The role of a chief financial officer has changed dramatically in recent years. In many growing businesses, the CFO serves as a partner to the CEO, helping outline strategy and drive the business toward its goals. Here are a few tips on finding the right person to serve as your CFO.

The role of a chief financial officer (CFO) has been evolving in business. No longer is the CFO only the senior finance guy or gal. In many growing businesses, the CFO is the partner of the CEO in helping lead the company to meet business goals. The CFO may supervise departments — such as human resources or information technology — in addition to handling the finances. The CFO may also help steer a company through mergers and acquisitions or an initial public offering. And, so, when hiring a CFO, it pays to really know what type of role you’d like the CFO in your business to fill.

Signs a Business Needs a CFO

Most small businesses don’t start out with a CFO. It’s often an overlooked role. In a small business, entrepreneurs and their staff do many jobs at once and someone usually takes responsibility for the finances. But as your business grows, there may come a time when the accounting, tax issues, and financial needs of your business necessitate hiring a CFO.

The big question is when a business needs to hire a CFO. Experts advise that there is no hard and fast rule but that business executives should look for certain signs.

Smaller companies often don’t have the luxury of hiring one executive to only deal with numbers. They might also need that person to oversee operational pieces of the business, or to supervise departments, such as human resources or information technology. But the following are some guidelines for when your business’ financial needs may warrant hiring a CFO:

• When your top-line revenue grows quickly.
• When you need a formal audit. Whether to satisfy your business’ stakeholders or a third party, such as a taxing authority or bank or venture capital investors, if you need to undertake a financial audit it’s best to have a CFO in place.
• When you think your company might go public or engage in mergers or acquisitions. Audits are required by regulators and exchanges if a company wants to hold an initial public offering (IPOs). A CFO with experience with IPOs or mergers and acquisitions can help shepherd a company through the process.
• When you have more than 30 employees. The larger your business, the more complex your financial operation. Staffing is often a sign that you’ve grown large enough to warrant hiring a CFO.

Whether or not you need to hire a CFO — and what the scope of responsibilities that CFO will have — is very much dependent on what you envision in your company’s future.

The Qualifications

After realising that your business needs to hire a CFO, it’s time to determine what qualifications you’re looking for in that role. Traditionally, a CFO was simply the senior financial manager, the person responsible for preparing the financial statements, dealing with banks and investors, planning your tax strategy, and developing budget forecasts. But the job descriptions for many CFOs have gradually broadened through the years to include more strategic planning in steering the business toward its goals. There has also been a growing requirement for the CFO to have more accounting acumen, with the push for more corporate accountability, and to include enterprise risk management among their duties.

The following are among the qualifications businesses might seek in a CFO:

• Leadership skills. At the CFO level, these skills are paramount, as this executive will lead teams and manage people.
• Experience in the specific industry may be important to your business.
• Accounting skills and qualifications.
• Communication and presentation skills. A CFO must have the skills to deal with a board of directors or outside investors to present complex information in a way that can be understood.
• Involvement in industry organisations. This is an important way for a CFO to benchmark your business against best practices in the industry.

The list of qualifications may also be influenced by the size of your budget/compensation package. If you make use of a virtual/outsourced CFO you can get access to the expertise on a part-time basis at a fraction of the cost of a full-time one.