No matter what size, your company can benefit from the services of a Chief Financial Officer (CFO). A CFO helps your firm organize its finances, and track performance. His (or her) job is different from that of an accountant who often only concerns himself (or herself) with the taxes, and sometimes the payroll.
The New York Times recommends that businesses earning more than $10 million in annual revenues should seek a CFO. For large firms, the financial reporting requirements are too complex to be handled by the Chief Executive Officer alone. Even if the CEO possesses super-human abilities, CFO services can bring the ability to keep data and strategy under control.
Forbes goes a step further. The magazine encourages small- and medium-size businesses to get CFO services to help them interpret financial results, acquire capital, and undertake cost control measures. CFO services for Small and Medium Businesses also increase their effectiveness in dealing with banks, shareholders, and government regulators.
The advice sounds good on paper, almost impossible to not follow. But few businesses have a full-time or a part-time CFO on their payroll. With the median compensation for a CFO a shade less than $316,000 a year, most firms cannot afford in-house CFO services.
That does not mean they cannot benefit from strategic planning, risk management, financial forecasting, or cash flow modeling. They can, and most of them will if they have the resource to hire and keep a CFO. This said money is not everything.
Finance grows in complexity; from simple bookkeeping into a more complicated monster as your company grows. That means you will need a CFO who can and is willing, to dig deep. Few companies have the skill set to recognize such a person.
Four Ways Businesses Trip When Hiring an In-House CFO
It’s easier to fail than succeed in hiring an in-house CFO.
- Run an Ad on a Job Board. Job boards are a popular way to recruit employees. They are effective if you are looking for, let’s say, a secretary or a salesperson. But when it comes to highly-skilled jobs, the best practice is to use a referral network. There are several ways to do that. One method is to team up with a recruiting firm that specializes in your vertical.
- Hiring a Candidate like You. Are you good at number crunching? Good! But hiring another number cruncher is unlikely to result in a productivity increase. A smarter method will be to find someone who complements your skills. For instance, you can find a CFO who is good at numbers as well as language. That will complement your skills, and help your firm grow.
- Filling the Wrong Role. Because CFO is such a trendy term nowadays, almost each firm, that can afford one, wants one onboard. Wants are not needs. Do not make the mistake of hiring a CFO when you need an accountant or a financial analyst. Create a list of duties, and compare them with the responsibilities of a typical CFO before starting recruitment.
- Recruiting on a Reflex. As much as you like your current CFO, your new CFO does not have to be like him or her. The chances are high that the position has grown in requirements. When you are seeking a replacement, find a CFO who is capable of fulfilling the new profile’s criteria.
Outsource CFO Services to Save Money
Outsourcing your accounting services can lead to higher-quality services from a team of experts for a fraction of the cost. In fact, we wrote a post on exactly this topic in July. Click here to visit Outsourcing Your Accounting Functions Will Save Your Company Cash.
Other Benefits of Outsourcing CFO Services
Financial Expertise – You can tap into financial expertise that might not be currently available in your firm.
Accurate and Effective Financial Decisions – By leveraging an external CFO, you can gain all the benefits of CFO services—such as minimizing expenditure and expediting growth—without spending a fortune.
Strategic Planning – Professional, outsourced CFO services go beyond simple finance solutions. They deliver detailed insights that allow the decision makers in your company to optimize growth plans.
Takeaway – Your firm can benefit from CFO services without the bill that comes with it. We can help you.
At CFO Strategies, we collaborate with you to gain a thorough understanding of your firm and its goals before delivering CFO services tailored uniquely to your situation.