If you find yourself without a CFO, there is a decision to be made. Your current CFO could be on a leave of absence, out on maternity leave, or away for some time, leaving you without a finance and accounting team lead. Many organizations wonder if it is best to hire an interim CFO to step in for a short period or wait it out until the CFO returns.
While some companies can get through a few weeks without their CFO, others need help through an adjustment period. If your company is going through a merger or acquisition, bankruptcy, or a financial audit, the support and guidance of an interim CFO can be invaluable. The same can be true for a cash crunch, an important one-off project, a relocation, or hiring new staff.
It may also be beneficial to hire a part-time CFO if you are currently searching for a new permanent CFO. A temporary CFO can help fulfill the duties and responsibilities needed from the executive position and provide valuable insights when hiring a CFO. Keep reading to gain additional insight on hiring an interim CFO versus waiting it out.
Consider Your Ramp-up Time – How quickly do you need a CFO to step in and take charge? The answer will help determine whether hiring an interim CFO is beneficial for your needs. If you have a short period of time for getting up to speed and being productive, an experienced interim CFO is a must. Hiring an interim CFO who has experience with your industry, understands companies at your stage of growth, and is familiar with your needs can make the process much faster.
An experienced interim CFO is able to jump in quickly, getting up to speed in little time. However, it is important to find the right fit for your company. If the CFO is not familiar with your needs, does not know your technology well, or has a hard time deciphering your books, it can take months for them to get up to speed. An interim CFO with relevant experience can be up and running in a matter of days, highlighting the importance of finding the right fit.
When do companies wait it out? – While an interim CFO can provide many benefits to a company in need, there are some situations where it might be best to wait it out. If you expect your permanent CFO to return at a specific date or you are farther along in the hiring process, not all circumstances will require an interim CFO.
If you have a competent controller who is confident in their position, they may be able to provide the necessary reporting, interpretation and guidance in place of your CFO. When a CFO is gone for a short period, they can potentially hand off their duties to someone else. A strong controller can monitor the state of your financial functions as long as there are no emergencies or unexpected crises.
If you have a project that is not time sensitive, an interim CFO may not be necessary. You can let your current team handle their regular responsibilities without adding to their plate while the CFO is absent. They also have the time needed to learn new tasks or responsibilities without being overloaded.
Finally, companies with solid systems and controls in place are less likely to experience errors. If your cash position is strong, you can take the hit if something is missed in the CFO’s absence. Lacking typical oversight for a short period of time may not be too detrimental if the necessary systems are in place.
Considerations for Working Without a CFO – Choosing to wait it out without a CFO or interim services can present some challenges. A CFO provides much-needed C-level management and insight, and there is a reason you hired one in the first place. It is important to be aware of the following problems which may occur without a CFO in place.
- Cash Crisis: With proper oversight, your business can recover from many problems. However, a cash crisis has the potential to damage your business, especially if you cannot pay employees or suppliers.
- Poor Decisions: Working without a CFO can be similar to working in the dark. Data is limited, and decisions are less informed than usual. Making the wrong decision can lead to a significant setback.
- Erroneous Reports: A CFO is responsible for sharing financial reports and important data with stakeholders. If they are not available, reports could be late in delivery or incorrect, damaging your credibility and reputation.
- Fundraising Efforts: Working without a CFO or interim CFO services could damage your fundraising efforts, limiting your future options. If funds are not sought properly, you are left without the money you need.
- Fraud: Companies that do not have oversight from a qualified and competent CFO run a greater risk of fraud or security issues.
When do companies hire an interim CFO? – Hiring an interim CFO who is the right fit for your business needs can help prevent all of the problems listed above. Interim CFO services ensure your company moves forward, while also fulfilling your short-term goals or completing time-sensitive projects. Working without a CFO can be risky, and an interim CFO provides important safeguards for your organization.
If you do not currently have a CFO, hiring an interim CFO allows you to learn the position and benefits without committing to a C-level salary. You can test drive what it is like to have a high-level financial resource and understand exactly what that position can bring to your business.
For those selling a business, interim CFO costs can be added to the valuation of your company. If you are buying a business, having an experienced CFO in place from the start can reduce your ramp-up time and help you get off to a running start.
Interim CFO services are also very helpful if you just need a fresh pair of eyes. If you feel like you are going in circles or gaining no new insight, an interim CFO can provide an experienced, outside perspective. They can bring their industry knowledge and various experiences to your business, providing incredible value.
Learn What an Interim CFO Can Do for Your Business – Are you still unsure about whether to hire an interim CFO or wait it out? Contact K-38 Consulting for a free consultation. We will review your business needs to determine which services will work best for you. With a robust team of experienced and highly-qualified interim CFOs, our firm can immediately add value to your bottom line. Contact us today to learn more!