When Should You Hire A Part-Time CFO?
As a business expands, controlling its finances and driving its operations forward become more complicated. From identifying key financial opportunities to managing accounts, suffice to say that even the smallest task can seem very overwhelming. At some point in your journey, you will need to hire a professional who can focus on your financial position. This is where a chief financial officer (CFO) can step in and steer your business in the right direction.
What is a Part-time CFO?
A part-time CFO is a finance expert who manages a company’s financial strategy, financial statements, cash flow, and other money-related activities part-time. These experts work alongside the CEO, offer appropriate financial advice, and identify potential financial opportunities or threats.
What Does a Part-time CFO Do?
An part-time CFO can help you in several ways. These include:
Transactional and Accounting Support
CFOs monitor payroll as well as accounts payables and receivables, ensuring that they are up-to-date, accurate, and paid on time. Moreover, they maintain error-free financial statements that align with the reporting standards and offer advice on optimising cash flow.
Part-time CFOs assist small businesses with cash and budget planning to easily balance the company’s income and expenses. These financial statements compare the real performance of the business with the expected performance to understand the gaps and mistakes.
Similarly, outsourced CFO services also make Profit and Loss budgets and tally them with real expenses and income. Analysing these accounts can help them properly understand business purchases, expenses, sales, or any other pricing issues that may occur. This ultimately helps maximise resource utilisation and minimises room for errors.
Part-time CFOS help prepare a business for upcoming financial challenges. They also identify and take advantage of their income streams and ensure the accounts are updated per the latest regulations.
Tax Assistance and Legal Compliance
One key elements of a part-time CFO service is to ensure that your business closely follows the law and other tax regulations. These service providers allow your company to design and implement systems for gathering tax data to maintain tax compliance activities. Additionally, they also evaluate it so that the business never skips a deadline related to tax filing.
When to Hire a Part-time CFO?
Deciding when to hire a CFO can be tricky business. If you hire one too soon, you may not be able to afford them. On the other hand, if you hire too late, you may miss out on important opportunities to flourish your business.
Normally, companies hire CFOs when they earn a certain amount of income, usually in the millions. Hiring a full-time CFO can be very expensive if you own a small business. A good alternative to this issue is to hire part-time CFO services to maximise savings as well as financial efficiency. Listed below are some situations where you should hire a part-time CFO.
To Complete a Short-term Project
Businesses experience spikes and dips throughout their lifespan. You could benefit from a part-time CFO when your financial activity is booming and you require an extra helping hand. These experts also allow you to determine your scope of work, nature of engagement, and working hours.
Depending on your company’s needs, you can hire a part-time CFO on an hourly, weekly, monthly, or project basis. You can also customise which areas of finance and accounting you need help with and discuss your budget with them.
To Maximise Business Efficiency
You can never say no to improved business efficiency as a business owner or manager. If you want to make better decisions, you will need to have a solid understanding of your company’s finances. A part-time CFO can use their knowledge and expertise to guide you regarding money-saving and business-growing tips for overall growth.
To reinforce your Company’s Image
If you plan to expand your business, you will probably require funding from banks and investors. In such a scenario, you will need to put forth a solid financial plan your company. A part-time CFO can identify your company’s weak areas and create a long term financial strategy. This will help assure bank loan officers and private funders that your organisation is financially responsible.
To Attract Potential Buyers
If you plan to sell your business, you will need to understand and optimise areas of your company. These areas can include financial reporting, planning, and overall fiscal strategy. Virtual CFO services can help you successfully handle these changes and get your organisation looking financially strong to attract buyers.
To Overcome Operational Hiccups
Sometimes, you can benefit from an interim CFO if you feel things are not going according to plan. It could be that your accountant is always overwhelmed, or your financial statements never tally. Or perhaps something always ends up wrong, or you have to take care of multiple audit adjustments every year.
If you feel like your company’s financial standing is wavering, it is best to hire a CFO on a part-time basis. Doing so will allow you to figure out the root of the issue and prepare yourself for future threats and opportunities.
To File Documentation for Tax Audits
Tax audits can be scary, and businesses must be fully prepared with appropriate documents to avoid unnecessary complications. Before audit season approaches, you can hire a part-time CFO to assist you with the required documents to file taxes. They will also provide you with the support you may need during an audit. These types of support can include answering your questions, pointing out errors, recommending changes to your financial statements, etc.
To Work under a Budget
Small businesses may have difficulty hiring a full-time CFO due to the substantial costs involved. This is because full-time CFOs charge based on the number of hours they work per day. Moreover, they require a separate office, employee benefits, and other expenses such as insurance, office equipment, etc. All this can add up to be very costly, especially if you are under a tight budget.
On the other hand, you can hire a part-time CFO on a short-term basis, lowering your costs significantly. Plus, you won’t have to worry about the additional expenses that come with hiring a full-time employee.
Qualities to Look for in a Part-time CFO
- Money management – When hiring part-time CFO services, check if the provider has good money management skills and a solid understanding of your industry.
- Relevant degree and experience – A part-time CFO must have a degree in accounting or finance and relevant experience specific to your industry.
- Trustworthy and logical – Logic is the quintessential quality for becoming a professional CFO since they oversee a company’s financial aspects. Moreover, since companies cannot depend on a deceitful person, trustworthiness is also crucial.
- Leadership skills – a part-time CFO will need to communicate with other team members and convey important information to the managers and owners. A CFO must possess strong leadership capabilities to carry out these tasks effectively.
- Transparent pricing – You don’t want to deal with a part-time CFO who quotes a new price whenever you discuss payment options. Be sure to discuss the pricing policy in advance and steer clear of providers with hidden costs. This will save you a lot of stress in the future.
A part-time CFO can be a great addition to your company, maximising its overall efficiency without breaking the bank. If you were wondering about when to hire interim CFO services, now you know. Be sure to thoroughly research and background check before hiring an interim CFO, and study their services carefully.