The most precious asset in any rapidly growing company is the talent you hire. In particular, your accounting and finance talent must be exceptional, and at some point, you’ll want to hire a Chief Financial Officer (CFO).
How do you know when you’re ready?
First, a thriving business does not necessarily mean you have reached the growth thresholds where hiring a CFO is the right decision. Their salary and other costs may not outweigh the benefits yet. Per one study, you will want to achieve at least one of the following before considering adding an executive to your team:
- Annual revenues exceeding $25 million
- Annual revenue growth exceeding 111%
- Retaining a 100-employee roster
However, if your business has not yet reached the above or needs financial guidance, other roles and solutions are covered below, like hiring a part-time CFO. And pursuing these alternatives can help you grow to where a CFO becomes necessary much quicker.
Know When Should You Hire a CFO — and Why
The CEO is an asset to firms needing sound money management processes, evaluations, and direction. Here are some expected benefits of having a CFO:
- Business model evaluation. The CFO can evaluate your proposed business model if expansion is in your future.
- Cost structure analysis. Having a financial officer on your team makes it possible to know the actual cost of servicing customers — and what to charge for those services.
- Financial reporting. Of course, you’re reporting your profits and paying taxes, but what about all other reporting requirements, such as principal and interest payments on bank loans or investor profits? Again, the CFO handles these.
- Compliance with regulations. The CFO is familiar with your industry and its many regulations, including tariffs, fees, and other governing rules.
The CFO’s service can be invaluable.
The Cost to Your Organization
How much should you pay for this expertise? The CFO’s salary may vary depending on education and certifications, experience, and work location. The average annual CFO salary in the US is $141,635, ranging from $82,000 to $242,000. You’ll need to offer more than a paycheck. Many CFOs also receive:
- Healthcare (medical, dental) benefits
- PTO (paid time off) days that include personal, wellness, and vacation days
- Reimbursements for mobile phones and professional development
- Retirement account contributions
- Stock options, bonuses, and other incentives
As costly as it may seem to bring on a CFO, especially if you’re a start-up company, the cost of NOT hiring a CFO could be devastating.
For this reason, some companies hire part-time CFOs who can help with specific projects, such as forecasting or preparing for an audit. These fractional CFOs work on retainer or seasonally, providing the temporary support you need until you’re ready to open up a full-time position.
If your company has reached the level to need financial guidance, start putting together a list of the accounting needs you want to be addressed. Not sure what responsibilities are covered by a CFO for your company – or when should you hire a CFO? Talk with a recruiter.
We know the best talent in the field and we know the marketplace. Make your next hire a great one by leveraging our knowledge and experience. Contact us to make your next move.