TRANSCRIPT 🔗
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Welcome to the new season of the CFO sessions.
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If you've listened before, you'll know the show is usually me interviewing CFOs and senior leaders about what it really takes to get to the top and the lessons they learnt along the way.
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This season is a little different.
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It's a shorter season and it's just me.
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No guests this time.
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Instead, I'm taking some of the big questions around leadership and finance and digging into them.
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And I should explain why.
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I've recently started out on my own with a business called CSG Finance.
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We offer fractional finance support at every level for businesses that are starting up, scaling up, or in the middle of a transaction or anything else that needs that bit more senior support.
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So in this episode, I want to tell you why I started it, and to do that, I'll start with a question.
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I get asked that a lot, and my honest answer is that it's the wrong question.
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Because it's a question about a title, and the title isn't what your business needs.
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What it needs is a set of skills at the right level, at the right time, and at the right price.
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The better question is: what skills does my business need right now and where are the gaps?
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And that matters because in most businesses, the FD and the CFO aren't too different people.
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They're two sides of the same coin and very often the same person flexing their skills where they need it the most.
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Isn't an FD just a CFO with a smaller title?
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I do get that one a lot.
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Not quite, but in my experience, it's a lot closer than what people might think.
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So let's consider these skills as two sides of the same coin.
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We'll start with the FD side.
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This is control, reporting, it's making sure the numbers are right, the month then closes on time, the cash is visible, the compliance boxes are ticked, and the six systems actually talk to each other.
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And the question it answers is what is actually happening?
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Now let's flip to the other side, the CFO side.
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This is the side that answers the question, what should we do about it?
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The focus is on strategy and capital, pricing, funding, scenarios, the board conversation.
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It's where the business is going and whether it can afford to actually get there.
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And this is the bit that rarely gets said out loud.
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In most grown businesses, those two sides aren't two different people.
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It's one person doing both.
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The person who's closing the month end and checking the cash is the same person who's then sitting in that board meeting and feeding back to the board.
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I've worked in many businesses where I've been closing the books in the morning and then talking strategy with the board in the afternoon.
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It's a natural progression for anyone in senior leadership and it isn't two skill sets competing.
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It's one skill set seen from two different angles.
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You can't spend one side of a coin.
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A CFO conversation built on the shaky FD foundations is just confident sounding guesswork.
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An FD function that's immaculate but never looks up doesn't give you the strategy and gives you no direction.
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Each side is what makes the other worth having, which is exactly why it helps when one person can move fluently between them, because there's no handover between what happened and what do I do about it.
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So as I said at the start, the title isn't the point.
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It's the mix of the skills in the room and whether it matches what the business needs right now.
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That's key really to how founders should think about buying in these skills, because the mix you need isn't constant.
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It is continuously moving.
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Think about a business going through an acquisition.
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In that moment, you need the CFO side, strategy, structuring, negotiation, and the storytelling needed for the buyers and investors.
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Then compare that with a year-end.
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Year end, you need the FD side, control, accuracy, tidying everything up and getting it all signed off.
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It's the same business, completely different mix of skills, and a few months apart.
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Now a full-time hire will always buy you the full coin every day at the same price, whatever that week actually needs.
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So often the cost and the skill level just don't match the work that's required.
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And this is where a fractional arrangement can really come to the fore, because this allows you to dial up or dial down depending on when you need it.
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You get the same calibre of judgment you'd expect from a permanent hire without paying for it five days a week.
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Because the reality is most grown businesses, or
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even businesses that are simple, don't need five days a week of that caliber of judgment.
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They just need the right part of it at the right time.
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And it isn't only about this ongoing support piece.
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Fractional work also covers project work.
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You may have a fundraise coming up, a system as implementation, or preparing for due diligence.
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Or maybe you simply just need someone in to help build the forecast and build the budget quickly.
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You bring in the right skills for the project for as long as it takes.
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And when it's done, it's done.
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And this is where kind of CSG finance and where I found myself in a number of different areas.
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Often I can be brought in just to help with doing a five-year plan, perhaps, or just perhaps building out the budget.
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These are very fixed-term projects, often fixed fee, and once the project's done, I move off to somewhere else.
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But the business has exactly what it needs when it needs it.
