By Eugene A. Blaho, Partner, CSuite Financial Partners
A Company’s Chief Financial Officer has numerous and varied responsibilities. Besides being responsible for basic accounting, reporting, planning, and financing activities, the CFO often has investor relations, information technology, human resources and other administrative responsibilities. In a company with $50 to $200 million of revenue, where accounting staff are usually lean, this is typically more than a full time job. What does a CFO do then when the company is contemplating a major project (and a huge workload) in an area where the CFO might not have a lot of time or experience to execute, like an acquisition, ERP system implementation, or a capital raise?
One unsavory option might be to prepare for egregious amounts of overtime. Another might be to hire a temporary analyst to assist in the project, but often an analyst doesn’t have enough skills… An increasingly popular alternative is for a CFO to “clone him/herself” and hire a contract CFO to manage the entire project. A great idea, perhaps, but where do you find one of these clones? Sometimes board members or members of the management team know people in their network who do this kind of work. Often, recruiters work with CFOs who are “in transition” between jobs and might want to take on a temporary assignment. Increasingly, though, CFOs are finding help from firms that employ “on-demand” CFOs who can be engaged immediately.
These “contract CFOs” are often expensive, with hourly rates often ranging from $200-$400 per hour, but, as Doug Mitchell, a partner with CSuite Financial Partners, – says, “I’ve never seen a CFO get fired for getting a major project done on time, even if he’s spent money to do it! I have, however, seen many CFOs lose their jobs because they DIDN’T get the project done.” Rick Chance, who leads the [Insert Sector Name Here] investment banking practice at the accounting firm KPMG, says, “Quality and timely execution by the finance team during a purchase, sale or financing is often the difference between the success and failure of the project.”
In addition to ensuring that the project gets done, companies have found that often “one plus one equals three” in that having a second, experienced CFO on board, even briefly, can give the sitting CFO a consultative partner that can help him/her validate or modify company process and activities and to recommend solutions unrelated to the project. “I have used a CFO consultant when I have been a seated CFO and found that having a partner whose work output and advice I could trust was invaluable to me during an acquisition-intensive period for my company,” says Mitchell.
Other instances when a contract CFO might be employed in a “non-clone role” is post-acquisition, when there are many technical activities to perform such as implementing GAAP accounting, calculating the working capital adjustment, and developing forecasts and budget models and methodologies or when a sitting CFO leaves a company or is terminated suddenly. Even if your company doesn’t have a current or foreseeable need for a senior financial resource, having a relationship with an on-demand CFO firm could be an excellent first step toward a successful project.
About the Author:
Gene Blaho is a partner with CSuite Financial Partners.He is a CPA (inactive) and holds an MBA from the Anderson Graduate School of Management at UCLA. He has been the seated CFO seven times and has worked on numerous M&A, financing, and system implementation projects..
About CSuite Financial Partners:
CSuite Financial Partners is a rapidly growing national, financial executive services firm that provides financial management executives to companies of all sizes and in every industry throughout the United States. Our Partners and executive-level resources are CPAs and MBAs who served on the frontlines; possess on average, twenty-five years of senior-level strategic and operational finance experience. Whether a company requires strong, visionary financial leadership or in need of highly competent tactical support on a departmental basis, our clients turn to CSuite Financial Partners to satisfy all their financial-talent needs.