What does the CFO need to be telling the board?
In many SMEs and growing organisations, the finance function is built around bookkeeping, payroll, and year-end accounts. This work is essential, and often, it's done well enough. However, it’s also almost entirely historical, which is why the role of the CFO (or Finance Director) is so important.
Because board members need more than a record to make sound decisions. They need to know what the numbers mean for the months and years ahead, where the risks are, and which options deserve their attention.
This forward-looking analysis is the job of a CFO, and it's the layer many growing businesses are missing. The good news is that once you know what to look for and what to ask, it's a gap you can close very easily.
Why historical data only takes you so far
Accounts tell you what you earned, what you spent, and where you stand. That satisfies HMRC and Companies House, and it gives the board an idea of the period just gone.
What it doesn’t tell you is whether cash will cover the next six months, which clients are the most profitable, or what happens if a major client leaves. As a result, when boards only see historical reporting, decisions get made without the right level of insight.
This often means that risks surface later than they should, growth plans aren’t in sync with cash availability, and unprofitable work carries on unnoticed. The cost of these blind spots grows with the business, and they’re often only discovered when it’s too late.
A CFO’s role is to close this gap by turning financial data into analysis the board can act on.
What the CFO should be telling the board
A capable CFO will bring the following to every board meeting:
Cash position and runway
Forecasts should look at least 12 months ahead and include options for handling any shortfall. Forecasts should also include how much cash the business holds, how long it lasts under current plans, and when pressure points might arrive.
Performance against budget, with explanations
The board should understand why revenue and costs moved against the plan, and whether each movement is a one-off or could be the start of a trend.
Profitability by product, service, or client
Overall profit can hide weak spots for years. This is why the board needs to see which parts of the business generate returns and which absorb them.
The KPIs that drive the business
A small set of measures tracked consistently, such as gross margin, debtor days, or utilisation, is incredibly useful for board members.
Risks, scenarios, and sensitivities
The CFO should stress-test business plans and show the board how resilient the orgnisation is under each potential scenario.
Funding and working capital needs
Growth consumes working capital before it generates returns, and funding arranged early is less stressful than at the last minute. So, if a growth plan requires cash, the board should know about it early.
The financial implications of each strategy
New hires, premises, markets, and pricing decisions all carry financial consequences. The CFO should model these so the board can make better decisions based on all the relevant information.
The questions the board should be asking the CFO
Day-to-day matters such as VAT deadlines and expense processing belong with the finance team, and board time is better spent on the decisions that shape the direction of the business.
So, these are some of the strategic and operational questions board members need answers to:
How much cash do we have, and how many months does it cover?
What's driving the differences between our results and our budget?
Which clients, products, or services make us money, and do any lose it?
What are the three biggest financial risks to the business right now?
What happens to our cash if revenue falls 20%?
Can we afford our growth plans, and how will we fund them?
What, if anything, should we stop doing?
What, if anything, do we need to start doing?
What if you don't have a CFO?
Most SMEs don't have a CFO, and for good reason. A full-time CFO is expensive, and many growing businesses don’t need one five days a week.
However, this becomes a problem when nobody is doing any CFO-based thinking. The accounts get filed, the payroll runs, and the forward-looking questions go unanswered because they aren’t anyone's responsibility or within their capability.
At Framework, we provide that CFO mentality on a part-time basis in two key ways. We cover cash flow modelling, budgeting, scenario planning, and practical advice on what your numbers mean for the future. And we manage the day-to-day financial operations beneath it. This means that the information reaching your board is accurate and current. It's essentially CFO-level insight at a fraction of the cost of the full-time role.
Give your board the full picture with Framework
If your board reporting looks backwards more than it looks forwards, we can help you change that. Get in touch to discuss bringing strategic financial insight to your board table.
