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When a business gets to a certain size or complexity, a full time CFO makes sense as it’s a critical role to a growing profitable business. But business owners usually have questions like, 'when’s the right time to hire a full time CFO?' and 'what are the benefits of hiring a part-time CFO until a full-time resource makes commercial sense?'.
In this post, we’ll look at the differences between hiring a full-time, in-house CFO and a part-time, outsourced CFO. You’ll learn how they differ in cost, industry experience, team support, standardised reporting, fitting in, network access, credibility and learning curve.
A competent CFO is expensive. Data from PayScale shows that CFOs in New South Wales earn an average of $184,314 per year, not including benefits. This expense can be a heavy burden for young or small companies, and yet, many companies feel that during this stage is when they’re most in need of the direction CFOs can offer.
A part-time CFO might be just what you need. They allow you to access their knowledge and experience, but only as and when you need it.
An in-house CFO may have a lot of experience in your industry, especially if he or she has been working for you for a long time. While this experience is helpful, it can narrow the scope of opportunity for your business.
Since part-time CFOs work for several organisations at a time (often in different industries), your organisation will have access to more opportunities. They will bring multilayered insights and networks into your organisation’s orbit that you may not have had otherwise.
An in-house CFO will get to know your organisation extremely well and understand your industry deeply, but he or she is just one person and has a limited viewpoint.
When you hire a part-time CFO from an outsourced business, you’re not just getting the expertise of one person; you’re also getting the expertise of the other financial leaders he or she works with. While you’ll most likely have a single CFO as your touchpoint and interface, you’ll benefit from the knowledge and expertise of others in that business.
Most CFOs bring some of their personal preferences into the way they format documents, files and reports, especially when they’re the only ones calling the shots for your business’s finances. This is fine, but it may steer you away from standard industry practices.
Part-time CFOs are much more likely to have adopted widely accepted reporting standards because they’re working with multiple businesses across different industries. Having your reports and forms produced in standardised forms can make it easier to work on your taxes, reporting and legal issues.
Bringing on a new in-house CFO can be tough, both for the CFO and for the rest of your employees. They may want to make lots of changes within your business, which may be difficult to adjust to.
Part-time CFOs are accustomed to working with dozens of different people and personalities, sometimes simultaneously. They’re well-acquainted with the process of fitting into existing teams and doing so without ruffling feathers or offending egos.
A full-time, in-house CFO comes loaded with his or her own professional network. Depending on how many positions they’ve had in the past, that network might be limited or stagnant.
With a part-time CFO, however, you’re bringing someone on who has worked with many different organisations spanning many industries. The network of your part-time CFO is current and active. And, as mentioned previously, you’ll also have access to the networks of the other CFOs on their team. This is especially important for organisations that are looking to raise funds or expand into new territories. Your new network may have contacts in new areas or know of people who are looking to invest in companies like yours.
Any time you hire a decision-maker for your business, you’re taking a risk. A full-time, in-house financial leader may have worked for another company or two before coming to yours, and hopefully, he or she made significant improvements at their former companies. But since you only have one or two cases to look at, it’s hard to know how the CFO will perform for you.
With a part-time CFO, there’s a richer track record to look at, so you can be confident that their skills and experience match your needs and expectations. It’s less risky, both financially and professionally.
When you hire a new employee, there’s a general expectation that it will take the person around 6 to 12 months to get up to speed. That’s a long time, especially because this person will be navigating the finances of your organisation.
A part-time CFO has a lot of experience entering organisations in the middle of various processes and situations. They’re trained and ready to hit the ground running. Part-time CFOs learn to assess the environment and start putting actions in place to achieve your organisation’s goals.
As you can see, there are many advantages to hiring a part-time CFO, or an outsourced CFO offer. You don’t have to pay the large salary of an in-house team member, but you still get the benefits of expert advice, skills and leadership. You can quickly get an up-to-speed professional who is accustomed to working with companies like yours.
To learn what your business can achieve with the help of our CFO services, get in touch with us at Altus Financial.
Set your business on the right path with this simple guide.
Make sure you’re on the right track with this online checklist.
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