Laser focus on finance aids farms with plans to grow
If your farm is in growth mode, now might be the time to expand your management team to include a chief financial officer (CFO). Although duties can overlap, a CFO is different than an office manager, controller or bookkeeper.
“The difference is the level of skill and responsibility focus in the business,” explains Dick Wittman, a producer from Culdesac, Idaho, who is also a farm financial consultant. “A bookkeeper provides numbers, but a CFO analyzes them and helps guide decision-making.”
Endless Advantages. Such review gives producers timely access to the operation’s financial performance and other key operating metrics, Wittman explains. The information helps farmers identify the right time to expand their land base, determine whether equipment is fully optimized and assess resource allocation.
For the De Jongs of Hartley, Texas, the CFO position evolved out of necessity. Donald De Jong is owner and CEO of AgriVision Farm Management, LLC, which manages and produces feed grains and forages on 38,000 acres, and Natural Prairie Dairy, one of the nation’s largest family-owned organic dairies. His wife, Cheri, is the operation’s CFO.
During the last 25 years, the De Jongs’ operation has grown and progressed steadily. “We needed specialized and intentional management,” Donald notes. “As you grow, you have to learn to delegate.”
Cheri holds a master’s in business administration as well as a degree in agribusiness management.
“With a business our size, you need to know the pulse of the business at all times,” she says.
Laser focus on numbers also enhances competitiveness. “We now spend our time worrying about things we can control, not the things we can’t,” Donald adds.
Fill Your Needs. Not every operation is complex enough to need a full-time CFO. “Determine how much horsepower you need and how many hours the position should involve,” Wittman recommends.
Look for someone with a well-rounded business background who can read and understand financial statements and ratios, Cheri says.
Develop a Job Description For Your Chief Financial Officer
The primary role of a chief financial officer (CFO) is to oversee financial management for an operation and help others on the management team optimize decisions, says Dick Wittman, Idaho producer and president of Wittman Consulting. Below are a few specific responsibilities your new hire should tackle. Download Wittman’s pro forma example of a fully-loaded CFO job description at www.WittmanConsulting.com.
- Oversee systems design and staff operations for payment of bills, collection of accounts receivable, records storage and banking responsibilities.
- Prepare monthly and annual financial reports that are appropriate for executives, including the board, management and responsibility center managers.
- Provide interpretation and opinions concerning financial performance compared to key financial goals.
- Provide financial expertise and support to owners in estate plan implementation (including items such as wills, stock buyouts and payments) and assist in implementation of business ownership transfers, capital investments and withdrawals of equity.
- Serve as primary liaison with business accountant on preparation of state and federal income tax returns.
- Arrange loans for operating and capital purposes.