Expense management automation

The ultimate guide on how to hire a CFO

January 17, 2020
|
5
Min Read

Effectively managing a company’s finance is one of the most critical aspects of sustainable business growth. Without a solid financial foundation, your company could crumble from the inside out. This could also prove detrimental to the health of your business. Hence, you must understand the nuances of who to hire a CFO to make the right choice for your business. 

A Chief Financial Officer (CFO) is responsible for managing all financial actions of a company. This includes planning, cash flow management, and identifying a company's financial strengths and weaknesses. They also play a critical role in risk detection and aversion.

If you are in the process of hiring a CFO and need some guidance, we're here to help! In this article, we take a deep-dive to understand the fundamental steps behind hiring a CFO. Let's dive in! 

How to hire a CFO: The right way

Hiring a CFO is no easy task. You are looking for someone who can maintain and improve the financial health of your business. This means someone credible, honest, smart, and the list goes on. But how does one identify the key characteristics of a CFO who’s a perfect fit for your business?

When you start your search for the ideal CFO, here are a few things to consider:

Hire someone you can trust

The CFO you hire needs to be a trusted advisor, who will work closely with administrators, senior management, and the CEO. Your CFO will ideally advise you in all financial matters, from investments and mergers to spending, budget-cuts, and overhead costs. This requires you to trust your CFO with more than just your money. 

Your CFO may also need to act on your behalf, without having time to consult you first. Hence you must pick someone who has sound decision-making abilities. Also, when you choose a CFO who shares your morals, values, and vision, you can rest easy that every decision has your company's best interests in mind. 

Choose someone with experience in your industry

CFO's who are just starting out, usually generalize their abilities and skills. Over time, they gain experience by working in a particular niche. If your company specializes in a specific industry, you'll benefit from hiring a financial officer with the same level of expertise and credentials. Here's why:

  • When the CFO you hire has experience in your field, they can better advise you on the decision making process. They'll also be well-versed and educated in common issues and how to address them. 
  • Background knowledge of your industry means you'll spend less time bringing them up to speed on how things work. This also means getting work done faster. 

Pro-tip: 

1. Choose a CFO that fits your specific needs. An easy way of doing so is by checking their portfolio for desirable skills. 

2. A financial advisor who is detail-orientated, bi-lingual, and strategic is ideal.

Hire an Ethical CFO

Ethics and finance go hand-in-hand. You want a Chief Financial Officer who makes ethical, moral decisions. Not only can an unethical CFO get you into trouble, but they can also bankrupt your business.

CFOs are responsible for ensuring compliance with Generally Accepted Accounting Principles (GAAP), which are outlined by the Securities and Exchange Commission (SEC). Make sure that the CFO you hire is well-versed in these laws and regulations. 

Additionally, all certified financial officers are bound by specific laws to practice in an honest, ethical, and legal manner. The Sarbanes-Oxley Act helps protect your business by preventing fraud and requiring CFOs to disclose all financial information. 

Pro-tip:

Always remember, not only are you entrusting your CFO with your finances but also your legal future. If your CFO is accused of illegal activity, your reputation and freedom are also at stake. 

Are you a startup or a Fortune 500?

Are you a startup, or have you been in business for a while? The size and success of your business will help determine the type of Chief Financial Officer you need.

Start-ups have the luxury of hiring a CFO and working with them from the ground up. This means they'll offer advice on budgeting and planning from the get-go – putting you in the best financial position for success. It is also an excellent opportunity for CFOs who are just starting. In such a scenario, you can grow and learn together. 

On the other hand, if you're a well-established Fortune 500 company, you likely need a highly-experienced CFO familiar with handling multiple accounts and high-risk assets and investments. Make sure that the CFO you hire is clear about their role and job expectations. This includes their core functions, the metrics they're responsible for, and their target spending scale.

Hire someone who's comfortable working on the frontlines

While there's plenty of time spent behind a desk, your CFO also needs to network. CFOs are responsible for attending meetings, making presentations, and rubbing elbows with other professionals. Often your CFO will meet with investors, team members, clients, and legal teams.

In many instances, your CFO is the financial face of your company. You want to hire someone charismatic, assertive, and who commands respect. A skilled CFO will have no problem making connections and keeping up with the changing expectations involved with the position.

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What not to do during the hiring process?

Don't rush the process

  1. It can be tempting to hire the first CFO you interview. This is especially true for start-up companies who are in a hurry to get things up and running. Companies who recently lost their financial advisor or one where ownership changed hands may also feel pressured to hire a CFO immediately.
  2. While this pressure can be intense, it's important not to rush the process. Filling the position of CFO is one of the biggest decisions you'll make as a CEO or business owner. Hence, approach the entire hiring process with caution. 
  3. It’s important you remember that while you may have some background knowledge and experience in finances, you wouldn't be hiring a CFO if you knew it all. Hence, be open to someone who is an experienced professional who can help you plan your financial future and aid in your success.
  4. Conduct several rounds of interviews. Tap into different resources and candidate pools. Don't limit yourself and keep an open mind. 
  5. Look beyond just the skills listed on their resume and choose a CFO with potential. Also, make sure the financial advisor you select is one whose long-term visions and goals align with your own. 

Pro-tip: 

1. Check the candidate's past spending record and the type of spending culture they're used to. (It can be difficult for some CFO's to change their habits and conform to a new set of standards.) 

2. Peer reviews and referral checks from both past colleagues and managers can help a lot. 

Don't hire a one-trick-pony

You want a CFO who is versatile. Avoid hiring someone just because they excel at one particular skill. While you want a talented CFO, you want someone who can perform all the jobs you require now – and any new ones that may develop over time.

At a minimum, the CFO you hire should be well-versed in the following areas:

  • Financial planning
  • Financial risk management
  • Financial reporting
  • Record keeping
  • Data analysis

Examine what other specific needs your company has and if a particular candidate can meet them. Even if, at first, the CFO has little experience in a specific area, trust your gut. Do they seem eager and willing to learn? Are they open to training or furthering their education if necessary?

A hard-working, flexible CFO willing to put forth the effort can quickly expand their knowledge and expertise to accommodate your company's needs. One benefit of this approach is that the new hire will learn how to perform the job exactly how you want it done. 

Don't leave your CFO in the dark

Your Chief Financial Officer is responsible for handling your company's finances – but that doesn't mean they shouldn't be well-versed in other areas of your business. The more your CFO knows about the inner-workings of the company, the better able they are to make educated decisions about your financial future.

Encourage the CFO you hire to attend all staff meetings and get involved with product development, marketing campaigns, and all other plans that directly impact overhead costs. The more they know, the better they can perform their job as an advisor. 

Hiring a CFO shouldn't be taken lightly

The task of hiring a CFO shouldn't be taken lightly. Finding the right candidate could mean the difference between your company's success and failure. It's not a process to be rushed. Choose a CFO you trust and one who shares your vision. Keep your chief financial advisor informed about the inner workings of your business so they can best serve you.

Need more advice on keeping your business finances in order? Check out our blog for more helpful resources and tips or schedule a demo today!


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