A chief financial officer (CFO) is a C-level executive who is responsible for managing an organization’s financial functions. Online businesses can only succeed in the corporate world when they create a structured and sustainable financial back office. Before learning what an e-commerce CFO does, you need to know about the traditional role.
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What Is an eCommerce CFO?
E-commerce CFOs assess large amounts of data to ensure the business is on track to meet its goals and collaborate with business owners to devise action plans if targets are not met. Additionally, they work closely with marketing and advertising departments to create financial budgets based on current market trends and statistical analysis, requiring them to stay updated with market changes.
Moreover, an e-commerce CFO conducts competitor analysis to help the business set appropriate pricing models and understand competitor strategies. Their primary responsibility is to handle the brand’s financial aspects, aiming to maximize revenue and minimize unnecessary spending. This role is ideal for individuals who enjoy working with statistics and numbers and seek a dynamic career.
What Does a Traditional CFO Do?
The job description of a CFO is a lot like other financial positions. Their chief duties include advising the executive team on all financially relevant decisions, steering the company in the right direction with meticulous budgeting, analysis of reports, benchmarking, and proactive forecasting.
Data Analysis
A CFO is responsible for presenting and analyzing financial reports accurately and timely. These reports are crucial for employees, creditors, analysts, shareholders, and management. The sensitivity of this information means the CFO must ensure data accuracy, as company decisions depend on these figures.
Executive Advisory
The CFO oversees the financial health of the business, investing wisely while considering liquidity and risks. They manage the capital structure, balancing internal financing, equity, and debt. Addressing capital structure concerns and finding revenue-generating methods are key CFO duties.
Forecasting
Beyond current and historical data, a CFO secures the company’s financial future. They analyze real-time data, identify improvement areas, and determine efficient segments. Using economic forecasting and modeling, they help the organization make informed decisions for long-term success.
The Age of an eCommerce CFO
Today, most organizations use an eCommerce platform. Whether they sell services or products, the online market is growing exponentially and organizations have to adapt to this paradigm shift. Tailoring an organization as per the online landscape is important for continued progression and growth.
Business owners often struggle with the eCommerce space. Hence, they have to hire an eCommerce CFO to manage it. Let’s see how the job of an eCommerce CFO is different from a traditional CFO. If you are looking to become one, consider the following post as a guide for your career path.
Responsibilities Of an eCommerce CFO
An e-commerce CFO always has their hands full, thanks to a wide array of tasks and responsibilities. If you are working as one, here’s what you will need to do.
Develop and Enforce Budget
Budgeting is a primary duty of an e-commerce CFO, involving creating budgets for each organizational area. By studying metrics and data, they identify high ROI potential areas and necessary budget cuts. Key areas include shipping, staff and payroll, marketing/advertising, software costs, office supplies, and tech/equipment.
Data Analysis and Reporting
After implementing budgets, the CFO regularly analyzes data to evaluate what works. They monitor areas of success and those needing changes, adapting budgets to market trends. Key metrics include web traffic, sales, customer discovery sources, visitor demographics, buying journey phases, purchasing trends, and marketing campaign performance.
Financial Risk Assessment
The CFO evaluates financial risks while allocating budgets to various areas. Risks include discounted product sales, failed marketing campaigns, and ineffective influencer marketing. They ensure budgets target high-return, low-risk areas to prevent potential revenue loss and manage financial stability.
Sales Forecasting
Sales forecasting is necessary when it comes to managing an eCommerce business. It enables you to leverage a reliable prediction of upcoming sales and handle your inventory better. With a sales forecast, an eCommerce business gets to make the right decisions that improve both short-term and long-term growth.
eCommerce CFOs come up with long-term and short-term performance after reviewing other competitors, inspecting the economic trends, and studying the historical sales data.
For instance, if you sell HVAC equipment, such as air conditioners, then your target audience is more likely to buy them in the summer season. Based on prior trends and sales data, an eCommerce CFO predicts the company’s profitability in this period. Similarly, they show how you are expected to lose sales in the winter season. These sales forecasts help you to personalize your advertising campaigns and tailor outward spending accordingly.
CFO Skills and Financial Expertise of an E-Commerce CFO
As the top financial professional in a company, CFOs must have extensive knowledge of all aspects of finance, from day-to-day financial management to investor relations. Additionally, e-commerce CFOs must also know e-commerce best practices. Whether you’re hiring a fractional CFO or relying on a full-time CFO, you can expect them to know the following:
Technical Know-How
You must have terrific technical skills required to pursue this career path because your entire profession revolves around technology and software. Hence, you have to gain a basic understanding of website plugins, SEO, website design, spreadsheets, database management, and many more. You will receive various opportunities to build on your skills and learn more on the job, but still, you should have a solid foundation in tech-based skills.
Mathematical and Analytics Skills
A large part of your job is centered on crunching numbers and studying statistics. First things first, you must have the skills needed for data analysis and make conclusions as per your findings. It includes detailed calculations and a great deal of critical thinking. The e-commerce organization depends on you to make predictions for budgeting and trends that are optimal for the company growth. Analytics skills are a lifesaver and enable you to make sense of several business functions.
Organization Skills
As you work with numbers, data, reports, and various software, organizational skills are a must-have. Without proper organization, you can confuse numbers and even lose crucial information. As an e-commerce CFO, you have the freedom to build your own systems to create accurate data reports and effective budgets.
Communication Skills
As an e-commerce CFO, you get to collaborate with many people belonging to different areas of the e-commerce organization. A CFO must interact effectively with individuals they supervise and establish trust and respect. Additionally, you will lead numerous meetings and it is essential to communicate your financial plans and vision to the organization properly.
Decision-Making Skills
As an e-commerce CFO, you have to make a lot of important decisions that decide your organization’s finances. You must have belief in your capability and prowess and make decisions with surety. For that, you will have to build a rapport with your superiors – which is only possible when you demonstrate your skills and prove yourself by not only making rational decisions but also sticking with them.
Strengthen Your Finances With Outsourced CFO Services
The role of a CFO in an e-commerce company is invaluable. From financial strategy to strategic planning, a CFO’s guiding hand can help you grow your business and improve the company’s financial health. With fractional CFO services, you can have the best of both worlds: a part-time CFO that costs less than a full-time CFO but still delivers the same level of financial expertise.
If your e-commerce venture is struggling, contact us. We will help you fulfill the duties of an e-commerce CFO and turn your back office into a profit center.
