By Michael A. Campian
Nov. 18, 2010
A dynamic new service has emerged over the past few years that allow companies to hire seasoned executives on a part-time basis instead of hiring a full-time employee. The ability for companies to “rent” a seasoned Chief Financial Officer is an alternative to hiring a full-time employee that otherwise would require an annual salary of $100,000 to $250,000, not including taxes, bonus and benefits. These professionals typically serve companies with sales from $2 to $50 million.
The Benefits
More time for the owner to spend with customers or in improving the company’s future. This is called a “finding” activity. A company, if it is to compete successfully, must have the owner spending most of his or her time with current and future customers. There are several “facts of life” that do not vary with time. One of these facts of life is that someone is spending time with your current and future customer today. If not you, it may be your competition.
Better financial information for key decision making. Most closely held companies have erroneous financial statements. It is dangerous for an owner of a company to make decisions, such as hiring new people, buying new computer systems, spending money on advertising campaigns, etc., if the financial information the owner is using is inaccurate. Bad financial information typically results in bad decisions. Bad decisions can kill companies. An experienced part-time CFO will have the skills necessary to help the company get correct financial information. This professional should also be a sounding board for key decision making.
A theft deterrent. It is shocking to see how many employees steal from employers. Many of the people that steal are in the accounting department. There is theft of money, inventory, customer lists, intellectual property and other company assets. A seasoned part-time CFO who visits the company’s office a few times each month will not only help establish tighter controls to deter theft, but their very presence should help decrease theft from company employees.
More money from the bank and from vendors. Bankers and vendors are more sophisticated than ever. They are looking for financial statements that look professional, that are issued in accordance with GAAP (Generally Accepted Accounting Principles) and that easily show the company’s key ratios. An experienced part-time CFO will be able to not only present the company’s financial information in a professional manner, but will be able to assist the owner with opening doors to banks and better vendor terms.
Training for the company’s accounting staff. It is in the best interest of the company to have its accounting staff become better in accounting knowledge and procedures. A good part-time CFO will be a seasoned executive who mentors the accounting staff to do a better job.
Pay for what you use. Many companies need the services of a CFO, but in the current economy cannot afford the cost of hiring another body. Businesses use a payroll service or outsource their network function for the same reason.
The Qualifications
Your professional should have more than 25 years of experience. Make sure the part-time CFO is supported by a national organization that has the resources to be able to give your part-time CFO the support they need.
A CFO is a proactive professional who has a pervasive knowledge of things important for you to run your company properly. They will have the ability to address HR issues, sales and marketing issues and a host of things needed to help your company succeed.
What to Expect
No contracts to sign. Relationships should be based on trust, mutual respect and a reliance upon excellent services rendered. Walk away from the situation if an organization is not competent enough to perform these services with a handshake or requires a large retainer.
Avoid any offer that might require your company to pay a return on profits. The money the company earns belongs to the owners, not outside people.
Finally, the advantages to hiring a part-time CFO include: (1) accurate and timely in-house financial statements, (2) the origination of solutions to your company’s problems, (3) financial and goal clarity, (4) a sounding board for the owner’s key decisions, and (5) you will begin to find more time to spend in entrepreneurial activities.
Michael A. Campian is partner at B2B CFO. To learn more, visit www.michaelcampiancfo.com or e-mail him at mcampian@b2bcfo.com.