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As your business grows, so do the challenges it faces. One of the biggest questions chief executives face during that growth is: when to hire a CFO (Chief Financial Officer)? Some wait too long. Others hire too soon. This guide helps you understand when bringing a CFO on board is the right move, and what you should expect when you do.
Understanding What a CFO Really Does
A chief financial officer is not just a high-level bookkeeper. They are the person who helps you understand your company’s financial health on a deeper level. A good CFO gives advice on spending, investing, budgeting, and long-term planning.
CFOs help set financial goals, measure performance, and reduce risk. They also manage accounting teams, oversee cash flow, and work closely with banks, investors, and tax professionals. Think of a CFO as your financial co-pilot.
When to Hire a CFO: Signs Your Company Might Be Ready
So, when do you need to hire a CFO? The answer to that question depends greatly on what your business is going through, and what needs should be filled. Here are a few tips:
Revenue Is Growing, But So Are the Questions
Perhaps sales are climbing, or you’re feeling overwhelmed by financial issues, which prompt you to question, ‘When is it time to hire a CFO?’ If you can’t answer the following basic questions, it might be time:
- Are we profitable?
- Can we afford to hire more staff?
- Where is our cash going each month?
These are red flags. If your numbers are becoming increasingly complex or difficult to understand, a CFO can help make sense of them.
You’re Preparing for Big Decisions
Planning to raise capital, buy another company, or sell your own? A CFO is essential in these moments. They’ll handle financial models, prepare documents for investors, and guide the decision-making process.
You Don’t Have Time to Oversee the Numbers
As a CEO, your time should be spent leading, not reviewing spreadsheets. If you find yourself stuck in day-to-day finances (or if you’re unsure about the reports you’re seeing) it’s time to bring in an expert.
Cash Flow Is Tight or Unpredictable
If cash flow feels like a mystery, that’s a sign of risk. A CFO can build forecasts, spot trends, and help you avoid cash shortages before they become crises.
Different Options for Hiring a CFO
Full-Time CFO
Larger companies with complex financials may need to hire a full-time CFO to handle larger and more intricate tasks. These companies often have:
- Over $10 million in annual revenue
- Multiple departments or locations
- Plans for mergers, acquisitions, or rapid scaling
Fractional or Outsourced CFO
Smaller companies may not yet need a full-time CFO. In these cases, it might be best to hire a part-time CFO. This arrangement is known as a fractional CFO or outsourced CFO services, which provides you with access to high-level advice without the cost of a full-time salary.
TGG Accounting, for example, provides outsourced CFO services tailored to growing businesses that aren’t yet ready for a full-time executive.
What to Look for in a CFO
As you consider when to hire a CFO, look for someone who has:
- A strong background in finance and accounting
- Experience in your industry
- A track record of helping companies grow or solve financial problems
- The ability to explain complex ideas in a simple way
- A collaborative approach to working with leadership and staff
Culture fit also matters. You want someone who understands your goals and communicates well with your team.
The Impact a CFO Can Have
A good CFO should manage your money, but they should also help you grow it. Here’s what you might see after hiring one:
- More accurate forecasts and budgets
- Smarter decisions around pricing, hiring, and investments
- Better relationships with lenders and investors
- Fewer surprises in your financials
- Peace of mind for you as the CEO
Common Mistakes to Avoid When Hiring a CFO
Waiting Too Long
Many CEOs delay the decision about when to hire a CFO. However, waiting too long could mean too much damage has already been done. Hiring early (before growth outpaces your systems) can save time and money later.
Hiring the Wrong Type of CFO
Don’t hire a full-time CFO if you only need part-time support. And don’t expect a bookkeeper or controller to take on chief financial officer-level tasks if they haven’t received the necessary training for it. Match the role to your current needs.
Not Listening to Your CFO
Your chief financial officer should be a partner, not a gatekeeper. If you bring one on board, be open to their input—even when it challenges your thinking.
Frequently Asked Questions About When to Hire a CFO
What is the difference between a CFO and a controller?
A controller typically manages day-to-day accounting tasks, such as closing the books, processing payroll, and ensuring compliance. A CFO, on the other hand, takes a big-picture view. They focus on strategy, long-term planning, forecasting, and helping the CEO make key financial decisions.
How much does it cost to hire a CFO?
The cost varies depending on whether you hire a full-time, part-time, or outsourced CFO. A full-time CFO salary can range from $130,000 to over $450,000 annually. Fractional or outsourced CFOs typically charge an hourly or monthly rate, which can be much more affordable for smaller companies.
Can a startup benefit from hiring a CFO?
Yes, especially if the startup is raising capital, managing rapid growth, or entering new markets. Many startups choose to work with a fractional CFO to get expert guidance without the full-time cost.
How do I know if I need a CFO or just better accounting software?
If your current financial tools and systems still leave you guessing about cash flow, profitability, or planning, a CFO can bring clarity. Software is helpful, but it can’t replace expert interpretation and advice.
How involved is a CFO in day-to-day operations?
That depends on your company’s size and needs. In smaller companies, a CFO may be more hands-on in their role. In larger companies, they typically focus on strategic decisions, oversee the finance team, and report directly to the CEO or board.
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Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
