Finance · Hiring

Part-time CFO vs. controller?

Nate Holbrook Founder / CEO at Lilac

June 28th, 2015

Not ready to hire a full-time CFO for funding purposes but we need someone to do more than bookkeeping. When is the right time to hire a full-time CFO versus hiring a controller instead?
Too many founders wing it when it comes to financials and have no idea how to use basic modeling to drive strategy. In this course, we’ll teach you how to build a basic financial model, read financial statements, and understand cash flow, balance sheets, and income statements.

David Crooke Serial entrepreneur and CTO

June 28th, 2015

For software you need a CTO, and acting CEO etc. (usually founders). You don't need a CFO until you're dealing with tens of millions of dollars and sophisticated finance, and VC's know this. For the first couple of years we used a by the hour service called Virtual CFO here in town, provided a controller first and a wee bit of CFO grade advice, then we worked our way up through full time people of progressive seniority, a controller, Director of Finance and then CFO. In each case the previous one quit after a while. Be sure to give titles appropriate to where the company will be in 3-5 years and not now - can this person grow into the role? If you have to demote someone or come up with a silly title like Chief Product Officer it looks weird. I had to grow a lot in 6 years from being self appointed CTO in a team of two to CTO in a company with 350 people and an IPO cooking.

Mark Wald Managing Director at Supporting Strategies - Santa Monica

June 30th, 2015

I believe that the core considerations should be to best address the needs of the company while minimizing spend. How many hours are required of a CFO-level resource, vs how many hours are required to complete lower level tasks? A good CFO or Controller will hold the company's cash preservation as a top priority and should identify opportunities to bring in lower cost resources to do as much of the time-intensive lower level tasks as possible, minimizing your time demands and cost for higher-level resources. So working with a responsible higher-level resource on a part time basis can yield more value while saving you time and expense.


Let's draw a parallel between business accounting and sports for a minute. The bookkeeper is like the score keeper--recording numbers in the appropriate boxes for reporting and (for others to perform) statistical analysis. Often a bookkeeper won't have a deep understanding of accounting, they'll just know how to keep score. But accounting professionals with more technical experience and expertise can add incremental value to the bookkeeper role. The controller is like the referee--they should have a deep understand of accounting rules and are responsible for the systems and processes that manage the company's financial data. Controllers ensure the accuracy and efficiency of a company's financial operations and reporting. The CFO is like the special teams coach, leading the strategy on technical plays and partnering with other coaches to lead the team to success. CFO's will also negotiate strategic partnerships with other teams (businesses) and service providers, participate in key staff recruiting process, help manage and raise capital, etc.


Speaking of teams, fulfilling the accounting and finance responsibilities of a business should be a team-based approach. Accounting and financial reporting can be very technical work in which mistakes can be costly to the business, so it pays to have systems of checks and balances and a second set of eyes to review the work to help ensure accuracy and consistency. It is difficult for one person to cover all this by themselves, especially when the work volume is unpredictable or is scaling up quickly.


Besides, each role requires a different skill set and personality type. Many CFO's can perform some or all of the lower level functions, but why would you want to pay their higher price to do lower level work? And if a "CFO" is charging a Controller's rate and/or is happy to perform lower level tasks for an extended period of time, are they really CFO material or are they a lower-level resource who's trying to wear the CFO title? How do they justify charging the company a high rate for their time to perform recurring tasks that a lower level resource can/should do for less money?


So to answer your question more directly, the right time to hire a full time CFO is when your business requires so much of a CFO's time on a consistent, ongoing basis that it is more cost-effective to hire a full time CFO than to outsource the role to an interim consultant. The same applies to the Controller and Bookkeeper position. And until then, outsource all three roles to a qualified team of resources who posses all the necessary skills, experience, and bandwidth to service your company's evolving needs. I offer this service through Supporting Strategies and would be happy to discuss further with you any time.

John Petrone CTO at LaunchPad Central

June 28th, 2015

I'd start with a director of finance/controller or even a VP of finance long before I'd consider hiring a CFO. A CFO is a much more strategic role, with a stronger presence in fund raising, investor relations and strategic relationships. More of a partner with the CEO/CMO/CPO/CTO - 

You can go a long, long way with a more junior team - and might find along the way that someone internal grows into a CFO role when it's needed.

Janine Davis President & Co-Founder Fetch Recruiting & Fetch Advisors

June 30th, 2015

Many of my start up clients in LA use CFO/Finance for hire companies, like Full Stack Finance, Accretive, Supporting Strategies, Straight Line.  They cover the gamut of financial modeling, planning, forecasting, as well as working on financing rounds and exits. But they also do day to day accounting operations, bookkeeping, taxes, etc.  These people are extremely experienced. At least in the case of these 4 firms, they have run into about every stumbling block, idiosyncrasy, exception to the rule, obstacle and crisis, and have successfully mediated it.  As a result, you don’t have to suffer the same pain other startups with less experienced finance/accounting staff might have to endure. And typically, the cost out the door is less than if you fork out the funds for a full time experienced CFO or Controller. If know the founders of these four firms - any/all would be happy to have a discussion with you about your situation and will be straight up about if they think you should outsource or hire in house. Just message me if you want their info.  

