5 Reasons Your Business May Need an Interim CFO

A CFO provides businesses with critical financial navigation through day-to-day operations and times of flux. Despite their organizational importance, many organizations do not need a full-time CFO if their daily needs require minimal guidance.
 
However, to best navigate fluctuating periods, some companies may temporarily need the expertise of a CFO to steer them towards calmer waters. The situations examined below will help determine your answer if you are wondering, “Do I need an interim CFO?”
 

Deciding Between Full-Time and Interim CFOs

 
For full-time CFOs, common advice states that such hires remain unnecessary until passing $10 million in annual revenue. All companies below that revenue threshold should consider hiring an interim CFO depending on the given situations that arise.
 
If your company could use some assistance managing a temporary financial challenge, an interim CFO provides the precise guidance needed. Such challenges include:
 

• Making a significant change that would benefit from specialty expertise
• Approaching $10 million in yearly revenue
• Managing an outlier year above $10 million in yearly revenue
• Ad hoc projects requiring extra financial oversight
• Temporarily replacing a full-time CFO

Specialty CFO Expertise

 
Sometimes companies need extra financial guidance when making significant organizational changes. Even if you otherwise might not need a CFO for daily operations, hiring someone for a temporary period will help smoothen the transition until an implementation or restructuring concludes.
 
Some interim CFOs specialize in specific areas of financial and business management based on their professional experience. For example, companies commonly hire interim CFOs to assist with large-scale software implementations—especially for accounting and payroll systems. Mergers and acquisitions mark another instance where companies regularly bring on interim CFOs.
 
You might already employ a full-time CFO, but if they do not have any experience with a relevant specialty, you may still wish to consult with one who does.
 

Companies Approaching $10 Million in Yearly Revenue

 
Perhaps you have yet to pass the commonly stated threshold of $10 million in yearly revenue, but all projections show you will soon. While it might still be too early to commit to hiring a full-time CFO, you may want guidance to help you prepare for that eventuality.
 
Accounting and compliance regulations often change as revenue and transaction volumes increase. Your current systems and processes may address all of your bookkeeping and reporting needs now, but do you know if they will withstand more activity or stricter scrutiny? Upon reaching $10 million, your primary concern should be how to pop corks safely—not “Can our business handle this?”
 
Companies on a fast growth track can leverage an interim CFO’s insight to identify any current or potential issues. They can analyze your financial records, make a note of any oversights, and recommend adjustments as you scale. Some companies may not need such a thorough financial examination and may simply appreciate the peace of mind following a few consultative meetings with a CFO that inform them of what to expect.
 

Outlier Years with Over $10 Million in Revenue

 
While you hope that growth continues ever upward, sometimes a successful small business may suddenly experience a one-off spike in their revenue. These outliers may cause difficulty due to temporary adjustments. It does not make sense to spend the effort to completely overhaul your financial management or hire someone full-time if you expect future years to return to the mean.
 
As with companies projected to surpass $10 million per year shortly, hiring an interim CFO will help you manage your finances during such surges. Events that may create a temporary revenue boost include:
 

• Selling a major asset (e.g., property, product lines)
• Adapting to market conditions (e.g., drastic changes in supply or demand)
• Fulfilling a temporary business deal

 
Outlier years often occur without a company’s anticipation, and preparedness may be an issue. Construction companies that sometimes engage in disaster relief efforts demonstrate one example with the unprecedented demand that might follow an event (e.g., hurricane). Suddenly, a construction company may need to manage drastic increases in overtime pay, additional labor hiring, taxes, and the financial management associated with such.
 

Ad Hoc Projects

 
Should your company choose to take on a temporary project to seize a business opportunity that requires additional financial insight, you may want to consider hiring an interim CFO. An interim CFO can double-check your number-crunching and forecasts throughout the project or during particular stages—from conducting preliminary analysis to closing and executing the project.
 
Perhaps your ad hoc project requires a significant initial investment in materials, manufacturing equipment, or property before operating costs even out and the accounting becomes more straightforward. Perhaps you are dipping your toes into an unfamiliar industry that requires adherence to a different set of financial regulations (e.g., government contracts).
 
For example, you may wish to have an interim CFO look over your current financial processes and documentation when preparing a “Request for Proposal” or “Request for Information” (i.e., RFP and RFI, respectively).
 

Temporary Replacement for a Full-Time CFO

 
As with any other employee at your company, a full-time CFO may need to take an absence. Whether missing time due to parental leave or they have departed your organization for another, the critical financial management a CFO provides cannot be paused until someone resumes the role.
 
Should you suddenly find yourself without your relied-upon, full-time CFO for any reason, hiring an interim professional will help steady the ship. An interim CFO can fill the role for a known period or act as an ongoing stopgap until your business finds an ideal candidate to manage your financial systems and processes.