By: Shawn Jensen
This editorial comes to us from Shawn Jensen, Partner at Moss Adams LLP. Shawn has been in public accounting since 1999, serving agricultural companies, food processors, wineries and vineyards, and manufacturers. His experience includes responsibility for all phases of audit and review engagement execution, assisting clients with technical accounting issues and the implementation of corporate accounting policies and procedures.
A full-time CFO often costs upwards of $200,000 a year, including salary and benefits. Hiring a part-time or contract seasoned CFO can often make sense for early-stage, high-growth organizations that aren’t in a financial position to on-board a full-time financial executive.
Even working part-time, the insights and guidance of a contract seasoned CFO can add tremendous value to daily financial operations—helping a business improve financial reporting to investors and other stakeholders, meticulously managing cash flow, and training staff on accounting best practices, providing management with relevant information on a timely basis. For startups, and companies in transition, this kind of counsel can be the difference between success and failure.
The Value of a Part-Time CFO
Upgrading financial processes. Many companies succeed without efficient bookkeeping or financial reporting practices. But a single sudden growth spurt can render outdated processes useless and completely ineffective. Sometimes this entails implementing best practices like using accounting software more effectively. Other times could include converting from QuickBooks to a more sophisticated accounting system, such as MAS 500 or Microsoft Dynamics. Either way, the training is more efficient and effective when someone who’s technically proficient has the necessary experience in finance and accounting along with system conversions.
Timely and useful information. Companies can’t make optimal business decisions without a rigorous assessment of their business. A seasoned contract CFO can analyze data from an accounting system in a way that makes the most sense for that specific business. For instance, evaluating a product line by sales, geographic region, individual product, salesperson or sales channel. And, of course, they’ll also keep a close eye on expenses: analyzing production costs and helping to negotiate contracts with key suppliers or co-packers.
Handle cash flow so owners don’t have to. A business owner who spends too much time worrying about cash flow is someone who can greatly benefit from a contract CFO. Rather than be mired in the minutiae of cash management, owners can be more productive developing a growth plan for their business and ways to generate more cash. Strong part-time CFOs are known for their ability to quickly assess why a company is crunched for cash and coming up with viable ways to fix the problems. They can also help start-ups access capital by providing meaningful forecasts and projections to current investors and other traditional and non-traditional capital providers.
Helping a company with growing pains. Growth spurts can be risky. Done badly, they can damage a company or lead to an owner losing his or her business. The contract CFO can help guide leadership towards, and through, a safe expansion plan. A company might be struggling and can barely make payroll even though sales are up because cash or credit is tied up in inventory or accounts receivable. This can be due to poor invoicing, or purchasing practices. In some cases, a contract CFO can instill best practices and procedures in a short period of time to free up needed capital. They can help consolidate equipment loans or renegotiating vendor contracts. In others situations ,they may talk to the company’s insurance brokers about omitting superfluous coverage. Some part-time CFOs may have to build an accounting and financial reporting infrastructure from the ground up.
Of course, you’ll want to be rigorous about who you on-board. Integrating a part-time CFO into your organization is an investment—and one you want to make sure you get right.
Here are a few questions you should ask every candidate (or agency):
- Can you provide three references of past clients?
- How have you helped a past client grow?
- Do you have relevant experience? In my industry // product category // company-size?
- Do you have experience with my systems?
Don’t overlook their references. It’s common sense—but you’d be surprised by how often people do not dig deep enough on potential candidates.
Is your company exploring hiring a part-time CFO? Join the discussion in the comments below.
ABOUT THE AUTHOR:
Shawn has been in public accounting since 1999, serving agricultural companies, food processors, wineries and vineyards, and manufacturers. His experience includes responsibility for all phases of audit and review engagement execution, assisting clients with technical accounting issues and the implementation of corporate accounting policies and procedures. He also improves the operational efficiency of his clients’ business processes, financial management, and internal control structures.