John Seiffer Business Advisor to growing companies

June 29th, 2015

There are many people who do this kind of work on a part time (not temporary) basis. That''s because it's a function all companies need but you don't need someone devoting full time to that function at all stages of a company's growth.

I would encourage you to think about functions rather than titles and find people who can perform the functions you need. Here are some functions that may be combined into different titles.

1) Financial analysis. Someone to make your financial numbers understandable so you can best use them when you make management decisions. Someone who projects the cash needs of the company based on what projects management is proposing.
2) Raising funds. Someone to prepare financial documents in support of raising investment or going for loans.
3)  Accounting organization. Someone to structure the accounting system, chart of accounts, procedures etc. properly. This mean make it easy for the financial analysis person to do their job, make it possible to generate relevant reports for management, keep the books in compliance to whatever the company needs at its stage (GAAP, SOX, for Audits etc) and procedures that will diminish the potential for fraud. 
4) Bookkeeping. Person (or people) who maintain the books, do account payable, receivable, collections and payroll.
5) Taxes. Person who prepares tax returns

In general the first 2 are done by someone with the title CFO and the third by a controller but when you don't need full time people you might find someone part time who can do it all.

Mike PhD North Design Labs

June 28th, 2015

Great question. If you're in SF, it might be worth chatting with momentum partners. They created an interim CFO offering for this very reason--get you setup for a raise, take care of the back office, but not have to take

Timothy Lipton Co-Founder and Partner at Momentum Partners // Seasoned Finance Executive, Startup and Early Stage Advisor, Interim CFO

June 29th, 2015

This balance of shared CFO and outsourcing back office services empowers a young company to focus on innovation and development, while allowing high quality reporting for mgmt and investors.  keeping an eye on the next 2-3 capital raises also guides the way the projections are modelled, pitch deck is designed and the story is shared with prospective investors.  

We created our firm to provide these services and the associated guidance to enable founders with high aspirations to have clean books, easy to interpret reporting and a light weight back office, as many of our clients have an admin person collect finance related items and we review this weekly and prepare AP for their approval / payments.  

The current SaaS systems are very empowering - typical tech stack for finance is QuickBooks Online, Bill.com, Payroll (Intuit / ZenPayroll), HR (Zenefits, similar) and Asana for task tracking.

Scott McReynolds, CPA

June 30th, 2015

Sounds like you're in a familiar spot for many small businesses.  You need someone to keep the books but would like more insight in to the numbers. 

CPAs and CFOs are overkill at this point but there is a large gap that requires some help.  Understanding cash flow and how your financial ratios compare are important insights to identify areas of improvement.

I would think the next step(s) would be the following to fill the Finance need at this level:

1. Understanding the non-financial metrics/drivers that translate in to revenue for your customer.  SaaS has it's share of metrics but almost every business should track # of customers, new customers, and the monthly sales to each.  Most business can be modeled based on market penetration and customer utilization and segment from there to identify opportunities.

2. Understanding your cash burn.  If you don't know this then by the time you hire a CFO you might be out of money.

3. ForecastingVariance Analysis - Non-financial and financial goals should be set for whatever period makes sense for your business.  This provides the insights necessary to become more efficient and effective.  It's good to have revenue and expense goals but also your strategic financial metrics (new customers,

Someone on your team may be able to learn some of these things. Score.org has many seminars, or you might search for "Finance for non-Financial Managers" training that can go over the key principles necessary.

LivePlan.com is <$20 per month and offers a complete solution for business planning, forecast, variance analysis, benchmarks, pitches, etc... I recommend getting a free month to see how it works for you. All the tools you need in one place.

Crunchboards is another good service to connect to your accounting system and get visual feedback for your metrics, doesn't have the all the business planning tools as LivePlan.com but a great tool for reporting/monitoring metrics.




Bob Smith Consulting to Boards, CEO's and Key Management Teams, Strategic Investor and Fast Growth Companies

June 30th, 2015

For issues of Compliance, utilize a Controller.  For Financial Strategy and Company Growth, get a CFO.

This keeps it simple.  Make it "outcome" based.  Often, you will start with a Controller and when you go to scale your investment resources, a CFO can  make a great difference.  Good Luck

Pete Lopez Business Development Manager at TempCFO Solutions Inc.

June 29th, 2015

Great question - certainly interim financial management on various levels is needed, from bookkeeper to controller to CFO.  Different levels are needed as you grow, which is what we call the back office.  You will need this to be taken care of so you can scale and exceed your milestones = increased valuation and audit ready.  Here at tempCFO -  http://www.tempcfo.com we deploy a model that scales with you to the point of an internal hire.  Happy to discuss....