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And I guess when we're talking about bringing in skills, the question is what skills are they that the businesses might need?
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And when we think about finance, it's a good way to think about this in three separate layers.
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The first layer is bookkeeping.
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This is the day-to-day recording, reconciling, and filing that you'd expect of accountant.
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The second layer is analytics and control, making sense of what's been recorded, reporting it well, and keeping a grip on cash and performance.
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And the third layer is strategy, the big decisions around pricing, funding, growth and deals.
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Sometimes when you're looking at upskilling, the business only needs one of those layers.
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It might be strong underneath and weak at the top, or the other way around.
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The business that's building its finance function more or less from scratch may need to look at bringing in all three.
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And the good news is that fractional support can work at every level.
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The point is that it isn't all or nothing.
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The sensible way to buy finance help is to match the level to where the business actually is.
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The top player, if that's the gap.
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The whole stack, if that's the gap.
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And not ripping out a setup that's already working.
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So if the question is about skills rather than titles, how do you work out which ones you need?
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Go back to the three layers bookkeeping, analytics and control, and strategy.
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I've got one question for each.
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Don't worry, you won't need a spreadsheet for this.
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And if you're driving or walking the dog, just have a think about these in your head.
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Layer one, the bookkeeping.
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We call that the foundations.
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Do the basics happen accurately and on time?
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Transactions recorded, accounts reconciled, filings made without a scramble.
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If the answer's no, that's your starting point.
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Because everything above it is only ever as good as what sits underneath it.
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Layer two, which was the analytics and control side.
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Do you get the numbers you trust quickly and efficiently and quick enough to act?
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Not just accounts that satisfy the tax team, but a monthly picture of where you make money, where you don't, and where your cash is going.
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If you're finding out how last month went halfway through the current month, or you don't quite believe the figures, that's your gap.
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And then we move on to the final layer, layer three, strategy.
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When you're about to make a big decision, like a hire, a price change, or a new product, does anyone see you pressure test the numbers with you?
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Or is it you, your instincts, and a spreadsheet?
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And could you explain right now where your cash will be in six months and what would change that picture?
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So here's how to read your answers.
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Work from the bottom up.
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The first layer where you hesitate is your starting point because the layers above it can't do their job properly until you get that layer right.
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And you may find your foundations are solid and your gap is right at the top.
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In that case, you're not short of bookkeeping or even of a full finance function.
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You're short of one specific skill at one specific level.
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And that's a much smaller, more targeted thing to go and find than most founders would assume.
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And there's one more thing I'd like to bring up.
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This isn't a one-off test, because your answers today won't be your answers in three months' time.
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Win a big customer, go out for fundraising, take on a big team, or even start thinking about an exit.
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And the layer that was fine can suddenly be the one that presents the gap.
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So what you need now isn't what you'll need in three months.
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And that's exactly the point I'm coming from.
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Come back to these questions on a regular basis and let the support flex with the answers.
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So I guess that's ultimately why I set up CSG Finance.
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I've worked in a lot of businesses wearing both hats, playing both sides of that coin.
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And over time it became clear to me that the all or nothing approach didn't work for every business.
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I often had a seat where I sat as a CFO but spent a lot of time doing basic bookkeeping.
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Some businesses only need this level of skill at key moments.
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Others are smaller or less complex and only need that top-level thinking a few days a week, or even a few days a month.
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And for others, the cost of a full-time top-layer finance person is simply out of reach.
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CSG finance has been created to help bridge that gap.
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Whether that's just at the higher level or whether the base layer in the middle layer needs some support too, hopefully we can help.
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So the next time someone asks whether they need an FD or a CFO, I gently reframe it.
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Don't ask about a title.
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Ask what skills you need, at which layer, and when.
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You don't have to rip up what's working to get them.
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And what you need now, expect it to change.
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And before you commit to a full-time hire, ask yourself, do I really need that five days a week?
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Well, thank you for listening to the podcast today.
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Next time I want to talk about growth and what happens when it goes wrong.
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Scaling without breaking.
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Because the businesses that struggle most when they grow are rarely the ones without ambition.
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They're the ones who tried to build the top floor before the foundations were really ready.
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So we'll look at the foundations and why they have to come first and what those foundations really look like in practice.
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See you in the next episode.