If your company is maturing, you may be wondering if it’s time to obtain the services of a Chief Financial Officer (CFO).

This is often a difficult question to answer. In addition, the decision you make is vital in taking your company forward successfully. If you hire a CFO too soon, it may be difficult to afford their services. If you hire a CFO too late, the progression of your company can be adversely affected. We will help you understand the traditional path of hiring a CFO and why you also need to consider the specifics of your company’s position before you make your hiring decision.

Traditional CFO hiring path

Usually, you will initially hire a fractional CFO as your company grows and you achieve revenue of between $1 million and $10 million. Their role is to manage the company’s bookkeeping and accounting teams. Fractional CFOs normally complete the role for up to two days per week.

If your company is at this point in its journey, hiring a fractional CFO may be the correct decision. Some start-ups find it advantageous to acquire CFO fractional services before revenue reaches $1 million because they are growing significantly. We will discuss this in more detail later in this article.

As a company’s turnover increases to $10-20 million, there is usually an increased financial control requirement. This requirement often necessitates enlisting the services of a part-time or fractional CFO for two or three days per week.

By the time a company’s turnover reaches $20-50 million upwards, there is usually a need for a full-time CFO. In some cases, this need occurs earlier in a company’s journey.

In fact, while the traditional CFO hiring path is well-trodden, it does not apply to all companies. In your case, you may find that your business requires a full-time CFO at an earlier point than is normal. For example, exponential growth may be anticipated.

We will now look in more detail at factors like this, which forward-thinking companies consider when making CFO hiring decisions.

Factors determining when you should hire a CFO

Several factors help determine whether your company requires the services of a CFO when considered alongside the normal CFO hiring path. You will find these factors listed below…

• Rapid growth that makes managing finances more complex and requires the services of an experienced fractional, part-time, or full-time CFO.
• Funding rounds when your company is looking for venture capital or preparing for an IPO and needs the advice and support that a CFO provides.
• Financial difficulties that are an issue for the company and which the financial guidance of a CFO can help resolve.
• Low levels of financial expertise that are holding your company back and which a fractional, part-time, or full-time CFO could help with.

If any of these factors apply to your company, it’s probably time to hire a CFO, even if your company does not fit within the traditional CFO hiring path. Failure to act could hamper progression and growth if your company is struggling with the lack of a CFO in any of the areas identified above.