The Strategic Finance Executive

One of the more remarkable developments I have observed throughout my career has been the impact CFOs and lead finance executives can have in founder-led, fast-growing technology businesses. Given my experiences as both a CEO and a CFO, finance leaders certainly must focus first on their core accounting responsibilities, but I have seen first-hand the critical role a strategic CFO can play in building scalable growth for a venture-backed SaaS or Internet Consumer business.

My experiences are not necessarily unique, or a novel insight of my own – rather something that is becoming more commonly understood industry-wide that I want to amplify. For example, Volition’s Founding Partner, Larry Cheng, recently shared that among the most common mistakes he has seen start-ups make is waiting too long to hire a CFO. Even after hiring a CFO, Larry shares how this executive is often one of the most underappreciated leaders. The opportunity for strategic CFOs emerges given founders are typically brilliant visionaries with the tenacity and audacity to launch a new venture. As the business grows, they need trusted advisors who can partner with them in developing strategy, integrating key business processes, understanding key metrics and ultimately building a sustainable business. This is where a strategic CFO can come into play.

Jack Perkins, Founder of CFO Hub, a leading provider of on-demand accounting and finance services, recently highlighted the key qualities that a strategic CFO must have. These three principles can be critical for finance executives looking to grow into this role as well as CEOs looking to hire a strategic finance executive. First and foremost, Perkins highlights how the current macro environment makes a strategic CFO integral to a company’s success. In a time where interest rates are higher, debt payments are due, companies are cutting costs and the fulfillment of receivables is dropping, a finance executive successfully forecasting and communicating with their CEO and company has become a priority with existential implications. More specifically, Perkins argues that the CFO role today requires a more holistic finance approach grounded in the ability to engage with other departments and executives to build longer-term strategies. He believes the three qualities to look for when hiring a strategic CFO are:

1. Finance Acumen and Strong Analytical Mindset – These traits include being someone who is proactive, forward-looking and prioritizes data-driven business planning.
2. Cross-Disciplinary Orientation – A person who always goes beyond the numbers and collaborates and develops a deep understanding of each area of the business.
3. Strong Communication and Leadership – A strong partner with the CEO who inspires confidence across the business and with key stakeholders.

As mentioned earlier, I want to underscore the immediate priority of a finance leader has to be around establishing strong accounting systems, processes, and controls, including AR/AP, payroll management, financial reporting, audit & tax, and compliance. If there are holes in these critical structures, everything else from a more strategic perspective doesn’t matter. Additionally, it is important to recognize that as your business grows, the accounting team needs to be right sized. This will enable the CFO to maximize their impact while ensuring the day-to-day critical “controller” type requirements are being taken care of.I am excited that the Partners at Volition Capital have asked me to put a special emphasis as an Operating Partner on supporting the finance executives at our portfolio companies. For starters, we are launching in the next few weeks our Volition “CFO Workgroup” to resource these leaders and forge connections with each other to share questions, ideas and best practices.

At Volition, we also want to build content around key topics and practical, actionable ideas for our strategic finance leaders to help them drive execution and transformation at their businesses. Stay tuned as we will cover in future editions ideas such as (1) designing & managing key financial and operational metrics that we call an “Executive Scorecard”, (2) supporting GTM, demand generation and sales efforts to help drive predictable growth, (3) practical insights around key systems and services providers, and so much more. Already these conversations have been extraordinarily insightful for myself, and I hope for our portfolio companies as well, and I look forward to continuing to share some of these insights over the coming months.

–Steve