Why Hire a CFO + How to Find the Best Candidate
Discover why you should hire a CFO, steps to help you find the perfect candidate, and a few challenges you may face. Also, explore the easiest way to hire a CFO.
Appointing a CFO (chief financial officer) might be the game-changer your business needs.
In a 2023 IDC survey, 90% of executives emphasized the growing importance of CFOs especially with economic uncertainties on the rise.
Another survey of around 100 failed, well-funded companies revealed that nearly half didn’t have a CFO or a senior finance leader in the critical year before their collapse. Of these, 30% had leaders who served less than 18 months (Egon Zehnder, 2023).
This leaves little room for doubt:
A CFO's strategic vision and financial acumen are vital for a company's innovation, competitiveness, and long-term success.
But, how do you find the right CFO?
We’ll give you a proven step-by-step guide to hiring one. We’ll also tell you the most effective strategy to find your ideal CFO (through Go Fractional).
Further Reading:
- Find out Why You Should Hire a Fractional CFO and why this could be the most cost-effective solution to transforming your company’s financial roadmap.
- Want to expand your executive team with a Fractional COO? Discover how to hire these experts and the Essential COO Interview Questions you should ask.
Why Should You Hire a CFO? 13 Key Responsibilities They Handle
A chief financial officer can be the architect of your company's financial future, crafting a strategic roadmap for growth.
Here’s a list of essential CFO services:
- Financial Process Optimization & Compliance: Sharpen the efficiency of intricate financial workflows and guarantee adherence to the latest regulatory, financial, and industry-specific standards.
- Budgeting and Financial Forecasting: Craft a budget to set financial goals, allocate resources, and establish milestones. Use market insights and previous financial information to forecast future financial outcomes, guiding financial strategy adjustments and helping stakeholders make an informed decision.
- Financial Reporting: Produce data-driven financial reports, highlighting revenue trends and cost analysis for strategic financial insight. Use advanced visualization tools to help stakeholders make informed decisions.
- Tax Strategy Enhancement and CPA Compliance: Refine tax strategies, ensuring compliance with CPA standards to minimize risks. Spot opportunities for financial efficiency using expertise in navigating complex tax laws.
- Fractional CFO
- Strategic Finance
- Investor Relations
- Corporate Governance
Strategy, Finance, Operations Executive. Problem solver; creating value and driving change.
- Audits and Financial Compliance: Guide companies through intricate financial audits, leveraging their deep knowledge of regulatory frameworks. Proactively identify and mitigate risks, ensuring compliance and operational excellence.
- Strategic Financial Planning: Align financial strategies with business objectives avoiding missed opportunities and resource wastage. Harness financial information to establish and pursue goals, taking into account the company's vision, financial health, and market dynamics.
- Treasury Management: Employ targeted cash flow strategies and sophisticated financial modeling to avoid liquidity issues, ensuring your company remains solvent and financially healthy. (This is crucial given that 82% of business failures are attributed to poor cash flow management.)
- Capital Raising and Fundraising: Evaluate funding sources, craft persuasive pitches, and manage investor relations, including setting up data rooms and addressing due diligence queries – all to secure funding in a competitive market.
- Fractional CFO
- Strategy
- Analysis
- Startups
Results-Driven Finance and Strategy Expert for Growing Businesses
- Vendor Negotiation and Contract Optimization: Optimize vendor contracts through negotiation and market analysis to optimize costs and forge valuable partnerships.
- Implementation and Scaling of New Systems: Oversee the implementation and expansion of advanced financial systems, incorporating state-of-the-art technology and optimizing processes for efficiency.
- Guidance on Mergers and Acquisitions: Deliver expert financial analysis and strategic advice on mergers and acquisitions, focusing on due diligence, risk management, and financial modeling to ensure successful, growth-oriented transactions.
- Regulatory Changes Adherence: Help the company adapt to ever-evolving regulatory changes while ensuring compliance and mitigating legal risks.
