How to Hire an Interim CFO

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Big financial decisions can sneak up on you- when you’re not prepared to make an informed decision.

 

If you’re gone through the process of starting a business and your company has grown, you’ll need some financial help eventually.

 

Finding an interim CFO to consult with you on important business issues can be a lifesaver. So, before it’s urgent, use this answer to understand what a CFO does, and how to find a consulting CFO who can help your business get to the next level.

 

Growth is Exciting

 

Growing your business is exciting, and it validates your product or service idea. Starting a new product line, bringing on a big client, and adding new locations will energize you and your team- but you also have decisions to make.

And those decisions may be beyond your capabilities.

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Here are several reasons why you may need the help of a CFO:

 

When an Interim CFO May Be Necessary

 

Before you can make a decision on a CFO, keep in mind that a bookkeeper posts business transactions, and that an accountant handles more complex accounting work and reviews the bookkeeper’s activity. As your firm grows, payroll, inventory and other accounting areas will become more complex.

 

A CFO manages the entire accounting function, including the preparation of financial statements.

 

You may start by having a CFO review your monthly accounting records, and ask for help interpreting your financial results. A CFO with industry experience can give you some key metrics and ratios to assess your business results.

 

If, for example, you are a retailer and carry inventory, a CFO may suggest looking at days sales of inventory as a metric to track the amount of available cash that is tied up in inventory.

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Here are some other ways that a CFO can help you make better decisions:

 

  • Efficiency: You need experts to perform some of your accounting work, in order to operate more efficiently. Say, for example, that sale growth requires you to issue 150 invoices in May, rather than the typical 45. You need an expert to help you work more efficiently.

 

  • Find capital: Many owners eventually need to find sources of capital, in order to grow the business. You may raise capital by issuing stock to investors, or by borrowing money from a bank. Both stock investors and creditors will require a set of audited financial statements prepared by an accounting firm.

 

  • Preparing for sale: You’ll need to have a variety of accounting records in place before a company sale can be completed, and a CFO can help you identify the records that you need, and to prepare any records that are missing.

 

Generally speaking, an interim CFO can install operational and financial systems, and create a budgeting process that includes annual forecasts for sales, production, and cash flow.

 

Most important, your CFO is a trusted advisor- someone who can help you make the most important financial decisions in your business.

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How to Find Your CFO

 

You may be surprised just how valuable a good CFO is, and how many people will be happy to refer a talented CFO to you. Here are some sources you can tap to find an interim CFO:

 

  • Friends, business peers: In addition to asking friends, you can find a CFO candidate by asking other people in your industry. Maybe an industry contact hired an interim CFO before taking on a full-time CFO, for example.

 

  • Attorney, accounting firms contacts: These professionals deal with CFOs all the time. Attorneys work with CFOs on contracts and business transactions, and accounting firms work with their customer’s CFOs on audit, tax returns, and consulting work.

 

  • University with start up incubators: Incubators are created to help startup firms launch businesses, and these companies need interim CFOs. Check with universities in your area.

 

Work your contacts until you find 2-3 CFOs who may be candidates for your firm.

 

 

Finding the Right Person

 

Interview each CFO, and ask them if they have experience in your particular industry. It’s also important to find out about their availability, and if they can be responsive to your needs.

 

Use these tips to find an interim CFO who can help you grow your business on a part-time basis.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(amazon author page) amazon.com/author/kenboyd

(website and blog) https://www.accountingaccidentally.com/

Image: Andrew Neel

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