There are a long list of responsibilities that CFOs take on. It is important to enact some of these practices early – even at a basic level – as your company grows from startup to thriving business. One of the most important jobs they can do is to put the basic controls, processes and systems in place. This helps avoid a huge cleanup job later.
House in Order
Investors often want to see that a startup has its “financial house in order”. It means that the books are up to date and correct. All the filings are done and in good standing, sufficient internal controls are in place, cash is well managed, and the management team is capable of providing reasonable forecasts. Fractional CFOs often help get all this in place and their presence provides early investors with surety that the company finances will continue to be well managed.
An experienced CFO will know the impact of seemingly small issues down the road. For instance, they might guide you on exactly how to reward early employees with equity without messing up an investment deal later. They might understand the impact of creating one more revenue or COGS accounts. Or adding dimensions/classes to accounting data in order to build KPIs. They might see your blind spots and internal controls risks when it comes to credit cards, expense approvals or tax liabilities.
Alignment and Growth
Getting help early and enacting best practices can smooth your path to growth. This isn’t just about cash management. It’s about creating harmony for the key metrics and Key Performance Indicators (KPI) your growing team will watch. The way you measure your company/team/people performance is integral to your company culture. Not making these decisions intelligently and with foresight leads to awkward conversations later – with investors, lenders, and key employees.