The chief financial officer (CFO) handles your company’s finances so it’s only fitting to know what is happening around the management of your business funds, investments, and other financial activities. Your CFO tracks all money matters inside and out which is why having an open dialogue to discuss their insights is a must.
In this article, we’ll look at questions you should be asking your CFO. From creating strategies to improve your financial position to maximizing your business potential, the CFO’s role should be to work hand in hand with the CEO as you address the organization’s needs.
First, let’s look at the importance of asking questions to your CFO.
Why is it necessary to ‘interview’ your CFO?
A regular meeting with your CFO about your company’s financial status assures you that your business is not stagnant and that it has the capacity to scale up. If you want to achieve the goals you have and take your company to new heights, it will be advantageous to know where you are now, what direction are you heading and what steps should you make to get there.
A good CFO will give you direction by providing the following information:
Monitor the company’s financial health
Your CFO should be able to give you information about how your current financial strategies improve the company’s financials. They should also be able to thoroughly discuss the time and resources involved in each financial activity like how much time is spent in solving an issue or what it will take to achieve a financial objective. Knowing the current financial performance of your company lets you know how near or how far you are from your goals.
Direct you toward informed and timely decisions
The chief financial officer is responsible for decisions you will be making because the financial reports they will be handing out will impact the next steps for your business. Stakeholders' opinions, resolutions, and plans of action are based on the CFO’s recommendations and results of important metrics.
As an executive, it is the CFO’s shared responsibility to give accurate financial information that will help you create a financial strategy that will lead to the company’s success. Informed decisions also include establishing strategic initiatives that will help reach long-term financial achievements.
Help you minimize financial threats in the future
Forecasting is one of the primary responsibilities of the CFO as they influence the financial direction of the company (1). Minimizing full-blown financial problems also involves supervising operational and sales activities like complying with regulations, preserving the company's reputation, increasing brand awareness, and providing market opportunities.
Identifying the financial and non-financial strategies to secure the company’s market position is a vital move for all businesses. It should be done according to credible CFO recommendations for sustainability and profitability.
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Top 30 questions you should ask your CFO
Understanding the current financial situation
How would you describe our financial performance this year?
How effective is our current accounting workflow?
Do you think our financial results align with the key metrics we are looking at?
These comprehensive questions about your company’s status quo help you know the major factors affecting your financial performance. It also gives you an overview of what’s happening on the frontlines - how well the functions of your accounting department are carried out and how well-defined are their duties and tasks.
For small businesses, current financial standing also takes a look at the execution of internal controls, financial policies concerning team members, and efficiency of accounting processes.
It is also vital that we understand how different types of data can affect the measurement of a company’s financial strengths and weaknesses. The CFO should be able to point out which key performance indicators (KPIs) we should be tracking in order to improve financial performance.
To be able to address your questions on current financial situations, your CFO should also provide regular financial reports, consistent review of data accuracy and financial guidelines, and hands-on monitoring of the company’s performance based on KPIs and set standards.
Managing a healthy cash flow
What are your insights on our current liquidity position?
What steps are we currently taking to address expenses and debt challenges?
How do we optimize our cost management?
Do we need to review our annual budget?
A healthy cash flow ensures that the company achieves financial goals by minimizing capital expenditures and taking control of the company's finances. A company’s financial plans integrated with cost-savings method secures good liquidity, promotes stability, and increases the capability of a business to maintain its operations for long-term success.
Having an excellent debt management plan in place also shows your stakeholders that you take care not only of your assets but also your liabilities during a company’s budget allocation. An experienced CFO works on debt reduction strategies that aim to eliminate your outstanding obligations and remove unnecessary expenses.
These CFO interview questions based on their perspective also let you know which budget-related situations they consider as financial challenges, and how your chief financial officer managed to resolve them.
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Establishing budgeting and forecasting strategies
How accurate are our financial forecasting processes?
How do we adjust our projections and existing financial strategies according to the current business environment?
How can the company’s financial strategy be compared with the industry leaders?
What is your view with regard to using AI utilization and its impact to our growth?
What new technologies do you think would advance our areas for improvement?
The CFO may suggest actions to help a company get into a good competitive position. Financial planning not only increases a company’s market standing but also helps you stay updated with the latest industry trends.
Bridging the gap between your financial projections and actual performance shows that you can secure long-term sustainability. A smaller gap means fewer adjustments to your forecasts and more time creating efficient processes.
Is your CFO in favor of taking steps to automate manual tasks, training to be technologically savvy, and increasing productivity? If not, is it part of the plan to do so in the near future? Does your CFO think your growth potential will be limited with digital transformation?
