The Chief Financial Officer is the head of finance at a corporation, a category that includes but extends beyond accounting. They may have a Chief Accounting Officer, Controller/Comptroller, or Vice President of Accounting responsible for the Accounting, but the CFO is responsible for the entire financial picture of the organization. In a proper Finance Department, Information Technology (Computers and Networks), Information Systems (Databases, CRMs, ERPs), and other cost centers that drive the company furnish the company with accurate numbers and metrics. A Contract CFO, is generally a part time person in that role, offering the company a Fractional CFO.
Do I Need a CFO?
“It Depends.” Are you an owner-operator making all the financially impactful decisions for your organization? In those circumstances, KPIs and financial metrics are probably overly complex, and a more straight forward system like Profit First is going to be more cost effective for the similar results.
However, if you have manager making financial decisions, then tracking KPIs is going to be more effective. If you are making financial decisions that should be handled by junior employees, than a contract CFO tracking KPIs will help your business be more efficient.
For example, if you are having conversations about digital marketing with your agency, and you are making bidding decisions, you probably would be better off tracking ROI (Return On Investment) and CPA (Cost Per Acquisition) and other metrics than making decisions for which you may have no expertise. The advantage of a contract CFO program is getting those KPIs.
How Do Contract CFO Services Work?
At our firm, our Contract CFO is a Fractional CFO Service is a monthly charge that includes all accounting services plus real time metrics and dashboards. We will integrate your systems into a reporting engine, and you will have dashboards that update daily. We will integrate your accounting data, CRM (if applicable), marketing data, and other systems to help you monitor the health of your business.
If you are using Profit First style accounts (which even our most complex clients do for Payroll and Taxes), those metrics can be viewed to tell you your current health of your business.
What KPIs do I Need from a Contract CFO?
Each business is unique, but they all share some common elements. Some common KPIs include monthly cashflow, trailing 3 and 12 months, marketing metrics like CAC and RPC, plus economic metrics of fixed and variable costs.
After we calculate the standard KPIs, then we will see which numbers you need to see daily. For some companies that is cash on hand. For others it is average aging of accounts receivable. Some companies live and die by Annual Recurring Revenue (ARR) and Monthly Recurring Revenue (MRR). Criminal law firms generally need to know their lead flow, cost per lead, and number of clients at each stage of the case.
Whatever metrics matter, a contract CFO should work with your information systems to expose the data in an easy to understand way.