Hiring a CFO is no easy task. Make the right choice the first time by learning key skills, services, benefits and costs to hiring.
The long-term success and financial health of companies are increasingly hinged on the CFO (Chief Financial Officer). A KPMG survey revealed that the CFO is the most important C-suite role in the U.S. and Canada.
As the CFO’s role continues to expand into that of a business strategist, finding the right fit for your organization is more important than ever.
In order for a CFO to effectively help shape business transformation and drive an organization forward, he or she must have the right set of skills or qualifications. But filling the position is a daunting task with “make or break” implications to a company. For this reason, our guide on hiring a CFO offers experiential tips on how to ensure you position your company for success by hiring the best person for the job.
What are the qualifications or skills of a good CFO?
CFO's are in charge of all aspects of a business's financial strategy and well-being. They play a pivotal role in a management team and provide the financial guidance to fuel growth.
To be effective, this requires a common skill set for virtually every CFO role. For example, an ideal candidate is competent in accounting and finance, is a strategic thinker, is committed to the mission of the organization, is a good communicator, has a creative approach to problem-solving and is able to relay sometimes complex financial concepts in ways everyone can understand. At a minimum, a good CFO should be a partner with the leadership team.
Other aspects of the CFO job description vary according to an organization’s specific needs or industry. At a minimum, they are responsible for a number of tasks including reporting, taxes, cash flow and financial planning. However, CFO roles are increasingly expanding beyond fundamental finance qualifications.
The modern CFO must hone other skills to thrive in today’s and tomorrow’s business landscape. This includes:
- Strong leadership skills to drive transformation programs, act as the financial voice of reason, and give counsel as the business executes on its initiatives or strategies.
- Ensuring an organization’s compliance with applicable legal/regulatory requirements. This is a balance between maintaining internal controls and mitigating risks in the increasingly volatile external business environment.
- An understanding of the global market, the organization’s industry, and the business model. A good CFO should be able to identify emerging opportunities, provide analytics to drive action, and help in decision-making.
What is the average salary of a CFO?
The average salary of a CFO varies based on personal qualifications of the individual, work experience, geographic location, and applicable bonuses, among other factors. As a point of reference, Salary.com estimates that a Chief Financial Officer in the U.S. takes home $395,882 as of March 2021—excluding retirement, healthcare benefits, and bonuses.
If you’re a small or mid-sized business, or a company in the growth stage, it’s clear that hiring a full-time CFO is an expensive endeavor. In such a case, outsourcing a CFO—rather than hiring a full-time employee—is increasingly in demand.
Outsourced CFOs characteristically cost far much less than regular employees and they often boast of wide-reaching experience in different industries and organizations. You get to forego sick leaves, health insurance, travel allowance, and other benefits that full-time employees are entitled to. The salary of an outsourced CFO is generally based on the scope of services offered.
Interim, part-time or fractional: what type of CFO is right for you?
CFOs can be divided into three broad categories: full-time (permanent) and part-time or fractional. The latter of which can be remote (virtual) or outsourced positions. As more companies move to remote and flexible workplaces, these titles are increasingly interchangeable but often broken out as so:
A fractional CFO is a finance expert who provides his or her services on an ongoing part-time basis, e.g., a fraction of a full-time employee. This can be either on a contracted basis or on a retainer. They come in for a few hours or days to offer their insight and expertise. A fractional CFO typically provide similar services to multiple clients—hence the brief time allocated to each company.
A good fractional CFO can transform startups or businesses in the growth stage by helping them think strategically, building cash-flow models, and offering industry advice.
Interim CFOs often come in to help steer an organization through a delicate process. This may include a financial crisis, preparation for a merger/acquisition, departure of the previous CFO, an operations change, or when the existing CFO lacks the necessary experience.
Interim CFOs work full-time for a defined period (around 3 months)—and they usually work with mid-sized or large companies when there’s a catalyst.
In a nutshell, a virtual CFO handles all the activities of a traditional CFO—only remotely rather than in-person. They leverage cloud and other technologies to monitor and offer guidance on the financial health of a business.
Related reading: Controller or CFO: Which is Right for Your Business?
When is the best time to hire a CFO?
Most companies do not start with a CFO on staff. However, having financial guidance from an industry professional will help you grow your business. When is the right time to hire a CFO?
Most organizations that utilize outsourced CFOs are at a pivotal point in their growth where they need the extra expertise but are not in a place to hire someone full time. These growth points could include:
- Cash flow issues
- Outgrowing existing systems/operations
- Raising capital
- Preparing for growth
- Fine-tuning strategy
Most business owners wear many hats, but there is often a lack of time or knowledge to be able to maintain the finance department at optimum performance. Having some or all of your financial needs outsourced to experts can not only free up your time but also give you critical information for your business.
In fact, hiring a CFO consultant can revolutionize your operations, ensure you're within budget constraints, and help your business stay ahead of the competition.
Looking for outsourced CFOs to fill the knowledge gap in your company? As the term implies, outsourced CFOs are professionals who offer their financial strategy services on a part-time or project basis. You get the necessary experience and expertise to steer your businesses forward without the hassle or costs of a long-term commitment. But how do you know when hiring an outsourced CFO is right for your business?
If your answer is yes to any of the following questions, you may benefit from outsourced CFO services:
- Do your budget constraints prevent you from meeting the hefty compensation requirements of full-time CFOs?
- Are you occasionally (e.g., a few times a month) in need of financial strategy services?
- Concerned over making a long-term commitment with the wrong candidate?
- Are your business finances in turmoil? Looking for a quick and effective solution to get your affairs in order?
Regardless of the stage of your business, outsourced CFOs could help you take considerable strides with their actionable recommendations. Interested in learning how? Contact Focused Energy today.