when to hire a cfo


When to Hire a CFO: 3 Signs It’s Time


The benefits of a CFO are endless. Helping companies focus on not only quality control, compliance, and business planning but process changes as well as influencing financial strategies. However, while companies may want to hire a CFO to take their company to that next level, many tend to question whether it is the right time for their business to invest in this position.


To help you with these concerns, we have prepared this guide, where we will go over the three signs that indicate it’s time to hire a CFO.


What Does a CFO Do?


A chief financial officer (CFO) is usually a senior executive who holds the top financial spot in an organization, meaning they are responsible for managing the company’s financial activities. These CFOs are generally in charge of financial planning, analyzing a company’s economic weaknesses and strengths, tracking the company’s cash flow, and working on the strategic directions the organization should take. 


What Can They Do That a COO Who’s “Good With Numbers” Can’t?


Although the chief operating officer (COO) and the CFO are two critical executive roles in an organization, when it comes to the day-to-day operations of a company, there are specific tasks that even a COO who’s “good with numbers” can’t do.


For instance, because the COO concentrates on daily business activities and is responsible for the company’s employees and general operations management, they usually cannot focus on the company’s overall finances as much as a CFO can. 


That is why CFOs are usually responsible for:

  • Predicting and evaluating financial risks and identifying how to minimize or avoid their impact
  • Creating summaries of a company’s earnings and expenses so they can make accurate financial decisions
  • Understanding the legal regulations and using them to make financial decisions


Consequently, even if a COO is good with numbers, they often cannot handle a CFO’s specific tasks.


At What Stage of Growth Does a CFO Make Sense?


In general, when a company is going through rapid growth, it is a good indication that it may be time to bring in a CFO. This is often because rapid growth means that the company will require more capital and financing and may need an expansion of its automated systems. As a result, most companies will need the services of a CFO when their annual revenue reaches at least one million dollars


However, when a young company goes through this type of growth, there are many arguments about whether a CFO is necessary. Some may argue that this financial expert can help satisfy the company’s needs and bring a deeper and more strategic financial perspective to help the company prepare for the future, while others believe it is an unnecessary expense.


Consequently, when a company is in the earlier stages of its lifecycle, a CFO will usually not be a top priority. However, if the business continues to grow, a CFO will be pivotal in helping the company expand and reach its financial potential. 


What Should I Look for When Looking for a CFO?


Although a company may know when to hire a CFO, they may not know exactly what they are looking for in terms of the ideal CFO candidate. However, while each company will have its own unique needs when it comes to this role, in general, some of the most common qualifications a successful CFO should possess include the following:


  • The ability to be a leader
  • A good understanding of the company’s industry, not just the financial aspects
  • Reliability
  • Great communication skills
  • A significant range of financial knowledge, including strategy and innovation skills, problem-solving skills, and risk management skills
  • A good fit in the company’s culture
  • Forward-thinking


However, as mentioned above, while a CFO can help your company reach new goals and provide the organization with numerous benefits, a full-time CFO may not be the best option, especially for start-ups. Fortunately, fractional CFOs may be the answer.


3 Signs It’s Time for a Fractional CFO


If you are thinking it’s time to bring in a CFO but are not sure if the company is ready to commit completely to this decision, a fractional CFO may be a great alternative.


Consider the following indicators of why outsourcing a fractional CFO may be the ideal solution:


  • Your Company is Growing Rapidly or About to Make Big Decisions


If your company is growing quickly, is thinking about bringing on investors, or there are significant financial decisions ahead, it may be time to bring in an outside perspective to make sure these decisions are the right choice for your company.


A fractional CFO can help you with these decisions, determine which course of action is best for the organization and provide everyone with a fresh viewpoint to clear up any confusion.


  • You Want a Better Understanding of Your Financials


Although you may have a good grasp of your bookkeeping and accounting, if you want to better understand your overall financials and what to do in the future, a fractional CFO can help you figure out how well your company is doing and the things you should change.


  • You Need a Leader to Communicate With Others


If your business needs a leader to communicate your overall performance to investors, partners, and even shareholders, it may be best to bring in an outside expert to analyze how well your company is doing and what the financials indicate. 


Figure Out if a Fractional CFO is Right for You – Contact hiline Today


If your company needs an executive-level manager with the know-how and a fresh perspective, but you are unwilling or unable to make this position a full-time staple, it might be time to hire a part-time CFO. And we’re here to help. 


To learn more about this option, contact Hiline today and see if this is the right choice for you.