What to Know About When and Why to Hire a CFO

In operating a small business you are continually required to evaluate your financial status to gauge your performance against plan and plan for future operations. Most business owners realize the need for accurate financial statements and have bookkeeping staff or controllers/CPAs. But these roles are backward-looking positions that record data and produced financial statements for your purposes. A Chief Financial Officer (CFO), however, manages the functions of the accounting services and manages the production of financial statements. In addition, the CFO also uses his or her expertise to analyze those statements to identify and report on key metrics for your business so that the business owner can make better decisions on internal operations and market strategy. The CFO is a great help in looking at strategy and managing daily cash flow so the business owner can work on other matters. The question is when do you need a CFO and can you afford one?

When Do I Need a CFO?

In general, if you are working on cash flow issues on a regular basis and spending a lot of time deciding which vendors to pay, taxes, finance (loans, investment) and compliance, you could use a CFO. If your business is failing to hit revenue goals and your margins and profitability are inadequate, you need a CFO.

Can I Afford A 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 advisor 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 with from CustomOne CFO & Controllers, They will get the assistance you need to get the most strategic value from your CFO position. You definitely need a CFO if your annual revenue is higher than $50 million. But can you afford a CFO? 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. A CFO can be relatively expensive with annual compensation packages of $250,000 or more, depending on experience and your location. 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.