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What’s best – a part-time, full-time or outsourced CFO?

All the advantages and challenges of the respective roles outlined to make your decision easier.
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The following is an excerpt from our new eBook on Hiring a Part-time CFO. Read more below, or get the full version right here.

The position of Chief Financial Officer is crucial for most businesses. Once you’ve decided that you need one, it’s simply a case of determining whether you want an outsourced or part-time staff member, or if you want to go the whole hog with a full-time salaried employee. 

Naturally, it’s not always clear which is the right fit for you. To make things a little easier, we’ve decided to outline the relative strengths and weaknesses of the different options…

Advantages of hiring a part-time CFO

Almost by definition, a part-time CFO is a temporary solution – you won’t find publicly traded companies that are still using this model. Nevertheless, hiring a part-time rather than full-time financial lead is a very popular choice for startups as it presents numerous benefits:

  • Cost: CFOs are expensive. According to Glassdoor, the average annual salary of a CFO in London is £127,325 – a potentially prohibitive price tag for a startup to pay. At the risk of stating the obvious, by going part-time, that bill goes down!
  • Workload: While the CFO’s responsibilities are mission-critical, for a younger company they are often focused around specific occasions – paying salaries and vendors monthly, processing new employees, or preparing a deck for a grant request. In this instance, you want a senior professional who knows your business inside and out, but the rest of the time, it’s difficult to justify having a full-time person on board.
  • Level of experience: Hiring part-time gives businesses the ability to access a larger and more diverse pool of senior professionals, who prefer a part-time position and would rather work flexibly. Your ability to provide these conditions can help you hire outside your budget – and enjoy the added benefits of a person who comes with a greater breadth of experience.
  • Time-to-hire: Finding a full-time CFO is a lengthy process that will typically require you to go through a recruiter, who will charge an additional 25-30% of your hire’s annual salary upfront. You can hire a part-time CFO using a flexible hiring platform, which removes these large upfront costs and allows you to finalise your hire within days to weeks. A part-time relationship is also easier to end, for both parties, making the potential cost of mistakes much smaller.

Outsourced or in-house?

If you’re going down the part-time route, the next question you might ask yourself is whether you want to go fully outsourced. There are multiple providers offering part-time CFO services, including our partners at Accountancy Cloud.

Hiring a third-party CFO-as-a-service saves you the need to interview and assess candidates. This is a great way to get started and ensure you have high-quality financial expertise from the get-go.

You might outgrow these services when your CFO role requires a lot of specialised knowledge, which you would like to keep in-house. If one or more of the following applies, you would benefit from having a friendly team member rather than an outsource company because trust is everything.

  • Externally funded (VC, angel investor)
  • New business model/product (common in startups breaking new ground)
  • Complexity relating to finance – high volume of transactions, international tax considerations

The CFO role should grow as the company grows

Regardless of the model – outsourced, contract or PAYE – hiring part-time is an excellent choice early on. But as your company grows, the CFO role will become more central to the business and entwined in a growing number of processes. After several funding rounds or at approximately £5 million GMV, the financial side becomes more complicated – and in heavily regulated or high-risk industries, this stage might come much earlier. 

Complexity can arise due to international expansion, new business lines or simply more people on payroll. The finance function needs to support this growth smoothly, meaning this would be the moment to staff up. This could still mean a part-time CFO and full-time finance resource elsewhere, but more often than not it will mean a full-time CFO. 

To find out more about when, how and why to hire a part-time CFO, have a look at our recent Founder’s Handbook on the topic.

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