What Does a CFO Do? Pt. 7, Stakeholder Relations
In our continuing series detailing the duties of a CFO, today we discuss the CFO’s role as it relates to stakeholder relations. Managing relationships with a company’s various stakeholders is something that requires skill and experience, and direct involvement by the CFO to yield the best results.
Let’s start with banking relationships. Bankers have their own language, and your CFO should be able to speak it. This means not only conversing, but supplying reports and documents in a bank-friendly format. Doing so will greatly increase your chances of a successful lending relationship. A strong CFO can be tremendously valuable in negotiating positive terms and guaranteeing that renewals are not a time of distress. Furthermore, your CFO should be at the healm of regular banking communications. A monthly or quarterly meeting with your bank, to review business performance, will go a long way toward building a strong relationship.
Banks often work with small businesses that provide spotty information, inaccurate reporting, and overly optimistic forecasts. It will go a long way with your bank if your CFO is reporting financial and operating performance on a regular basis, and holding an open, constructive dialogue with lenders. Backing this up with accurate reporting will instill trust and further the relationship.
In addition to banking, the CFO can play a key role in managing vendor relationships. Doing so can insure performance in keeping with company objectives, and maintain healthy relationships that can result in improved pricing and supplier performance. At the same time, the CFO should be actively involved in implementing payment strategies and negotiating terms with suppliers.
Another set of stakeholders in a small business, investors and your board of directors/advisors should look to your CFO for guidance and reporting. These stakeholders have a very real concern in the business, and will often expect access to a seasoned financial executive to guide the company’s financial affairs. This can include board presentations, reporting, and more.
Last but certainly not least, your CFO should play a key role in managing employee relationships. This can include much more than formulating HR policies and the like. For many companies with “open book” management philosophies, a CFO can be very important in communicating the company’s goals and position to employees.
Stay tuned for Part 8 next time, as we discuss the CFO’s role in “Human Resources.”
If you missed the previous posts, here they are:
- Part 1 Introduction, click here.
- Part 2 on Cash Management, click here.
- Part 3 on Financial Reporting, click here.
- Part 4 on Accounting, click here.
- Part 5 on IT Development, click here.
- Part 6 on Strategic and Financial Planning, click here.
About Gateway CFO Solutions, LLC:
Based in St. Louis, Gateway CFO Solutions helps small businesses grow profits and revenues, and bring peace of mind to their company’s financial picture through part-time CFO services. Many small business owners are without a trusted advisor for the financial side of their business, and they have seemingly few resources to turn to for expert guidance. We provide that guidance and act as a trusted, strategic advisor for our clients. We provide both broad, global planning and “roll up the sleeves” technical services.