Complete Guide to Scaling Your Finance and Accounting Team

As a business grows, so too do the demands upon it.

While such scaling strains ripple across the entirety of a company, the burden they place on the finance and accounting departments is augmented—especially in the run-up toward an investment round, acquisition, or IPO. When that happens, it threatens the organization’s future prosperity.

Rather than waiting passively for bottlenecks to arise, company leaders must proactively scale their finance and accounting teams before matters can get out of hand. But that does not mean hiring haphazardly. Instead, you must take a measured and strategic approach.

Here are some tips you can use when scaling your accounting team.

 

What Does a Typical Scale Look Like?

In the early stages of a business’ lifecycle, much of the accounting will be handled internally, with the business owner acting as the de facto finance leader and accountant. But eventually, there comes a point where that is no longer feasible—the scope and complexity of the job become too great.

The Accounting Department

The natural response to this situation is to hire a bookkeeper whose primary role is devoted to managing daily accounting tasks, including:

  • Recording and monitoring of financial transactions
  • Reconciling bank statements with the general ledger
  • Closing the book at the month’s end

This initial hire creates internal efficiencies that strengthen the business and position it for further growth. It lays the foundations for the entire accounting department, and what will also—eventually—be the finance team.


The Accounting Department at Scale

As time passes and growth progresses, more accounting experts may come on board. Depending on the business, its market, and specific needs, this could include:

  • Additional accountants
  • Billing specialists
  • Payroll specialists
  • Tax preparers
  • Accounting Managers

For example, B2B companies with many clients may prioritize hiring billing specialists early on for easier invoice management.

The Controller

 

As your accounting team slowly transforms into a fully-fledged accounting department, there comes a critical inflection point where the business must hire someone to propel its actions forward. And for most companies, this first essential leadership position is known as the financial controller.

A controller acts as both the company’s financial historian and its interim financial leader. As senior-level managers, they oversee day-to-day financial and accounting operations. According to Deloitte, high-level tasks include:

  • Corporate accounting
  • Regulatory and financial reporting
  • Treasury management
  • Budget and forecasting
  • Development of internal control policies and procedure

Ideally, a qualified candidate will have over a decade of experience in accounting and finance, an advanced accounting degree, plenty of hands-on management exposure, and thorough knowledge of accounting principles, procedures, and compliance issues.

When is it Time to Hire a Controller?

 

The earliest stage a company will hire a part-time controller is either right around the $500,000 revenue mark. Alternatively, you may bring on a controller when the business produces enough transactions to necessitate adherence to the Generally Accepted Accounting Principles (GAAP)—if it is not already required.

The vast majority of businesses will enlist a controller’s services by the time they reach $10,000,000 in revenue.

 

The CFO

 

The third and final essential hiring point as a company scales over time is the Chief Financial Officer (CFO). This C-suite executive is tasked with managing and monitoring both the accounting and financial analysis teams.

At the root of their mission is cost-benefit analysis.

They first review the company’s ledgers, staffing, and cash flow to gauge the company’s financial health. The CFO then outlines their vision for the business to forge a path forward. Finally, regarding the day-to-day implementation of this strategy, they charge their controller with the duty of seeing it fulfilled.

The CFO’s Responsibilities

 

While the duties of a CFO are varied and complex, there are five primary aspects of finance and accounting that they oversee, including:

  • Corporate accounting
  • Regulatory and financial reporting
  • Treasury management
  • Budget and forecasting
  • Development of internal control policies and procedure

Modern CFOs must also apply broader perspectives than were previously needed due to globalization’s impact and technology’s disruptions.

When Do Most Companies Hire a CFO?

 

As with controllers and specific accounting department positions, deciding when to fill the CFO role depends on a company’s circumstances.

The earliest stage a business would consider a part-time CFO would be at $1 million in annual revenue. And that is just for an outsourced CFO. A recent Lancor Study found that “companies typically hire a [full-time] CFO for the first time, on average, when they reach 100 employees, revenue of $25m, or a revenue growth rate of 111%.”

 

Tips for Scaling

 

Scaling properly is not easy. Either acting too early or too late can set you back. Or, you could hire at the right time but enlist the wrong people.

So, how do you scale the right way?

Consider these tips:

  • Consider outsourcing your leadership early on – As mentioned, instead of waiting until you have enough revenue and requirements to invest the funds necessary to entice a full-time controller or CFO to join the team, such roles can likely be outsourced at a much earlier point. Hiring a part-time CFO or controller lets you immediately enjoy the many benefits an experienced financial and accounting professional brings to the table.
  • Be proactive and patient with hiring – When it comes to finding new team members to staff your accounting department, do not wait until the need is so pressing that it puts outsized pressure on you to say yes to the first qualified candidate. Hiring decisions should not ever be rushed. You do not want to hire just good enough; instead, you need to be picky and wait until you find the optimal fit. Starting the search early on can alleviate such problems, thus enabling you to hold out for the right person.
  • Leverage technology – Digital technologies are transforming how finance and accounting are done. Companies that embrace and adopt these novel solutions can create inner department optimizations that not only relieve staff of many onerous tasks but also inform decision-making for the better. This includes:
    • Advanced data analytics
    • Machine learning
    • Artificial intelligence
    • Robotic process automation
    • Cloud-based infrastructures
    • Software-as-a-Service
  • Set clear objectives – Like the human body, a finance and accounting department is composed of many different parts. But for either to function properly, they must act in harmony. Setting common goals and objectives, then creating a roadmap to achieve those ends, enables every member to understand their individual responsibilities while also bonding the entire department in a common purpose.

CFO Hub – Here for Your Scale

Every company walks its own path on the road to success. As a result, the way one business handles its scale could look drastically different from another, even a comparable competitor.

This is why it’s so crucial to hire the right financial and accounting leaders and to do so as early as possible. If your organization is flagging, a controller or CFO could right the ship. Or, if it’s floundering, they could set its course to the proper heading.

With CFO hub, you don’t need to wait to hire. You don’t need to be reactive. With our outsourced CFO, controller, and accounting services, you’ll be firmly in the driver’s seat at every stage of your growth journey.

From CFO to back-office support, we provide solutions that scale with you.

Related:  Is it the Right Time for My Business to Seek a Capital Raise?