- Financial Mentoring and Training: Mentor finance teams and business owners to elevate financial practices, and train team members to prepare them for advanced roles. (Here’s why this is vital, especially for a founder: In a 2014 survey by Decipher Market Research, 40% of the small business owners labeled themselves as “financially illiterate”, yet 81% were managing business finances.)
- Leadership
- Strategy
- Fundraising
- Process Improvement
CFO of Citymapper until its recent sale to Via
When Should You Hire a CFO?
Here are a few scenarios where leveraging CFO services can be a game-changer:
- You are making $10–50 million or more in annual revenue
- You are preparing to raise external capital
- Your business is undergoing rapid changes and/or sales growth
- Your internal team lacks adequate financial management expertise and leadership skills
- You don’t have time to focus on financial management and want to focus on other core competencies
- Your company’s financial operations are growing more complex
- You want to enter new markets or expand globally
- You are considering major changes in your company’s capital structure
- Your company is undergoing significant technological transformations
- You want to maximize your company’s exit value
Now, what should you do to hire a good CFO for your business?
How to Hire a CFO: 9 Essential Steps to Help You Find the Right Candidate
These nine proven steps will ensure you find the right CFO who meets your financial needs and aligns with your company's vision and financial performance goals:
1. Identify Your Business Goals and the Type of Finance Leader You Need
Start by assessing your company's current financial health, market position, operational efficiency, and future aspirations.
Next, determine the specific financial leadership role you need – be it for early-stage growth, navigating mergers, preparing for events like an IPO, or orchestrating a financial turnaround. The chosen CFO should have the expertise that aligns with your business's current needs and future objectives.
Here are some of the CFO personas you could look out for depending on your company's trajectory:
- The Accountant CFO: Specializes in financial reporting and management, crucial for accuracy and compliance in financial statements.
- The Capital Raising/Startup CFO: Focuses on securing funding for growth, adept in dealing with investors, and managing early-stage financial challenges.
- The M&A or Exit CFO: Provides expert guidance through mergers, acquisitions, or sale preparations (exit), employing financial statements to ensure strategic decisions.
- The Turnaround CFO: Skilled in restructuring financially troubled companies, steering them back to profitability.
- The Strategist CFO: Integrates financial acumen with strategic foresight, propelling long-term business growth.
- The Operator CFO: Optimizes day-to-day financial operations and business processes.
- The Technical CFO: Has a deep understanding of technology and the latest tech developments, and can leverage it to build financial strategies for rapid growth.
2. Determine the Commitment Level You Need
Traditionally, companies gravitate towards employing full-time CFOs.
However, nowadays many experienced executives favor project-based or part-time engagements instead of full-time roles.
This lets businesses access a broad range of expertise on a more flexible basis, through options such as hiring a fractional CFO (AKA a virtual CFO or an outsourced CFO) or an interim CFO.
Let’s look at what a full-time, interim, and fractional CFO offers:
| Full-time CFO | Interim CFO | Fractional CFO |
| A regular C-suite member who’s paid a full-time compensation package (including salary, all benefits, profit sharing) | Temporary executive stepping in during a vacancy or transition period | Part-time executive who takes on all the responsibilities of a full-time CFO, at a significantly reduced cost |
| Long-term, permanent role | Short-term, temporary role | Part-time, flexible duration (can be short- or long-term and usually up to 20 hours/week, |
3. Determine Your Budget
To set an appropriate budget for hiring a CFO, evaluate your company's financial health and goals, and research market salary rates. This will ensure you offer a competitive salary that attracts top talent without straining your finances.
For example, a larger enterprise targeting rapid growth might allocate a significant budget for a CFO skilled in mergers, acquisitions, and navigating global markets.
The costs will also depend on the levels of commitment you need. Here’s how:
- Full-time CFOs: Many top former and current CFOs rake in yearly salaries from $15 to $60 million, including bonuses, benefits, and stock option rewards.
