Creating a solid financial foundation that will set your company up for future success is a vital part of building a business. No one is better at making sure that happens than an experienced CFO, but for many business owners hiring a full-time CFO either is not feasible or is not something the company is ready to take on. An established company that has recently lost its CFO or is in transition may need someone to fill the gap.
An interim CFO is a logical solution that will give your company all of the experience and knowledge of someone who has been in the business a long time without the difficulties of bringing in someone full-time before you’re ready. It will also give you someone with more experience than you might be able to afford when paying a full-time salary.
What an Interim CFO Does
Like a full-time hire, an interim CFO will create a financial plan for your business that looks to the future. Outsourced CFOs bring to the table years of financial experience that allow them to see the big picture for your business and create financial forecasts to determine what you need to do today to reach tomorrow’s goals.
An interim CFO will create budgets and cash flow projections that will help you make smart financial decisions. Since they are used to dealing with a variety of different business and industries as well as working in a temporary capacity, interim CFOs are experts at getting in, getting things in order, and making sure you have a solid base to work from until you are ready to bring someone on full time, whether that is six months or six years. You can expect to work with a professional for as long as needed. In fact, often times the interim CFO becomes a “permanent” part-time CFO because the cost is right to leave him/her in place rather than hire full time.
For companies that have recently lost a full-time CFO, an interim person in the position can keep the ship sailing smoothly until you find the right person to hire full-time. They can also deal with the unique financial challenges of companies facing big transitions, such as help with a merger, acquisition or an IPO that may disrupt the normal business flow or take away too much time from existing staff. In fact, often times, the Interim CFO takes over the “normal” duties so that the existing staff can work on the project with other senior management. In that way there is no catch up work to do.
Experience to Look For
One of the biggest benefits of hiring an interim CFO is that you will get someone with a breadth of experience – something that will be harder to find in a full-time hire. Most outsourced financial experts have seen a lot of different types of companies and have solved a wide variety of issues, more than someone who has been in the same industry or working at the same company for many years.
In fact, looking only to someone with experience in your particular industry might eliminate some candidates that can bring in much needed change. A fresh set of eyes often causes questions and probing that yields positive results. However, if you do hire someone without your specific industry experience, make sure they have the tools and abilities to catch on quickly. One or two month-end closes should do it as the real difference in industries from a finance standpoint is usually only revenue recognition. After all cash is cash, receivable are receivables, payroll is payroll, rent is rent, etc. regardless of industry.
It is a good idea to ask what other companies they have worked with and how many years they have been working as a CFO. The greatest gift an outsourced financial expert brings to the table is a high level of experience, so look for someone who has been around the block. Specific situations often call for the need for specific experience more so than industry expertise. Experience in Mergers and Acquisitions or converting corporate structure through the sale to an ESOP (employee stock ownership plan) or taking a company public (IPO) are all good examples of situational experience that is a must.
Your Company’s Challenges
The first things a good interim CFO will do are:
- Ask what managements goals are. Where do they want this Company to be in the near, mid and long term.
- Assess where the Company is currently and if they are on course or not to the stated objectives.
- Determine what particular challenges lie ahead for your business to either get back on track or continue on the desired path.
A good CFO sees the challenges that will arise down the road based on management’s plan and the assessment of where the Company is currently and creates a plan today to handle them as they will arise in the future.
When you are hiring someone to come take the financial helm for a while, make sure they have the experience to recognize the challenges facing the business currently as well as future concerns and can formulate an approach to them. It should become clear in the consultation stage of outsourcing that you’re sitting down with the right person – or if you are not.
It is a good idea to have a basic idea of what you expect the challenges to be and what you need from the CFO you’re bringing in before you start your search, however, the right person should be able to see even more clearly than you do what plans will need to be laid. That is what experience in the financial world brings to the table for your business.
Hiring an outsourced CFO is a cost-effective solution for businesses that are growing. But an interim CFO is more than just a stopgap solution. The right person will help you lead your company to a better financial position and lay a foundation for future growth. Contact Your CFO Solutions for more information.