What is a Consulting CFO? Does My Business Need One?

As your business grows, you will need to fill the C-suite roles with trusted professionals who understand your vision. Your passion and skills have carried your business far, but there are likely some aspects of entrepreneurship that require specialized knowledge.

You will soon need someone to lead financial operations. This is the role of a CFO. 

If you are not ready to bring a new C-level executive onto your payroll, you may consider a consulting CFO. Read on to learn the pros and cons of hiring a consulting CFO, and to determine if your company is ready to begin the search process.

A Consulting CFO’s Job Description

You know your business needs financial leadership, but what gaps in your team can you expect a CFO to fill?

This professional is experienced with business finances and can lead the financial aspects of your business, such as:

• Developing and maintaining a budget for your business
• Networking with investors and raising funds
• Analyzing your business’s financial data and creating forecasts
• Working with you and other C-level professionals to set goals and make other business decisions
• Keeping your business’s financial records in order

This list illustrates the potential responsibilities of any CFO, whether they are in-house or consulting. 

Inhouse vs. Consulting CFOs

So, what is a consulting CFO, and how do their responsibilities differ from an in-house CFO?

While an in-house CFO may be available on a full-time or part-time basis, they are generally hired to fill the role for an extended period of time. You are expected to pay them a salary. 

In contrast, a consulting CFO provides financial leadership services on different terms. They will bill you for their time rather than be on your payroll. This allows them to provide their services on an “as-needed” basis, such as: 

• Interim – An interim CFO can help you transition your business from a barebones operation to one with a full C-level team. This professional helps you establish your financial team and processes while your business grows or while you find the right candidate for primary CFO. Interim CFOs are typically hired for shorter periods, but you may appreciate their guidance enough to make it an ongoing relationship.

• Project-based – A project-based CFO will assist you with financial responsibilities related to specific projects rather than your day-to-day financial leadership needs. These projects could include acquisition, quarterly budget building, fundraising, or myriad other short-term or long-term projects.

The Pros and Cons of Hiring a Consulting CFO

When determining whether you should hire a consulting CFO or an in-house CFO, consider the benefits and drawbacks below.

The Pros of Hiring a Consulting CFO

The pros of partnering with a consulting CFO include:

• They are skilled and experienced financial professionals — Consulting CFOs can lead your financial team and help solve their challenges with expertise. This saves you time and energy so you can focus on the aspects of your business that inspired you to start it in the first place.
• They are available “as-needed” – You do not have to pay them for time they are not working for you. This can be a budgeting relief if you are a growing business with already high overhead. 

The Cons of Hiring a Consulting CFO

The cons of hiring a consulting CFO include:

• They may not always be immediately available – Since consulting CFOs work with multiple companies and create their own schedules, you will have to plan your financial operations in advance. This also means they may be difficult to involve in some emergencies requiring financial leadership. Make sure to check your partnership contract, so you firmly understand their availability and response times.
• They may not be able to meet in person – Consulting CFOs may be located anywhere in the country—or even the world. Though this means you have a vast talent pool to draw from, you may find yourself working with someone in a different city, state, or country. Not only will you potentially have to manage different time zones, but you may never meet your CFO face-to-face.

Is it Time for You to Hire a Consulting CFO?

Consider your business operations. Are you and your team still able to manage the financial responsibilities of your business without disregarding other important responsibilities?

Consider hiring a consulting CFO if:

• You need to develop a process for budgeting – A consulting CFO can ensure that your budgeting process is functional and repeatable.
• You have data you cannot analyze – A consulting CFO can analyze your business’s financial data and create financial forecasts based on it.
• You need assistance with record-keeping or financial reporting – A consulting CFO knows the ins and outs of record-keeping and reporting requirements, so they can ensure that your business is compliant with finance laws.
• You anticipate a significant financial event – A consulting CFO will help if you are trying to raise capital or may be involved with a merger or acquisition.

If any of these scenarios sound familiar to you, or if you are simply ready to grow your business to the next level, it is time to consider hiring a consulting CFO.

What to Look for When Hiring a Consulting CFO

Innumerable financial professionals are eager to be your consulting CFO. So how do you know which is the right one for your business?

• Their experience, vision, and values should align with your company’s.
• For instance, if you are a regenerative dairy farm, your consulting CFO should understand the financial requirements of agricultural businesses and share your regenerative ethos.
• They can find the solutions to your company’s problems.
• When presented with the obstacles and challenges unique to your business, the consulting CFO should be able to determine the solution based on their experience and expertise.
• They are someone you look forward to working with.
• Skills can be learned and experiences can be gained, but personalities do not be change often. When hiring a consulting CFO, make sure that they are someone you and your team are eager to work and grow with and learn from.

The hiring process is an opportunity for you to determine exactly how you want the financial aspects of your business to grow.