Asking your CFO’s opinion when it comes to using current technologies, like the use of AI, data analysis, and other financial management tools helps you to get a clear picture of your business needs.
Assessing risk management preparedness
How would you assess our preparedness in mitigating potential risks?
Do you recommend adjusting our risk management procedures with regard to the current economic environment?
Are we anticipating any non-financial risks at the moment? How are we planning to handle them?
How would the company ensure financial performance in the long run?
The CFO’s role should include providing guidance on how to stay afloat amidst financial obstacles by assuring flexibility and resiliency. Other than taking care of short-term risks, building an extensive risk management plan is important to cover potential threats that would pose a danger to financial stability.
Preparing for risks that not only concern credit and liquidity should also be taken into account by your financial officer. A knowledgeable CFO may suggest a supply chain assessment that should be reviewed on a regular basis.
Non-financial risks also include other external factors like reputational, operational, and health and safety threats which could affect the competitive landscape of the industry you are in. A CFO can help contribute to developing a contingency plan that will help save your company resources, time, and workforce.
Aligning financial objectives with business development and expansion strategies
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How would you rate the company’s overall marketing strategy?
What are the drivers of our revenue growth and how do we take advantage of them?
What are our most successful distribution channels to increase our company’s visibility?
How did we accomplish our top marketing campaigns?
How do our current marketing efforts attract potential investors?
Do you think we need to improve other departments’ collaboration with the marketing team?
When your CFO means business and they are serious about your future, they are able to answer your queries regarding market expansion. A reliable CFO looks into your untapped potential and explores opportunities on how your company can scale up while staying aligned with other organizational goals.
By asking how your successful campaigns were carried out, your CFO supports you in making informed decisions with regard to maximizing profitability. Evaluating your marketing strategies helps you take a look at the most effective ways to tap new markets, retain and expand your customer base, and reflect on your strong market share and position in relation to other competitors.
CFOs also track key metrics that draw investors in. They are aware of which activities have the highest ROI, the most favorable number of sales, and which marketing direction should the business focus on to increase revenue growth rate.
Evaluating your CFO’s executive skills
If you could, what major changes would you implement to improve the company’s financial health?
How would you describe our financial roadmap to achieve our milestones 4 to 5 years from now?
What financial plans for increased efficiency were you able to accomplish recently? How did you identify areas that helped you reach your goals?
Personality-wise, CEOs are more open to changes and risks while a CFO tends to be more negative as they always anticipate the worst aspects of events. (2) On the other hand, evaluating their leadership skills gives you an idea of their capacity to not just command and give instructions but also provide accessible and easy-to-understand financial information for the whole organization.
Their role gives them access to the company’s financial health and it is their responsibility as leaders to make team members comprehend technical data and help people recognize their purpose and contribution towards the success of the organization. By upholding accountability, you would know that your CFO’s vision is integrated with the business goals of the company.
As part of the executive team, your CFO should also be able to provide initiatives in executing financial tips and recommendations. Together with the CEO and CMO they look at the bigger picture and solve inconsistencies and issues before they become large-scale problems. When your CFO answers these queries with confidence, you can gauge their ability and experience in managing people, time, and processes.
Enhancing personal growth and cultural fit through transparent relationships
Personally, what do you think are the company’s biggest strengths and weaknesses?
Do you have any thoughts on our current communication process?
What is your personal attribute or principle that helped you become successful in this role?
How do you carry out work-life balance in an organization?
Do you find your personal goals aligned with the company’s goals? Why or why not?
When asking your CFO, you also want to know them as a person. After all, you are trying to build a stronger relationship with the person in charge of the overall fiscal health of your company. These might be seen as private and personal questions, but taking the time to answer them will create an open line of communication and build a comfortable atmosphere when working around them.
Your CFO might say that they see themselves as strategic business partners with the CEO. Their outlook could also be in the same direction as what the company promotes. Both of these answers would help encourage positive working relations with other executives and stakeholders, willingness to actively engage in financial opportunities, and handle challenges, as you optimize your business’ growth.
Partner with a CFO that fits your business needs
In summary, asking the right questions to your CFO helps you understand your company’s financial situation, the direction you are heading, and the right key indicators to look at to strategically achieve your goals. They not only provide accounting and financial solutions but also short and long-term strategies for your financial growth.
Whether you are a thriving small business or a large enterprise, it is vital that your finances are taken care of by a professional.
A good CFO is aware of the client’s needs but a great CFO assesses the viability of the company and works on that to create projections for the future.
Footnotes:
1.Deloitte
2.HBR