Managing finance and business accounts is a challenging task that most business owners are not skilled in, but they know it’s essential for sustainable growth and success. Now, when to hire a CFO and when is the exact right time to hire a financial expert depends on your business needs and billables. If you have just started, you probably want to focus on sales, operational activities, marketing, and customers, which is great. But as soon as you grow and have established your presence in the market, you need someone who can help you keep your finances intact in case of discrepancies and risks. That someone is the Chief Financial Officer; they are equipped with the industry knowledge and experience to handle your business and its accounts during an upcoming storm or downturn. Several other aspects need consideration and in-depth analysis to match the timeline for hiring a valuable yet expensive asset for your company.
If you are looking for an experienced CFO who can direct your business toward growth and success, contact a CA firm or CPA in Richardson, TX, to help you. Remember, look for the one who has years of working experience, say 10 years, and has worked within your domain.
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What’s a CFO?
A CFO, or Chief Financial Officer, is the highest professional in the finance department of an organization who works to grow and stabilize the company’s balance and liabilities. They manage the financial health of an organization, guiding CEOs and business owners on wise decisions. They can use the company’s data, account details, financial reports, and documentation to identify trends and pitfalls, as well as areas that need improvement and operational adjustments. A CFO is accountable for and supervises the accounting and finance team. Your company’s recorded documentation yields vital insights that guide them in crafting budgets, balancing expenses and revenues, and analyzing operational functions. They also guide acquisitions and mergers. In a nutshell, a CFO is the most valuable asset of the company, which is the primary reason business owners are advised to hire a skilled CFO as soon as they expand or merge.
CFOs are, without a doubt, expensive. Therefore, if you want to hire them, consider doing so on a contract or part-time basis to meet your needs. That way you can use the expert knowledge on a minimal budget. Their role primarily involves, but is not limited to:
- Record keeping
- Financial risk management
- Data analysis
- Fundraising
- Reporting to stakeholders
When should one hire a CFO?
Hiring a CFO too soon can be costly if you’re bootstrapped, and hiring too late can be risky as you won’t fully realize the company’s growth and success. So when is the exact right time?
Well, a business should not hire a CFO unless they are thriving and making about $50 million per year in revenue, at least not in-house. This is the basic traditional rule that everyone sticks to in the market. However, if your company’s total income is between $1 million and $10 million, you can hire a CFO as a controller who reports to the Chief Executive of the company. At this $1 million to $10 million stage in your company’s lifespan, you will likely need a top head who can oversee all business accounting activities, including bookkeeping and finance teams. At this threshold, companies generally have the budget to hire a CFO on a part-time basis and should benefit from their unique financial insights.
You must also consider other factors like competitors, accounting team, total revenue, expenses, overall financials, market gaps, set targets, and growth expectations, including your team’s expertise.