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FOOD FOR THOUGHT

5 CFO questions to ask right now

Posted by Mike Atkinson on August 29, 2017

You’ve had your meetings, you’ve spoken with the executives, you’ve discussed things with the board, all with your CFO by your side fielding the tricky financial questions and presenting the profitable forecasts for the year ahead. But that’s just the start of what your CFO can offer you.

5 CFO QUESTIONS TO ASK RIGHT NOW


Read more: The Modern CFO: What business leaders need to know

 

These are the CFO questions you need to ask right now to stay on top of the past, present and future of your enterprise.

 

1. What is the mood of the board?

 

Your CFO is a leader, and is a primary part of the team that communicates regularly with the board. Their expertise and constant contact with the directors will give them the opportunity to read the writing on the wall: they will be able to gauge how the investors are feeling about your current business performance.

“The board is tasked with setting the strategy and long-term goals of the company. They have to process a vast amount of public and internal information in order to make decisions that will ultimately lead to success of the business,” explains Business Advisory Manager Neeraj Patel.

This will let you know about particular areas of concern, and your CFO will be able to provide you with advice on alleviating those concerns (warranted or otherwise). This is one of the reasons why soft skills are so important for a CFO. Without those abilities, senior management might not know that there are worries amongst the directorship until it’s too late.

 

Follow up questions:

  • Is there anything we can do to alleviate those concerns?
  • Is there a particular pain point that is more significant than the rest?

2. Where should we be directing additional capital?

 

Some projects, departments or business ventures are more suitable for additional funding than others. It might be a new product, new premises or some new hires that you need to direct financing towards: but which would benefit the most? Your CFO can tell you, providing direction for your growth.

Which would benefit the most? Your CFO can tell you.

During your discussion, your CFO will almost certainly mention any opportunities to free up capital from other areas to balance out the difference. If they don’t, ask: this can be a great way to free up additional capital for those projects that are most important for your business success.

 

Follow up questions:

  • Which is more important at this stage: revenue growth, or market consolidation?
  • If something were to go wrong, where could we tighten our belts financially?

3. What risks should we be most concerned about?

 

One of the most significant reasons why some businesses fail while others succeed is due to the difference in ability to mitigate risk. That makes risk management an integral part of the role of a CFO. They should be on top of upcoming shifts in legislation, potential changes in the broader economy, as well as adjustments within your industry.

By asking this question, you are ensuring that your CFO is being heard when they highlight a potential issue on the horizon. This will give you the opportunity to avoid it, or at least mitigate the damage should it affect your business. Too many businesses have collapsed due to unforeseen risks. Don’t let yours be one of them.

 

Follow up questions:

  • What would be the effects on our business should this risk impact us?
  • What would you suggest to reduce the potential damage?

4. If we had an audit right now, would we pass it?

 

The role of a CFO changes significantly depending on what kind of organisation they are in. In larger enterprises, they might be in charge of a financial department, whereas in smaller businesses, they might only work with one or two other financial professionals, and take on more “coalface” accounting work.

The role of a CFO changes significantly depending on what kind of organisation they are in.

However, regardless of their precise duties, they should be across your tax compliance. Your CFO should be able to say, with confidence, that your financial documentation is up to date and correct. If they are hesitant, it might be time to take another look at your books and rectify the problem.

 

Follow up questions:

  • How are we storing our financial documentation?
  • When was the last time we had an audit?

5. Should we be making any changes to our forecasts?

 

The sun goes up, the sun goes down, and the world has changed. Your business should have changed with it. You’ll likely have had a discussion with your CFO near the start of the financial year regarding the financial forecasting: your expected turnover, expenses, risks and so on. But as the year goes on, your CFO may have noticed that something has changed that may affect those forecasts.

By asking this question, you are giving your CFO the opportunity to voice these adjustments. They might take the form of a leaner year, or potentially a product that is performing exceptionally well and should be capitalised on. This information lets your business remain agile, and adjust to the hurdles or opportunities that present themselves to your enterprise.

 

Follow up questions:

  • How can we capitalise on these changes?
  • Will these changes affect us in the long-term as well as the short-term?

Ask these questions of your CFO and arm yourself with the knowledge your business needs to succeed.

 

For more information on getting the most out of your CFO, access our free ebook below.

The Modern CFO: What business leaders need to know

Topics: CFOs