What’s the Value of an Automotive CFO?

March 7, 2022

And when should you hire vs. outsource the CFO role at your dealership business?

A Chief Financial Officer (CFO) is one of the most important roles in any dealership operation. 

A CFO’s value comes from his or her ability to not only crunch numbers and track budgets, but also to analyze and manage the financial health of a dealership. Your CFO can keep you from spending too much (or too little) in any given area, while keeping your business growing in the right direction.

But many dealerships don’t have a CFO on staff. Many outsource the role to a CFO services provider. While there are many good reasons to have your own CFO in-house, it’s also possible for the costs outweigh the benefits. 

This may be the case if you employ similar team members like an accountant or bookkeeper, if another member of your leadership has some expertise in dealership finances, and/or if your business hasn’t yet reached the size where you need a full-time CFO.

The Value of the CFO role

Whether you hire a CFO at your company or contract a CFO service provider—the value of the role goes beyond simply keeping track of your finances. 

That role is, using high-level financial expertise, to take the numbers on your books and weave them into a financial strategy and vision.

A CFO partners with a dealership’s owner or CEO to achieve business objectives and plan for growth.

The CFO position is multifaceted

Let’s drill down on the specific responsibilities, skills, and benefits of the role. These may include:

  • Detailed financial research, analysis, and strategy
  • Risk management
  • Periodic operating and financial reports
  • Facilitation and insight during mergers & acquisitions
  • Internal controls to prevent fraud
  • Negotiating more favorable terms with suppliers, vendors, and insurers
  • Assuring compliance with all financial regulations
  • Minimizing tax liabilities
  • Scaling finances across multiple rooftops
  • Building relationships with lenders and other funding sources
  • Improving profitability and cash flow

The CFO can identify the financial strengths and weaknesses of your organization. This lets you plan ways to further improve the performance of the profitable elements (and stop the bleeding of the unprofitable ones).

When searching for a CFO, automotive dealership experience is an enormous plus. The many unique aspects of our industry require knowledge that can only be acquired from hands-on experience in the business.

The role of a CFO during an acquisition

If you have an in-house CFO, they can be a valuable member of your team during the acquisition process. The CFO’s financial knowledge can greatly facilitate the acquisition process.

At DCG , we perform our own comprehensive due diligence on any transaction. If you’re working this us and you don’t have an in-house CFO, we’re happy to provide that strategic financial eye. 

It starts with the identification of potential targets, which the CFO can analyze and qualify. They can also take the lead on your team’s due diligence and other financial steps when assessing a potential acquisition. The CFO has the knowledge to uncover any financial red flags and ask the tough questions if issues are revealed in the acquisition target’s books.

They can help determine whether a particular acquisition will enhance your business’s profits without undue risk. Your CFO may also have input into how the deal is structured, keeping the business’ best interests in mind. When the CFO can say that such a deal makes financial sense, it reinforces the CEO’s strategic approach to the acquisition, and makes it much more likely that the rest of the deal will proceed smoothly to a positive conclusion.

In today’s M&A environment of high dealership valuations and fast-moving transactions, a bad deal structure can cost a dealership millions of dollars. The CFO is there to support a successful outcome.

Bringing on a CFO is a major investment

Many small to medium-sized automotive dealerships could use the services of a CFO but may not think that they can afford to hire one full-time. Granted, CFOs tend to receive six-figure salaries and generous benefits packages. Despite this, a good CFO is usually worth every penny.

When to contract a CFO services provider

You may decide that hiring a full-time CFO is not the best move right now for your organization.

If you already have one or more employees in an accountant or bookkeeper role, then a part-time CFO may be just what you need to get your dealership to the next level.

CFO Services with DCG Capital

Our Capital team has extensive experience in the automotive industry, dealing with all financial aspects of the dealership business. CFO Services gives you all of the expertise and strategic guidance that an in-house CFO provides, designed specifically for the unique complexities of your dealership’s operations.

With DCG’s CFO Services, you benefit from an extra set of eyes on your dealership’s finances, ensuring a culture of compliance, a more strategic mindset, and greater peace of mind that your automotive business is growing financially in the right direction.

Contact DCG Capital today to learn more

If you think that your dealership could benefit (and most will), DCG is here to provide you with our expert automotive CFO services. Contact one of our financial specialists for full case data and more information on how DCG’s CFO Services can be your competitive edge.