Professionalizing the Finance Function in Your Company

Hiring a CFO might seem redundant when your business is still in its infancy. But if your company has successfully navigated the start-up stage, is experiencing middle-market growth, or has even gone on to become an international business, bringing a CFO on board will be necessary. Unlike controllers, who are process-driven, project-focused, and historical thinking, CFOs can help with the complexities of your finances and the strategic planning you need to take your company to the next level. They have the knowledge and expertise that reaches beyond what your bookkeeper, accountant or controller can manage. At some point, professionalizing the finance function in your company by hiring a CFO will seem like the only logical next step.

Your company is ready to professionalize its finance function if you are wondering how to provide financial advice to your company’s principles, the efficacy of your financial analysis and reporting, managing risk, and creating financial tools, systems, and processes. By outsourcing a part-time CFO, you will be able to adapt their dedication to what your organization really needs – Finance as a Service (FaaS). Externally hired financial leaders used to be the least common type of CFOs, but their number has risen significantly compared to new CFO hires. They are most common in industries that experience frequent disruptions.

Differences between a Controller and CFO

Business owners and executives need to understand the difference between a CFO and a Controller if they think they need to add a CFO to their finance managing teams. The differences lie in:

  • Project-Focused vs. Bigger Picture

A CFO has complete insight and a full view of the organization, which gives them a broad perspective of threats and opportunities that allows for their forward-thinking mindset. But your CFO can maintain such a perspective because the Controller provides accurate financial reports used to determine your organization’s previous successes. The accountant also participates in data analysis and audit projects, helping the CFO to stay focused on his or her broad perspective.

  • Process-Driven vs. Project-Driven

Controllers are typically more structured and tend to follow the necessary processes that help them generate the information a CFO needs. Tasks like Managing the accumulation and consolidation of all financial data necessary for an accurate accounting of consolidated business results are typically handled by a controller. They also coordinate and prepare internal and external financial statements. The CFO focuses on planning and budgeting to maximize shareholder value, protect company investments, control costs, and project profits while the controller may help to support these more strategic tasks.

  • Historical-thinking vs. Forward-thinking

When it comes to integrating with the board of directors, vice president, and other C-suite members to implement long-term, large-scale actions (e.g., capital investment, fundraising, capital structure, financial planning, and succession planning), CFOs play a vital role. Controllers also play a crucial role in those actions by providing reports that the CFO needs in order to evaluate current financial results and predict future ones. Also, they’ll take an important role in sales and payroll, while potentially helping with the audit process (both internal and external) and corporate development. CFOs know that they’re required to be catalysts for change and lead to transformation across the company, which can give the company enormous competitive advantage.

  • Tactics vs. Strategy

Both tactics and strategy are essential to build and run a successful, growing company. In a small or family business, controllers usually focus on short-term, small, tactical actions that can improve current results. They are able to detect and correct inefficiencies that impact the short-term goals, but they rarely focus on the long-term outlook. On the other hand, CFOs use their experience, knowledge, and tactics to focus on financial planning and executing broad growth initiatives.

What a CFO Can Do for Your Organization that a Controller Can Not

CFOs can help set up a budget and forecasting function, as well as compare actual results with the forecast results to understand where, why, and how your company could be performing better. They can also perform strategic decisions so you can see the effects of a strategy being deployed (at each growth stage), determine the cash needs, track the performance of each strategic objective, and maximize the value of your organization.

To improve your company’s finances, as well as its financial visibility, a CFO knows how to create the best reporting package and KPI dashboard with the metrics that matter to your business. After following them up with your management team, you get an opportunity to become a metrics-driven organization.

Professionalizing your finance function also includes building trusted investor relations, and CFOs have the communication skills that can bring investor relations to the next level. They will accurately track your cash flows, optimize the ways you use it, and identify alternative funding sources. All these things cannot be done by your accounting team.

Business owners and executives need to balance attention to the organization’s past while making plans for future growth. In the world of finance, the back-office finance & accounting team along with the Controller are responsible for taking care of the company’s past, including balancing books and creating reports. On the other hand, CFO’s are concerned with the future – creating forecasts, strategies, and paving ways to achieve those future strategic objectives.

