Could your company benefit from a contract CFO?

The Chief Financial Officer (“CFO”) plays a vital role in the growth and success of a company. However, a company does not need to hire a CFO full-time to benefit from the skills and expertise of a CFO. This blog post will discuss:

1. the core responsibilities of a CFO;

2. the benefits of outsourcing this role on a contract basis (often called a contract CFO, virtual CFO,  part-time, or outsourced CFO);

3. the companies that could most benefit from a contract CFO; and

4. how to structure a CFO role as a contract position.

Core Responsibilities

The core responsibilities of a CFO include the following:

• Operations – Operating the company’s finance function both effectively and efficiently (this includes overseeing financial reporting, tax compliance, financial planning and analysis, and treasury, among other areas).

• Governance and Risk Management - Ensuring the company’s ongoing compliance with financial regulations, safeguarding the assets of the company by establishing and monitoring internal controls, ensuring the integrity of the company’s management information systems, and communicating high risk matters and financial information to the board of directors.

• Strategy – Aligning the finance strategy with the business objectives and strategy, developing debt and equity financing strategies, identifying tax planning strategies, and establishing performance measures that support the company’s strategic direction.

Benefits of a Contract CFO

While companies decide to outsource the CFO role for a variety of reasons, some of the key benefits include:

• Cost Savings – The company can benefit from the experience and expertise of a CFO at substantial cost saving compared to hiring a full-time CFO. Contract CFOs may also be hired on a fixed budget to complete a specific task or project.

• Efficiency – Contract CFOs can free up the time of the company’s other executives to focus on other value-add responsibilities.

• Results-Oriented and Deadline Driven – Since the engagement can be ended by the client with ease at any time, contract CFOs are required to demonstrate their value on an on-going basis by consistently providing high quality services in accordance with the company’s deadlines.

• New Insights and Perspectives - Because of their experience with multiple companies across various industries, a contract CFO can provide a company with new insights and diverse perspectives.

• Attracting Higher Level Talent – Hiring a contract CFO can allow a small to medium-sized company to attract a more experienced, higher performing CFO that it could otherwise attract for a full-time position.

Companies That Most Benefit from a Contract CFO

While each company is unique, companies that would typically benefit the most from a contract CFO include:

• Annual revenue between $1 million to $30 million

• 8-75 employees or contractors

• An existing finance individual or team (e.g., a bookkeeper, accountant, or controller)

• A management team that desires stronger financial reporting and advice

Ways to Structure a Contract CFO

A company can hire a contract CFO for a specific project or period of time, depending on the company’s needs. This CFO can be engaged part-time (e.g., 1 day a week or 32 hours a month) or full-time for a pre-determined length of time. The contract CFO can also be compensated via an hourly rate or fixed monthly fee, depending on the tasks to be completed and the financial control required by the company. Finally, a contract CFO can be completely virtual (working exclusively off-site) or work partially or exclusively on-site at the company’s office.

Each arrangement should be tailored based on the work to be performed by the contract CFO and the culture of the client company.

If you have questions about this blog post or CHY’s contract CFO services, contact CHY today.