Last month the Wall Street Journal published an article For Rent: Chief Financial Officer by Raymond Flandez, commenting in how more and more firms are outsourcing this high level function of management. For businesses small and large, especially companies that want to grow, the finances do get more complex. He points out that many of these ‘Rent a CFOs’ are also Certified Public Accountants.
I agree wholeheartedly with Flandez’ assessment that an outsourced interim or part-time CFO is a capital efficient way to access this expertise and an outsourced CFO can be more objective and give a reality check. I also agree that many of the CFOs are indeed CPAs and this is partially due to the Sarbanes-Oxley Act of 2002 (SOX) that has driven businesses and their CEOs more to the compliance and technical side of finance enforcing the common belief that if you have a controller and an accountant your financial needs are covered. That may apply to life style companies who do not intend to grow but simply run a sustainable business.
From this juncture, however, is where I begin to differ. A company with expansion and growth in their forecast, the paradigm has to shift drastically from technical to strategic. In fact, not recognizing the importance of strategic finance and solely relying on your controller’s risk aversion, you may be holding your company back from that growth. Here is why I think so.
For a fast growing company, the financial spectrum has to be broader and therefore more complex as pointed out by the author of the WSJ article. You want to consider a broad based and strategic CFO, one that picks up where the CPA or controller leaves off. The CFO is your business partner and brings a strategic organizational mind set to the discussion and understands the importance of mapping out the corporate strategy into multiple roadmaps. Given uncertain economic times, this is more important than ever. Finance for emerging businesses brings a complexity that is more than accounting and number crunching.
The CEO needs to fully understand the financial ramification and bottom line each decision triggers. SOX compliancy has driven us too far towards the tactical aspect of finance forgetting the importance of looking forward, checking your Financial Headlights. The CFO plays an important role acting as conduit to growth and walking the fine line between the risk-averse controller and the visionary CEO. Your future CFO needs to have average appetite for risk, not too little and not too much, understand how to translate the corporate strategy and be a true value creator and not a gatekeeper of growth.
Rudi Scheiber-Kurtz, CEO
Next Stage Solutions, Inc.