Whether you’re facing a pressing need or planning for the future, it pays to know the potential value of hiring an interim CFO.An interim or temporary CFO is an important strategic consideration in a number of potential cases, depending on the nature of your business and your current or future needs. It can be a crucial step and strategy for a startup, established company, or a private equity or venture capital firm.
Common Business Cases
If you’re running a startup and/or your company is experiencing rapid growth, you may suddenly have a need for an experienced financial professional, who can make sure your finances are in order and you have the right accounting practices and procedures in place. An interim or short-term CFO can also help you navigate your future financial path, provide strategic insights on budgets, projections and cash flow forecasts, and even guide you through a venture capital fundraising or M&A process.
If a CFO has left your organization, hiring an interim CFO can provide continuity and stability, and ensure that the departure won’t negatively impact your business. By bringing in an experienced and knowledgeable resource in the interim, you can potentially “test drive” a new CFO, or ensure a seamless transition to your eventual permanent replacement.
Special Projects or Events
If your current CFO needs additional expertise in handling a major event or project, such as an M&A transaction, fundraise, restructuring, new product introduction, or major expansion, an interim CFO can provide much-needed skills and experience in one or more of these areas.
In private equity, an interim CFO might be an ideal way to address weaknesses or a gap in the financial management of a recently acquired business. It can also be an effective way to lead a turnaround effort or prepare to sell a business.
Benefits of Hiring an Interim CFO
Hiring an interim CFO offers a number of advantages and important benefits. Across all business cases, it means bringing in a professional with the expertise and experience to organize your finances and keep them on track.
An interim or temporary CFO will typically have extensive experience, often with multiple organizations. This includes education and training in accounting best practices, systems and reporting, as well as financial regulations. Bringing in the right talent means you can leverage this experience to establish or make immediate improvements to your financial systems and processes, or lead the way through an important project or event.
Since the assignment is typically temporary, an interim CFO is often focused on specific goals and tasks. These might include building or maintaining a strong financial foundation and setting the stage for a future handoff to your existing staff or an eventual replacement.
An interim CFO also offers some “big picture” benefits. Among these are an opportunity to provide financial planning and analysis, to help your business prepare detailed budgets and monthly forecasts, and develop a complete understanding of your company’s financial performance and history.
Importantly, an interim or temporary CFO can also offer an objective, neutral point of view. This can be a crucial perspective when it comes to identifying areas for financial improvements or major investments. It’s also beneficial in providing stakeholders with an experienced, third-party perspective during strategic deliberations and evaluation of future business opportunities.
In the event of a major M&A transaction, an IPO, or the sale of a business, an interim CFO with experience in these areas can provide much-needed guidance and help ensure a positive outcome for all stakeholders.
Ultimately, hiring an interim CFO is an investment in time. It gives your organization time to establish the right accounting systems and financial methods, find the right replacement, address weaknesses or a lack of resources, or make the right long-term decisions.
Depending on the size and complexity of your needs, a temporary, interim CFO may cost considerably less than hiring a permanent resource. Even if you plan to hire a permanent CFO, an interim hire can save considerable expense by giving you time to find the right candidate, ensuring a smooth and efficient transition, and setting up the right financial systems and practices for a permanent replacement.
Interim CFO Qualifications
Qualifications for the ideal interim CFO may vary based on your business needs, but a good candidate will typically offer a combination of outstanding education, experience, skills, expertise, and personal traits.
Education and Experience.
Typically an ideal interim CFO has an MBA in finance, 5 to 10 years of executive-level or senior management experience, and a proven track record of leading the accounting or financial functions for companies of a comparable or larger size. We recommend focusing on candidates who have prior experience at one of the “Big 4” accounting firms (Deloitte, KPMG, PwC, EY), as they provide world class training and maintain very high standards for their work product. CPA certification is an added bonus as well.
Accounting Practices & Systems.
The ideal candidate should also have extensive experience in establishing, maintaining and managing accounting practices and systems. These might include your current systems and procedures, or those you may need to put in place to make improvements and manage your finances more effectively. An interim CFO should also have sound knowledge of current financial regulatory and legal requirements.
In addition, depending on your business needs, you may seek an interim CFO with specific experience and expertise in capital raising, financial planning and analysis, financial modeling, growth management, new product development, cash management, M&A, sales of businesses, restructuring or downsizing, or turnarounds.
It’s often important to find a candidate with the right personal traits and attributes for your business. For example, most businesses will want to bring in a highly proactive and hands-on CFO who will be positive, focus on results, and provide financial leadership for the entire accounting and finance team. It’s also ideal to find someone with strong judgment and who will be objective.
Flexibility and Adaptability.
Other key considerations are a candidate’s flexibility and adaptability to change, particularly when entering a different industry, culture or organization. Ideally, you’ll also want to hire an interim CFO who can establish immediate credibility, work well with peer-level executives, and win over and build teams quickly and effectively.
As a final but all-important consideration, it’s best to find a candidate with excellent interpersonal skills. This helps ensure positive, constructive interactions with stakeholders and all the members of your team. If you’ve decided to hire an interim CFO, take the time to find the right candidate. It’s a crucial decision, and getting it right can save your business considerable time and money.
Finding Your Interim CFO
At Graphite, we connect companies with pre-vetted, highly qualified and experienced financial professionals, including top-tier interim CFOs. We offer access to over 4,000 vetted experts with an average of 10 years of experience, including more than 1,000 with an MBA from a top 10 U.S. business school, and hundreds more with MBAs from top global programs such as INSEAD and London Business School. We only admit CFOs into our network who have several years of work experience from a Big 4 accounting firm.
Visit www.graphite.com to start your search and find your interim CFO.