According to estimates and reports, more than a hundred million startups open up each year. However, not all the startup gains success, and some even met their failure. Poor financial management is the main problem often found in startups, which leads to their failure. A Chief Financial Officer (CFO) can quickly resolve such problems within your startup.
Research also found that senior finance executives and CFOs play a crucial role in the early-stage growth companies and start-ups. There are many misconceptions among people that only large companies can appoint CFOs. Mostly, their values are also undermined. But, CFOs are needed in every step of growing as the company’s financial and business strategies are deeply interwoven with each other.
It is undoubtedly one of the primary roles in a growing young company as the Startup CFO’s commercial manager. When a CFO is needed, the main question gets expressed when the startup comes with finance.
Role of Chief Financial Officer in enhancing the Finance Sector of Start-Ups
CFOs are the backbone of a company, basically for the startups to manage everything for easy functioning. Below stated are some of the critical financial areas for enhancing and adding value by the CFOs.
Financial Processes Improvement and Cash Flow Management:
Financial turbulence is always a problem for startups in the business world. Reportedly, most of the startups, even before launching the product, run out of money. Hence, a CFO is needed to guide the entrepreneurs in every step of cash flow and the company’s finances analysis.
Regulatory and Compliance Laws:
One of the other fields that can be a massive problem for startups is the compliance and regulatory laws. There is much statutory compliance for following by a startup such as Income Tax, Company Law, GST, etc. In this matter, a CFO can provide the right guidance regarding government policies and rules to the company with availing the maximum advantages also.
CFO Has Important Role In Risk Management:
Another important area of neglect in startups is failing to put in place robust risk management processes. There is risk in every business, and the same is not possible for avoiding. But, if we can identify the risks and plan accordingly, then we can minimize them up to some extent. Hence, CFOs can mitigate such financial risks as startups need to have a contingency plan.
Startups need to have future planning in the financial sector. They not only have to meet the finances of the present but also of the future. A CFO can quickly help in the planning by analyzing the balance sheet and forecasting growth trajectory. They will help in the formulations of the best plans for the growth and development of the startups.
Hence, CFOs are very much needed to develop a start-up without any hindrances in the finance sector. Start-Ups gets immense value with the hiring of a CFO and gives them the best chance to succeed in their entrepreneurial venture.