- Interim CFOs: Compensation for interim leadership can vary based on location, industry, and function. But you can expect to pay an interim CFO between $252,000—$462,000 annually (including cash bonuses, commission, etc.,)
Fractional CFOs: These executives are the most cost-effective, with salaries typically ranging between $10,000—$20,000 monthly, summing to $120,000—$240,000 annually. The best part is, that you don’t have to offer your virtual CFO bonuses, equity, or other employee benefits.
- Fractional CFO
- Analysis
- Strategic Vision & Leadership
- Forecasting
Maximizing Financial Potential, One Strategy at a Time
4. Determine What Skills You’re Looking For
When hiring a CFO, it's vital to identify specific skills that align with your company's unique financial goals and organizational culture.
Here are some of the essential skills to look for:
- Expertise in financial analysis, forecasting, and modeling
- Strategic financial insight and innovative thinking
- Proficiency in financial risk assessment and mitigation
- Balanced decision-making with ethical integrity
- Competence in building and managing agile systems
- Strong interpersonal and communication skills across stakeholders and departments
- Expertise in leveraging technology to automate financial processes and improve efficiency
5. Create a Compelling Job Description and Promote It
Before you craft a job description, create a clear list of your company's requirements and deal-breakers. This provides guidance for both your internal HR team and external recruiters.
Your job description should contain the following:
- An engaging overview of your company and industry
- The major duties and strategic roles you expect the CFO to fulfill
- The industry experience, degrees, and certifications that you expect the candidate to have
- The desired leadership and interpersonal skills you’re looking for
- Details about the salary and benefits
The job description should not only clarify the role for potential candidates but also position your company as a desirable workplace.
But that’s not all.
To effectively attract a good CFO, you also need to promote the open position by advertising it across multiple channels to reach the relevant audience.
For instance:
- Use LinkedIn and similar platforms for job posting and networking to ensure maximum visibility.
- Actively participate in relevant events to network with finance professionals.
- Implement targeted advertising on social media to reach a wider pool of potential candidates.
- Partner with finance and executive associations to leverage their networks and job boards, accessing a pool of skilled professionals.
6. Consider Different Recruitment Channels
When hiring a CFO, using various recruitment channels can broaden your search and increase the likelihood of finding the right fit.
Some of the best recruitment channels include:
- Fractional Hiring Platforms: Go Fractional gives you access to exceptional CFOs available for part-time work, offering a flexible solution for businesses needing expert financial management without the expense or commitment of a full-time hire.
You can even hire a fractional head of talent through Go Fractional to help lead your search for a CFO.
- Startups
- Financial Modeling
- Financial strategy
- Business strategy
Startup Finance & Ops Expert - CPG & Tech (Top 3%)
- Executive Search Firms: These firms specialize in sourcing executive talent, including those not actively job hunting. But the high fees can strain the budgets of especially smaller businesses.
- Networking: You can leverage your existing network to get referrals so that you can connect with recommended potential CFO candidates directly. This can be time-consuming and you may not find a qualified candidate with the relevant expertise immediately.
- Tracking Potential Candidates: By keeping an eye on industry leaders and emerging talent potentially open to career moves (via LinkedIn, industry events, online forums, etc.), you can proactively identify potential candidates early on. This approach, though proactive, demands ongoing effort and may not always lead to immediate success.
7. Have a Robust Interview Process in Place
Implement a thorough interview process for your CFO candidate, incorporating behavioral questions, financial expertise assessments, case studies, and scenario-based questions, especially for execution-focused roles.
Question the candidate thoroughly on all potential responsibilities, covering financial strategy, compliance, investment acumen, risk management, and others.
Involve key stakeholders – executives, direct reports, cross-functional leaders, and board members – in the process to gauge the candidate's collaboration skills and cultural fit.
Use a mix of panel discussions and informal interactions to obtain a well-rounded view of the candidate's ability to integrate and lead.
This comprehensive approach guarantees a deep dive into the candidate's strategic vision, ensuring alignment with the company's goals and culture.
Not sure what interview questions to ask?
Here are 50 Critical CFO Interview Questions to help you find a qualified candidate.
