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CEO of an SME, are you thinking of giving your finance manager only Excel and too little time?

Your business has grown to the point where you have already hired or decided to hire your company’s first finance person. The title might be CFO, Controller or Head of Finance. You have outlined the job description, discussed it with your other CEO colleagues and created expectations of what the CFO should be able to achieve in your company.

Before you find yourself wondering why your recent recruitment didn’t pay for itself in the first six months, stop for a moment and read this post with some thought. Both you and your new recruit will thank you.

What situation does the first finance manager typically jump into?

Imagine yourself for a moment in the shoes of your new confirmation. He or she is likely to come from outside the house without any knowledge of your company or your practices. He or she is the first member of the finance team and has no team members of his or her own (yet), but you expect him or her to do both the strategic-level thinking and the day-to-day operational running.

As a starting point, he may have beautiful Excel spreadsheets that you have been using for years, partly outdated systems and a lot of data that he may not be able to fully trust. He will be the first person in your history to unify, streamline and rationalise your entire finance function.

To make things even less stressful for your new right-hand man, you may be in the midst of, or already behind, a financial round, government consolidation or internationalisation. The time pressure to get your finances in order is starting to build up.

Where can you benefit most from the skills and time of a finance officer?

At best, a great CFO is literally worth his or her weight in gold. Below is a sample list of where a CFO’s time should be directed:

  • Improving profitability: product, service or customer profitability, improving pricing, cost savings, optimising finance costs
  • Improving cash flow: optimising trade receivables cycle, optimising trade receivables cycle, optimising inventory cycle, improving purchasing activities
  • Improving balance sheet health: optimising capital structure, reducing weighted average cost of capital, borrowing and loan repayment programmes, dividends
  • Investment planning: various business case calculations, scenario modelling, sensitivity analyses
  • Strategic planning: strategy work, budgeting, forecasting, target monitoring, corporate restructuring, risk management
  • Information processing: gathering, processing and analysing information for decision making and communicating with external stakeholders such as investors, financiers, guarantors
  • Systems development: technology projects, IT systems, integrations, work automation, process development, staff training

Where is the time of the CFO really wasted?

Before any of the unexpected areas that could genuinely develop your business can be dumped on your financial manager, the first thing he or she has to deal with is the so-called legal issues: accounting, financial statements, auditing, taxation, day-to-day cooperation with an accountancy firm, and any licensing or other cooperation with the authorities, depending on your industry. In English, these are called “license to operate” matters. These are important, if partly obligatory evils, to keep in order at all times. Otherwise, you will find them facing you as big problems in the future.

Often the first financial officer is also entrusted with protecting the sales and purchase accounts, monitoring payments and implementing and supervising any recovery measures. Daily or weekly cash management is also part of the day-to-day work of a financial officer. In addition, in an SME, at least part of the HR tasks are typically delegated to the CFO.

However, the biggest time-consuming task is data, and in particular the verification of its accuracy. A lion’s share of your CFO’s time, especially at the beginning of the employment relationship, is spent fiddling with data, sorting through it, digging into the root causes of problems and building data warehouses. At the same time, this means that your historical data cannot necessarily be trusted and you will, at least temporarily, be left adrift without comparable figures.

In addition, as a fresh confirmation from outside the house, your new CFO is likely to be reluctant to make or take the business decisions described in point 2 without reliable data.

How do you, as CEO, plan to answer his cry for help?

Now let’s go back in time a little. When you originally decided to hire your finance person, did you consider what resources you could provide to support him or her? How did you think you would enable him to succeed?

By giving him access to all your systems, an Excel license and too little time? As the only sparring partner for the busiest person in your entire company, you?

Does this sound properly resourced if you re-read through the job advert you made and paragraphs 1-3 of this article?

How about checking out the Clarity service partnership offered by Aamu Partners, which you can read more about here: Clarity By Aamu Partners.

How will your finance manager benefit from Clarity?

Your CFO is probably the second most valuable human resource in your company. With Clarity, you can harness the time of this large investment of human resources for the highest value-added projects and the things only he or she can do. Chances are, your CFO has been looking to move into a more strategic role than ever before, and with Clarity you can help him or her to truly get on the same level as you: to look at the performance of the whole company, not just the pure financial angle.

The most fruitful time to start working with Clarity is just after the new finance person arrives in-house: then you can build a solid foundation for the future, rather than spending time tinkering with old patterns and practices. As a recent addition, he will also immediately have a sparring partner in the Morning Team who speaks the same language and will not have to be the only “numbers person”. With Clarity software, tailored specifically for your company, your finance manager will avoid going down the path of endless Excel, which is extremely difficult to comb back into the light.

By working together, your CFO can focus on the things he or she is passionate about and the things you decided to hire him or her for in the first place.

What do you, as CEO, get out of Clarity?

In short, you ensure that those initial “number needs” are genuinely met and you don’t overload your finance person with burnout. You are more likely to allocate your most expensive hours to where they have the greatest business benefit, so that your investment genuinely pays for itself in more than just your reduced evening hours.

You’ll also ensure that your entire company’s time isn’t spent on data collection, validation, further processing and ad hoc analysis. Instead, time is spent on effective analysis, decision making and, above all, taking the right action, because only that action has real business value.

At the same time, you reduce dependency on people and speed up the onboarding of your finance officer. You also ensure that the future of your company is being looked after by more than one “number brain” and that the most valuable information is not sitting on the desks of individuals in separate files.

The best thing about working together is that you will find that your CFO “for once” understands you and your company as a whole. He or she will genuinely be your right-hand man, just as you dreamed of when you originally wrote your job advertisement.

Check out our customer stories for companies with a financial officer:

Lihatukku Tamminen

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