This article appeared in the January 2019 issue of MiMfg Magazine. Read the full issue and find past issues online.

Whether or not to hire someone to fill a CFO role is a question that many manufacturers face. Maybe to help answer this question, we need to ask another. What does a CFO provide beyond what your controller, accounting manager or bookkeeper are providing? Here’s a brief listing of what you could expect from a seasoned CFO:

• Strategic thinker – What’s our value proposition in the market place? Are we focused on the right customer and product lines? Where do we want to be in five years and how do we get there? These are all questions that a CFO is driving to answer though a collaborative strategic planning process.
• Predictive not reactive – CFOs are forward-thinking and ensure the company has the right tools (forecasting, financial modeling, cash projections) in place to navigate the outlook in front of them.
• Decision making – Small businesses need to be nimble and dynamic in their decision-making ability. CFOs provide leadership, experience and the financial tools to streamline decisions as they support key negotiation areas such as banking, legal, customer and suppliers.
• Driving financial results – CFOs are focused on key financial metrics such as inventory turns, maximizing working capital, product and customer profitability, ERP software utilization and proper banking structure and rates.

These CFO abilities make a compelling argument that all manufacturers should have a CFO no matter the size of their business. Unfortunately, budget limitations greatly impact the ability for some manufacturers to actually have a CFO. When small to mid-size manufacturers figure out how many senior management positions they can afford in their budget, the dollars usually run out before they get to a CFO.

What other options do these manufacturers have? Maybe they can hire someone who’s recently retired and would like to work part-time? Maybe they can form an advisory committee and ask a couple financial folks to help in this capacity? Maybe they can outsource the CFO position until they can afford a full-time role?

In the end, all manufacturers need to find a way to get CFO-level capabilities into their business to ensure they are well positioned for the future. As manufacturing is a capital-intensive industry, an experienced CFO is essential to drive superior returns on investment for businesses.

About the Author

Tom Shemanski, a principal with Rehmann, serves clients in an advisory capacity, providing fractional and project-based CFO services, business financing solutions, turnaround management, strategic planning, system implementations, and transactional advisory services. He may be reached at tom.shemanski@rehmann.com.

Rehmann is an MMA Premium Associate Member and has been an MMA member company since July 2006. Visit online: rehmann.com.