8. Ensure Alignment between the CEO and CFO + General Cultural Fit
The synergy between the CFO and CEO directly influences the company's strategic planning direction and clarity of vision.
Misalignment between these key leaders can lead to conflicting financial strategies, placing the company's financial health and decision-making at risk.
But that’s not all.
The CFO also needs to be aligned with the board, other top executives, and department heads. In general, the CFO should be able to integrate with the company's values, work ethic, and team dynamics.
Evaluate a CFO's fit with the CEO by posing scenario-based questions to assess their vision and problem-solving tactics. For broader compatibility and cultural fit, involve team members in the interview and use behavioral questions.
9. Conduct a Background Check
Conducting a thorough background check on a potential chief financial officer is vital to validate the candidate's financial expertise, qualifications, and credibility, and ultimately safeguard your company's financial integrity and reputation.
This process includes verifying educational and professional credentials, and employment history, and scrutinizing resume details through reference checks.
Criminal and financial checks are also essential to evaluate the candidate's integrity and bankruptcy records and any financial misconduct.
Given the high stakes, you should also consider checking the candidate’s litigation history, potential conflicts of interest from affiliations or board memberships, and a global address history to cover any international experience.
Now that you know how the CFO recruitment process works, let’s look at a few challenges you might run into.
3 Common Challenges in Hiring a CFO
Here are three key hurdles you may face when filling your CFO role:
- Limited Pool of Qualified Candidates + Competition: There's a noticeably smaller pool of highly qualified candidates when hiring for C-suite roles, leading to fierce competition among companies seeking top-notch financial leaders.
- High Salaries: Full-time and interim CFOs demand high salaries due to their expertise and vast experience, requiring companies to make substantial financial commitments.
- Lengthy Hiring Processes: The CFO hiring process is often long and complex, involving detailed vetting, interviews, and negotiations, which can delay the strategic benefits they bring.
Looking for a way to overcome these challenges?
Fortunately, Go Fractional can help you tap into a pool of highly qualified, pre-vetted fractional CFO candidates, expediting and streamlining your hiring process.
- Strategic Vision & Leadership
- Analysis
- Process Improvement
- Monthly Financial Reporting
Finance business partner focused on accelerating businesses growth
Here’s how:
Hire a Fractional CFO through Go Fractional
Whether you own a large or small business, Go Fractional, offers a distinguished network of adept CFOs to strategically steer your financial operations. Our experts excel in financial management, including guiding IPOs.
We'll take on the cumbersome administrative tasks involved in filling your CFO role, freeing you up to concentrate on what you're passionate about — your core business activities.
How We Select the Candidates
- We vet candidates to ensure they have a solid track record in financial leadership and business growth.
- Those who qualify are subjected to a comprehensive interview to align with our stringent standards.
- Candidates create detailed profiles that showcase their specific areas of expertise and notable achievements.
Next Steps?
- Contact us to tap into our exclusive network of fractional executives. We offer recommendations that align with your specific financial needs, including access to select members not publicly listed on our website. If the perfect match isn't already in our network, we're committed to finding them for you.
- Arrange a meeting with our prospective candidates to talk about their roles, duties, timelines, and fee structures. It's also a good idea to have your executive team interact with the potential candidates to ensure a good cultural fit within your organization.
- You will then receive a comprehensive proposal to evaluate.
- If everything looks good, kickstart your collaboration with a clear-cut agreement.
- You receive a monthly invoice and ongoing assistance from our team.
How Much Will It Cost?
The cost of our fractional CFO services at Go Fractional varies, depending on their time commitment, expertise level, and job scope. But you can anticipate budgeting between $10,000 to $20,000 per month, or $120,000 to $240,000 annually.
This rate is a steal compared to the annual compensation, including bonuses and stock options, that full-time CFOs command.
In short, if you're thinking about bringing on board a fractional CFO, Go Fractional provides a simplified, strategically savvy, and cost-effective answer.
Ready to leverage exceptional fractional CFO services to boost your company’s financial performance?
