Six key questions to ask before hiring a CFO: part 2
(Editor’s note: This is the second of three parts. Read part 1.)
2. What questions should I ask a CFO to be sure he/she has the experience and personality traits to help me?
Ask them if they are a Strategist and Visionary. He/she must always think ahead. Reporting on the past is an important function he/she oversees, but his/her value will come from his foresight and ability to strategically guide the company as a whole, not as individual parts.
Ask them about their professional designations and education. A professional accounting designation is good, but not required for a superstar, senior executive CFO.
Having a graduate degree with 25+ years experience is key. An MBA with less than 25 years experience does not begin to cover the accounting, process and operating knowledge needed to steer a company’s finances.
Ask them how hands on they are. The job of a small business CFO is very different from one at a big company. The latter is much more of a hands-off role focused on investor relations, deal making (financing, M & A), governance, reporting and other back office matters. In stark contrast, the small business CFO is much more hands-on and integrated into the day-to-day of the business.
You want a CFO who is not shy. The CFO is the CEO’s most trusted advisor. If a CFO doesn’t tell you he/she is planning to ask you tough questions that nobody else will, then you won’t get the best experience and value.
A good CFO is good at asking questions that force those around him to think through and understand things they are about to undertake. A good CFO keeps asking questions until he/she gets his/her mind around the issue and fully understands it – and is confident that those around him/her fully understand it as well. The discipline to keep after it until initiatives and actions are understood and are sound is the hallmark of a good CFO. It takes much humility and tact to accomplish this, but organizations soon learn to completely think through things before they bring them to you.
Ask them about their technical and systems expertise. No, you don’t want your CFO troubleshooting Windows on your desktop, but you do want someone who’s sufficiently comfortable in information technology to take the lead in driving your information systems.
Ask them about their decision making. Your CFO will be a trusted advisor. Running a company can be lonely. Your CFO can be a key, objective source of advice and counsel as you make the big and the small decisions.
As you probably noticed, only one of these points (the 2nd one) actually deals with accounting. Despite their accounting experience, the best CFOs go far beyond this foundation. They are capable of adding value to every aspect of the business. Judge yours accordingly and make sure you have a high impact CFO.
3. How do you bill for your services?
There is no need to be afraid to talk with your CFO about how he/she bills for the work they will do with you. No one wants surprises!
Since the CFO is a trusted advisor, they will work with you to understand your exact needs and put together a no-surprises cost. This is accomplished by assessing your needs, understanding the current state of your business, performing a gap analysis, and agreeing on specific work that will benefit your company the most. Since these are advisory services, most often they are billed on a bi-weekly or monthly fee basis.
Sometimes a small business just needs an experienced CFO to help them with a strategic plan, business plan, financial projections, bank lending package or similar project that’s typically charged a flat fee.