatively simple business model. As such, it might get along just fine without a CFO. On the other hand, a business that makes far less money but manufactures and sells a variety of smaller products might need a CFO to analyze market trends, see which items generate the most profit, and keep track of the many transactions between a variety of vendors.

Your firm’s CFO duties might include analyzing current budget allocations and projecting annual budgets into the future, taking into account potential business growth. As you learn how much revenue the business makes on a yearly and quarterly basis and that revenue’s origin, you might decide, for example, to cut off vending avenues that no longer turn a profit or to expand ones that provide excellent profits.

To act as a CFO, you need a solid understanding of not only the financial operations of the business but also the many applicable Canada Revenue Agency (CRA) rules and guidelines regarding quarterly instalment payments, capital gains and expenses, foreign rental properties, and motor vehicle expense deductions. You’re responsible to work with the business to create a firm budget plan and make adjustments as necessary.

CFOs Help a Business Grow

A CFO’s job involves more than just crunching numbers. As an acting CFO, you must also work closely with owners and proprietors to make profitable decisions for the company on both immediate and long-term levels. Since your clients already have a working relationship with you, you’ve established open lines of communication and confidence in your financial skills.

The role of a CFO includes creating and refining a business strategy based on analysis of performance and budget. Clients are responsible to keep you informed, and regular meetings are essential to this type of relationship. It helps to ask your client key questions to make sure you’re both on the same page from day one with regards to business planning and strategy.

For example, you might ask where the proprietors want the business to be in a year or in five years. What steps do they already have in motion to achieve those goals? What are the biggest challenges the business faces with regard to profits and expansion? Your clients should be able to provide you with at least general answers to these questions. This makes it important to keep client goals in mind as you analuze financial records and statements and devise actionable plans for moving the company forward.

CFOs Keep Investors Informed

The need for and presence of investment funding can add complexity to a business’s financial model— and it might also be one of the reasons a business needs a CFO. When your accounting firm takes over CFO duties for a business client, you become the liaison between the business proprietors and their investors. In this role, your firm needs to communicate directly with investors to inform them of any changes to the business’s strategy or finances. Investors are typically concerned about how changes might affect the value of their investment. As the CFO, you must deliver informed hypotheses and projections based on market fluctuations, previous trends, and the business’s unique strategy.

The CFO should also keep the business aware of any questions or concerns the investors may have. Business owners who juggle complex transactions and budgets need to be able to keep investors happy and well-informed. As the messenger between these groups of people, you have the opportunity to do a bit of interpretation by simplifying complex financial ideas into concepts that business owners and staff alike can understand and implement.

Providing CFO services to a growing business offers a great opportunity for that business and your own firm. A CFO needs to be an expert in not just bookkeeping or accounting but in the overall field of financial decision-making. You and your accountants should be prepared to analyze risks, prepare budgets, and communicate regularly with your clients, as well as with their vendors and investors. For some extra help, QuickBooks Online offers powerful tools for accounting professionals. Sign up for free to see how your firm can save time and money.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Sustainability, ‘small’ business, and love of the craft: Earth Day 2019

On the north coast of Cornwall, England—a half-day ride southwest of London…

Read more

Dataswitcher and Intuit QuickBooks Canada join forces to automate conversion to a cloud-based accounting solution

Toronto, June 8, 2021— Intuit Canada, makers of QuickBooks, Canada’s leading financial…

Read more

The 5 Ws of Financial Reporting

No matter the size of your business, whether small, medium, or large,…

Read more