What Is the Average CFO Salary? How Much Should I Offer?
Your business is officially up and running—customers are purchasing your products or services, your marketing team keeps the sales pipeline full, and you are ready to set some future financial goals. It may be the right time to hire a CFO—a Chief Financial Officer.
But, before you post an ad seeking a CFO, make sure your budget can accommodate the average CFO salary.
How much do CFOs usually make? What if you cannot afford one yet? Are there other financial personnel options out there?
Read on for answers to your most pressing questions about CFO salaries and packages.
When Should You Hire a CFO?
First, a thriving business does not necessarily mean you have reached the growth thresholds where hiring a CFO is the right decision. Their salary and other costs may not outweigh the benefits yet. Per one study, you will want to achieve at least one of the following before considering adding an executive to your team:
- Annual revenues exceeding $25 million
- Annual revenue growth exceeding 111%
- Retaining a 100-employee roster
However, if your business has not yet reached the above or needs financial guidance, there are other roles and solutions covered below—like hiring a part-time CFO. And pursuing these alternatives can help you grow to where a CFO becomes necessary much quicker.
What Do CFOs Make on Average?
The average CFO salary is $141,635 per year—in the US, CFOs generally make between $82,000 and $242,000. However, these figures may not encompass the total cost of a CFO’s compensation and benefits package.
Which factors impact CFO salaries?
- Experience level – There are no specific hiring criteria for CFOs. Unlike some financial staff (like CPAs, for instance), CFOs do not have to hold a professional license. So, experience is often the metric of a CFO’s value—the more experience they have, the higher their compensation.
- Geographic location – CFOs in metro areas should expect to make more than their suburban or rural counterparts—as salaries should accommodate local living costs.
- Education – A CFO with a Ph.D. in Accounting will likely be offered higher wages than a CFO with a Bachelor’s degree. Advanced education generally improves candidates’ pay opportunities.
In addition to competitive salaries, CFOs generally receive high-caliber benefits packages. Before hiring one full-time, you should be prepared to offer:
- Healthcare coverage
- Paid time off
- Contributions to a retirement savings investment account
- Cell phone stipends
- Tuition reimbursement
While not all of the above benefits may be required by your jurisdiction, CFO candidates expect offers with comprehensive packages.
If you are unsure which benefits are common in your area, try to gain industry intel from your business partners and competitors. Then, budget wisely—administering robust employee benefits packages can cost a pretty penny.
Salary Alternatives for New Companies
What if your business cannot afford the high salary and comprehensive benefits packages that CFO candidates will expect? Consider some alternatives that could still help you attract CFO talent:
- Company stock – If your business is new to the market, you may not have the cash flow to hire a six-figure employee. Until your business is more profitable, consider compensating for a low salary or limited benefits with stock in the company.
- Bonuses – If you predict significant financial growth in the next twelve months, you may be able to offer a large bonus for your CFO candidates at year-end. Bonuses can also incentivize CFOs to set and accomplish ambitious goals.
- Merger and acquisition incentives – If your top priority is selling your startup, a CFO is a critical person to have in your corner. And, if you cannot afford a high salary, consider offering them a percentage of the profits once you achieve acquisition.
The Perfect CFO Offer
So, what should your CFO offer look like? An enticing package may include:
- Competitive wages that correspond with median pay in your geographic area
- Comprehensive benefits that (ideally) outpace your competitors
- Alternatives or additional performance incentives, like:
- Company stock
- Proceeds from mergers and acquisitions
While your CFO offer is a critical piece of the puzzle during your talent search, so is honesty about your company’s financial situation and goals. Do your best to sell the position, but do not make any promises you cannot keep—especially because, given their role, CFOs will find out fast.
The right CFO candidate will negotiate for fair wages, consider alternative offers if your package is below industry standards, and communicate expectations honestly.
Alternatives to Hiring a Full-Time CFO
If your brand is not financially prepared to hire a CFO, it may be time to rethink your next steps. Luckily, there are alternatives to hiring a full-time, in-person CFO that could be an excellent fit for your business.
If money is tight, consider hiring a CFO on a project-by-project basis. Some short-term projects that could help your brand advance include:
- Financial forecasting and modeling
- Preparing for an audit
- Planning and executing a capital raise
- Building financial goals
- Making a major purchase, like
- Equipment and machinery
- Company vehicles
- Real estate
Once your temporary CFO has successfully ushered you through the project, they could depart from your business until you have the time and capital to undertake your next initiative.
Fractional CFOs are an excellent option for new businesses that do not yet have the financial horsepower to hire full-time finance professionals. Company owners can customize their fractional CFO experience, giving them more flexibility to spend their available staffing funds wisely.
You may integrate a fractional CFO who:
- Is available on retainer for as-needed tasks
- Works part-time or seasonal hours
- Offers expertise for specific projects only
- Only meets one responsibility, like accounting department oversight
Fractional CFOs are typically outsourced—they often work off-site and are rarely subject to mandatory benefits requirements. As a result, you can save significantly by opting for a fractional, outsourced financial expert.
Similar to a fractional CFO, virtual CFOs are typically outsourced professionals who work off-site. While you may not be entirely comfortable hiring someone who works 100% remotely, consider the following:
- Virtual CFOs check in regularly – Before starting work, your virtual CFO will establish a timeline for regular check-ins—weekly, monthly, and quarterly check-ins are all common.
- Virtual CFOs represent multiple experts – Since they typically work for agencies, virtual CFOs offer the expertise of numerous financial professionals for the price of one.
- Virtual CFOs can work full-time – If you imagine your company’s CFO duties will take 40 hours per week, a virtual CFO may be available to handle that demand—even if it is temporary.
Streamline Your Finances with Help from CFO Hub
As experienced, high-powered financial executives, CFOs receive high pay, robust benefits, and additional performance incentives. However, the barrier to entry for hiring a CFO can be very high, especially for small businesses and startups.
But financial professionals aren’t out of reach. CFO Hub offers a comprehensive suite of outsourced financial services, connecting up-and-coming companies with experts who facilitate real growth.
Our top-tier outsourced professionals can help you prepare for an audit, perform everyday bookkeeping tasks, negotiate a merger or acquisition, or anything in between. If you have a financial goal, CFO Hub is here to help you crush it.