By Shereen Shabnam

It is a well-known fact that an alarming number of Startups and SMEs fail due to lack of financial foresight. So why is it that many young companies do not priorities or even trivialise this function of their business?

In this issue, Shereen Shabnam meets with The Scalable CFO, which was founded in UAE in 2016, as a team of freelance finance professionals who provide access to flexible high level financial management services to ambitious business that do not want, or do not need a full time CFO.

By bringing together their financial expertise, they introduced the industry to a new breed of CFO, to contribute financial foresight and take every opportunity to empower business owners by sharing sound financial management practices with them every step of the way.

In the article below, the team members from The Scalable CFO offer insights into the On-Demand services they provide to SME’s.

Why we took On-demand CFO services to the SME World

In a survey we conducted in Dubai, 50% of the respondents said they have no idea what a CFO is, let alone what they do? While this pains us, it does not surprise us. One business owner even said “I know I have more money coming in than going out, so why do I need a CFO?”

Against the backdrop of limited resources and uncertainty, there are also some stereotypes that abound the CFO role. We want to debunk some myths and misconceptions about our role and really give you some insights into what CFO services can do for your business.

1. Just a glorified Bookkeeper

The position of bookkeeper is considered a reactive role, focusing on historical transactions that have already been performed by the organization in a past accounting period. An experienced bookkeeper would be able to provide different solutions on how to record cost elements, identify accounting discrepancies, ensure bill are paid on time in addition to improve the accounting processes for day to day activities.

The natural role of a CFO will encompass a much deeper understanding and broader skill set. Where we focus on the bigger picture of the organization by transcribing strategies into short term tactics. We are business savvy, able to navigate cross functional complexities with ease understanding financial and non-financial business risks and how to successfully mitigate them. Arguably most CFO’s may start their careers as accountants, but not all accountants have the skill set to become a CFO.   

2. CFO hides behind spreadsheets

The CFO has a bad reputation. Often the general perception is at best a more experienced accountant who is inflexible in our approach, a creature of routine and habit that hides behind a spreadsheet, and a bit of technophobe to top it all. However, per Longitude Research Report commissioned by Oracle it highlights that modern CFOs are in fact the ones taking the lead in business transformation and growth strategies, and are technology evangelists advocating for the use of advance analytics and modern mobile, social and cloud technologies. Hiding has never been an option. We have to be forward looking and often find creative ways to take advantage of tools and techniques to maximize corporate value, revenue streams and stream line operational processes that are robust and agile to remain competitive and can adapt to the fast changing landscape.

3. CEO’s decision is undisputed

Some describe the relationship between CEO and CFO as of Pilot and Co-pilot when in fact the CFO is also managing the whole airport. In the same way that the co-pilot supports the pilot and the airport manager makes sure all the ground staff, crew and passengers are taken care of to ensure a successful flight, the CFO keeps abreast of the situation internally and externally so the company is on course for on-time and successful arrival.

Our role as the stewards and catalyst of a CEO’s decisions can create the misconception that we are only here to expedite may not necessarily be to the liking of all stakeholders. The truth is the CFO and CEO form an indispensable pair that enables the CFO to challenge the decisions of the CEO supported by an impartial well-substantiated business case. Whether for or against, it will equip the CEO to make the most informed decisions in the best interest of the company.

4. No cost benefit

There is often a misconception that only large multinational organizations really require or can afford a CFO among the management team. In reality, these services offering forward thinking financial administration are critical to smaller organizations and can be obtained on an affordable basis. Where effective cash management, careful budgeting with strategic planning and rational decision making are the difference between success and bankruptcy.

5. Obstacles to progress

Are we really troublemakers that want to ruin the party or simply misunderstood? Saying no is not as easy as it seems when individual department approaches with their plans and great ideas. In fact having the access to information that provides a holistic view of the company’s position to see the bigger picture, we cannot afford to be granular but instead have the responsibility to make sure all the party planners are aligned and on the same page without going off road, each component has to happen at the right place at the right time so that the corporate goals are achieved and a bigger party can be had by all.

6. Emotionless robots

It is common for a CFO to be thought of as emotionless and ruthless, but this could not be farther from the truth. People mistake the display of control for lack of emotion whereas this control is to instill calmness within the organization especially in turbulent times. All this is changing. The Finance profession is entering a new era where CFOs are encouraged to embrace their soft skill set and in additional to their role and responsibilities move toward coaching, mentoring, storytelling, creatives thinking and networking. According to the EY survey title “Do you define your CFO role? Or does it define you?” the CFO role is under intense pressure, with the common thread being people. Humanizing the CFO and developing a people focus is already essential to sustained success.

7. Everything can be done at a press of a button

Streamlining complicated scenarios into simple numbers which can easily be interpreted by non-financial personnel are what we do, but as a result it has lead to an expectation gap that these are simple numbers and can be changed within seconds. If only we can do everything and run all the reports at a click of a button we would, however, the truth is that we are not magicians and what you see as one number modification is linked to multi layers of scenarios filled with facts and figures it affect and which needs careful consideration, and with various systems used by different department this one change frequently turns into a time consuming task. Building an aeroplane requires time, parts, tools, technical knowhow and patience, the same can be said with finance, only we do it with numbers to ensure the business is backed by solid and meaningful data that has integrity.

The truth is CFOs are creatives and cannot resist the invigoration and fulfillment presented by SMEs and startups. If you are serious about building a business you are passionate about, this is the service you need.