|On October 26, The New York Times published an article titled, “When Should a Small Business Hire a Finance Chief?” This piece deals primarily with growing businesses and some of the major issues they confront. I recommend this article as a good summary of the complex range of issues that all small businesses face.The article defines a number of tipping points that confront companies as they grow. But the primary issue was summarized by one business owner, who said: ”I needed to hire someone who could function as my business partner and allow me to step away from the books so I could manage other aspects of my business.”
Among the challenges that organizations face, the Times identified the following:
I would add cash flow and working capital management, as well as human resources and IT management, to the list. And the CFO is critical to exit planning.
Can’t Afford or Don’t Need a Full Time CFO? Hire One Part Time
As the Times points out, “no matter how small, any company can benefit from having a finance chief to help organize its finances and track its performance.” But a full time CFO usually commands a six figure salary plus benefits. The solution, say the Times, is to hire a part-time CFO. It is sort of like a time-share condo: you get the high quality seasoned finance leader you need for a fraction of the cost of a full time CFO.
A CFO or Chief Financial Officer is the person on your executive team who sole purpose is to increase cash flow, improve profits and help in improving the bottom line. The difference between a CFO and part-time CFO is only the hours. Unfortunately, many companies who have a need for a skilled CFO do not have the funding to actually hire one. Another senior officer on the payroll might just be a bit too much. In these cases, they might bring on a CFO temporarily to get them running in the right direction and teach them how to keep it up.
The main responsibilities that are performed by a part-time CFO include overseeing all of the company’s financial and accounting practices. This can include such jobs as preparing the budgets, preparing timely and accurate financial statements or even being the long-term trusted business advisor for the CEO. It includes developing systems and tools to give the CEO of the company vital information about the finances as well as give recommendations on the operations of the company and strategies. A CFO will also oversee the budget planning and put into motion any strategic plans for managing the company’s costs. Sometimes it requires a specialist to really look at the business functions and make authoritative, educated decisions.
Some of the other duties include taking care of the cash flow of the company, and making predictions on where those profits will go, or where they will need to go. They must also optimize and maintain good relations with any banks they do business with. The part-time Executive will also take on the responsibility of mentoring your designated staff so that the procedure setup by them will be carried out properly; allowing the CFO to leave the business in your hands.
Many companies are taking the option of hiring part-time to help solve their money woes. Very often, this simple measure can turn a company’s financial standing right around and set them on a far more profitable path. The cost that the company will pay for a part time CFO will be significantly lower than hiring a full-time financial professional that they would have to offer benefits to as well as other factors that need to be taken care of when you hire an employee.