The role of the Finance Business Partner – External Chief Financial Officer

Financial control of business management is a fundamental tool for understanding how the company is performing, what factors determine business profitability, and which management levers should be activated to implement your strategies.

Financial control is usually entrusted to the Chief Financial Officer or CFO. Among their responsibilities, we can list the following activities:
- preparing the company budget;
- monitoring variances;
- periodic preparation of forecasts;
- profitability analysis of various profit centers;
- cost analysis;
- management of the balance sheet liabilities;
- management of extraordinary finance operations;
- liquidity management;
- design and configuration of the company reporting system;
- definition of the cost allocation system (Activity Based Costing);
- ad hoc analyses to support strategy;
- what-if analysis;
- auditing of the reporting system.

In small and medium-sized companies, the role of CFO is often absent. The company organization chart may include an administrative manager, who also prepares the financial statements, but whose skills rarely extend to the above-listed activities.
This does not happen due to a lack of foresight by top management, but because the small size of the management structure and the amount of financial resources allocated to executive compensation do not justify hiring a full-time CFO. Moreover, sometimes, the small size, the lack of certain types of benefits, and limited national and international visibility make it difficult to attract highly qualified resources.

How can this problem be solved and provide SMEs with the managerial resources needed to build lasting success?

A solution that is becoming increasingly popular is to use an external CFO, also known as a Finance Business Partner (FBP).
An FBP is simply an external professional with skills comparable to those of an internal CFO, who assists company management by performing CFO activities. However, since they are external to the company, their involvement is managed with great flexibility, allowing the company to reduce costs. In fact, the company acquires the specialist skills of a CFO without paying them full time, but only for the time actually dedicated to the company.
The so-called “idle time” is not paid, as the professional divides their time among several client companies. On the contrary, the professional’s intervention is tailored to the actual needs of the company.

Using the support of an external Finance Business Partner is one of the components of a flexible and SMART business approach. According to this approach, the company has a greater chance of building lasting success by using its resources where they are most needed and to the necessary extent, without setting up often redundant capacity, but at the same time without giving up acquiring specialist skills when needed. By using an FBP, a company equips itself with specialist resources without creating “idle capacity,” and can direct its resources to other value-generating activities.