Both the controller and CFO roles are crucial to your organization’s success and they complement each other. Having the controller and CFO work well together as a managing team (having their expert eyes on the past and future) can bring immense benefits throughout the organization. Actually, companies that have a strong CFO presence can bring strong strategic insight and broader management experience by pairing their CFO with a senior finance executive (who manages traditional finance roles).

According to Korn Ferry (organizational consulting firm), at the 1,000 largest public companies in the U.S., the percentage of CFOs who are CPAs (certified public accountants) fell from 46% (2014) to 36% (2019). Nowadays, financial leaders are not just concerned with books but are increasingly in charge of enterprise risk management, information technology, and human resources. That’s also why organizations want more skilled and experienced and professional managers who are strategically savvy and have a grasp of the CFO’s finance operations.

Is It Time to Professionalize the Finance Function?

As you can see, reaping the benefits of an experienced CFO at an earlier stage is possible in startups, as well as in successful and mature enterprises. Profiles of today’s CFOs show how this role is evolving, and they raise key questions for the board of directors about talent and leadership development. But you must understand that the cost of professionalizing the finance function is always high when it is too late to do it (when you’re about to launch a key funding round or are in a crisis scenario). The following signs will help you know whether you are ready or even overdue for professionalizing your company’s finance function.

  1. You are concerned about risk management

If you are unsure whether you have the right risk management strategy in place, it is time to hire a strategic financial leader. Most types of CFOs out there don’t know how to recognize the red flags that a trained CFO can easily see. This means that they may not realize that there are growing issues until it is too late to solve them with simple solutions. An experienced, full-time CFO can monitor your plans and strategy and provide timely advice and possible responses.

In case of a downturn, many leadership teams crumble under the pressure to make quick and effective decisions. It’s essential for CFOs to always be one step ahead of changing market dynamics, particularly when it comes to sensing a downturn or recession, responding, and leading the recovery.

  1. Investors request more detailed information

Do your principal investors want more information than what you are giving them? They may want to review everything from your internal financial controls to essential KPIs like customer churn or ARR as they decide whether they should or shouldn’t invest in your organization. A CFO can make the entire process easier for you because he or she will know what potential investors want to see and how to prepare the right reports.

  1. You’re experiencing difficulties with the audit process

As your company grows, third-party entities will require audited financial statements at some point. Conducting such audits means additional scrutiny of your organization’s finances, which can be intimidating and overwhelming (especially to business owners and executives who don’t specialize in finance). To make your audits cheaper and easier to manage, your CFO can create and monitor finance and accounting systems with internal controls. When it’s time to conduct an audit, a CFO can oversee it, allowing you to deal with your daily operations without stress.

  1. You are growing rapidly

The CFO will ensure that the company has conducted thorough market research to support financial projections and assumptions. Today’s business environment is quickly changing and increasingly competitive, extending the role of CFO beyond finance. CFOs also need to be experts in market trends and know how to use customer data to identify new business opportunities and manage the risk associated with quick growth.

  1. You want to simplify communication

If you have lots of consultants around you, communication with all these people can make things more complicated and difficult. They might not understand the position and work of other consultants, and you can lose direction if they are working autonomously. On the other hand, a CFO can consult with all the consultants and get them on the same page regarding your overall strategy. They will also report directly to the CFO.

For many years, finance was regarded as a function designed to support other business units, rather than an integral part of a company’s overall strategy and success. However, times have changed, finance functions are expanding and transforming to drive better business results, and professionalizing and modernizing the finance function in your company is critical to meet tomorrow’s challenges. Embracing new technologies (such as machine learning and artificial intelligence, big data analytics, and business process management driven by optimization and automation) and having a finance expert to drive the necessary changes has become imperative for companies that want a competitive advantage on the market. Among other roles, CFOs are typically focused on performance management, strategic leadership, and organizational transformation.

How Consero Can Help

If the capabilities of your finance department require more sophistication and expertise to support the anticipated growth, Consero can provide scalable teams, software, and processes to your business and manage the back-office transactions. Consero’s Finance as a Service (FaaS)  produces an optimized finance & accounting function including audit-friendly financials in a shorter timeline and lower cost than building in-house.

We can help to support your CFO and professionalize your company’s finance function, helping you optimize your finance operations and evolve in the face of ever-changing needs. Contact Consero today for more information.


Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons