Have you ever felt like there is a hole in your company’s financial planning? You are not alone. Unless a business owner has a strong background in finance, it’s almost impossible to balance tasks such as increasing sales, managing employees, and improving the product or service of the company while properly handling the finances with a view to the long term. Even if a small business owner is diligent about putting time aside each week to focus on the company’s finances, it’s easy to feel like you are treading water simply tending to monthly expenses instead of developing a long-term financial plan.
One smart solution is to hire a part-time, or “floating,” chief financial officer (CFO). An experienced part-time CFO can look at small business financials with the eye of a well-trained surgeon. He or she can create cash flow statements and revenue projections, negotiate with vendors, collect receivables, and implement a strategy for reducing bad debt. A superb CFO can create near-magical spreadsheets, often dubbed “dashboards,” which allow users to punch in numbers to see how one cost changes net profit and cash flow. If you’re planning to raise capital, a CFO can also help you with the business plan, projections, and tax issues.
If you plan to approach a bank for a credit line, you’ll be in better shape with clean financials. It’s also wise to have your CFO with you during bank meetings. The same holds true if you’re hoping to “exit” your business via an acquisition, particularly if your likely acquisition candidate is a public company.
While it’s good to have checks and balances in place by keeping your bookkeeping, accounting, and CFO services separate, if you’re not happy with your bookkeeper or accountant, a CFO service may be able to make informed recommendations for both. But be sure to ask if the CFO service gets a referral fee. That may be okay with you, but full disclosure says a lot about the people you are hiring. If your company grows to a point where it needs a full-time CFO, your part-time CFO service may offer recruiting services for a finder’s fee (or not), help you read through résumés, interview candidates, and negotiate salary.
Many of the temporary CFO companies focus on middle-market and even Fortune 1000 companies and specialize in “interim” CFOs. Smaller companies may find it more advantageous to work with local, sole proprietors.
One such firm is Beyond the Bottom Line, which offers “CFO on Demand” services to companies in the Northeast. Founder John Gillespie has worked with Fortune 1000 companies, startups, and nonprofits. Prior to launching the company in 1998, he was COO and CFO of Innovation Luggage. Gillespie says the fees the firm charges range from $125 to $250 per hour. “It depends on the situation and how complex the assignment is,” he says. “Sometimes we’re simply keeping the books and closing them at the end of the month. Other times we’re doing forensic accounting.” A dedicated community activist, Gillespie gives nonprofits a break on fees.
Another firm with a similar mission, but a larger territory, is B2B CFO. The company has 98 partner CFOs across 42 states. B2B CFO works with smaller clients such as dentists and doctors, but also caters to larger companies with up to $75 million in revenue. “Our fees are flexible and fit within the budgets that our clients can afford,” Ania M. Kubicki says, speaking on behalf of the firm. “Some clients pay our partners as little as a few hundred dollars a month.” Both B2B CFO and Beyond the Bottom Line offer clients a complimentary financial “fitness” analysis prior to beginning work.
It is always challenging to take on another expense when you’re trying to build a company, but the fees for a part-time CFO may be offset with reduced fees from your accountant, as your financials will no doubt be in better order. To find a floating CFO in your area Gillespie suggests asking your accountant for a referral, or calling your state CPA organization or area chapter for the Financial Executives International (FEI).