Businesses small and large face the same challenges and most of the same requirements relative to bookkeeping, financial management, and reporting. Most of these duties can be handled by a bookkeeping staff for backward looking financials as to how your business performed. They can also handle, with the help of a CPA or accountant, the forward-looking plans for your company relative to taxes and regulatory reporting. Whether due to increases in revenue or size, at some point you will need some additional assistance in managing all your financial matters and making decisions as to financial planning and strategy. This is where a Chief Financial Officer (CFO) becomes an asset and should be consulted.
A CFO manages all the bookkeeping and financial reporting but also provides an analysis of your situation, internally, and externally relative to your competitors. This type of analysis is indispensible when planning the direction you want to take your business in the market or relative to production levels or even the type of products to emphasize.
Can I Afford A CFO?
The big question is, can you afford a CFO? A CFO can be relatively expensive with annual compensation packages of $250,000 or more, depending on experience, your business, and your location. The question you really need to consider is that you may already be spending that money in lost profits, badly spent funds, and other deficiencies a CFO could correct.
Do I Need a Full Time CFO?
Your revenue does need to be robust enough to afford, and need, a full time CFO. If you are a small company, you will probably be better off with a part-time CFO as an adviser to work with your bookkeeper, accountant, and/or controller. A rule of thumb is that if your annual revenue is less than $20 to $25 million dollars, you should use this “contract CFO” model. If you don’t have a CFO, you can contract for these services from outside firms. They will get the assistance you need to get the most strategic value from your CFO position.
If your annual revenue is higher than $50 million you definitely need a CFO and you probably don’t need anyone to tell you that. If you don’t have one at that level of revenue and operations you should look into hiring one immediately!
If you need a less than full time CFO, or some coaching for your current staff, help is available through the use of outside CFO services from firms such as Customone CFO & Controllers. Their financial professionals can supplement and provide guidance to internal CFOs or help you find the CFO you need.