5 Signs You Need a Finance Executive for Your Small Business

by Sarah Johnson on February 6, 2013

You’ve outgrown your business-in-a-basement past. You have clients, sales, and even a few employees, including a bookkeeper who keeps track of the money that’s coming and going. But do you still have a handle on the big picture and all of your company’s finances?

“When you start off as a small company, you get used to doing it all by yourself and you could lose track of when it has gotten beyond you,” says Loren Carlson, chairman of the CEO Roundtable, a networking organization for chief executives and business owners.

Small-business owners who don’t view financial matters as their forte (in other words, most of us) can greatly benefit from hiring a finance executive — someone to help them with budgeting and planning, managing cash flow, improving the collections process, and taking the business to the next level. Depending on what you can afford and how much support you need, this person could be a contract-based controller, a part-time CFO, or a full-time finance chief.

Here are five signs that it’s time to bring in someone to focus on your company’s finances.

1. Your method of collecting payments is hoping for the best. Your business is diligent about billing customers, but too many of them are not paying up. You need someone who can take over, streamline the collection process, and get on the phone to play hardball when necessary.

2. You need a big-picture view. Although bookkeepers are great at writing checks and processing payments, they are generally focused on the present state of your business and not the future. By watching over your receivables, revenue cycles, inventory levels, cash flow, and the like, a CFO can help you with strategic planning and assess whether what you’re doing now is sustainable in the long run.

3. You no longer understand the numbers. When your business grows, so does the breadth of calculations you have to do. If the final numbers you’re seeing don’t tell you the full story of your finances, you need additional expertise — someone who can explain what the figures mean and how you can increase some of them.

“As businesses get more complex, owners start to not understand why they’re not making money,” says Bob Thompson, founder and CEO of the CFO Connection, which provides small businesses with part-time CFO services. “They realize they have to do things differently, but they’re not quite sure what that is.” A CFO can fill in the gaps. Other CFO-services firms for small businesses include CFOwise and B2B CFO.

4. You need to show credibility. If you’re looking for additional funding, such as from venture capitalists, or you want to go public in the near future, a CFO can be your advocate and show potential investors that your company has the financial acumen not only to stay afloat, but also to thrive.

5. You have other matters to worry about. If you’re already spread thin finding clients, coming up with new product ideas, and creating marketing plans, consider handing off some of your financial responsibilities to someone more knowledgeable than you are.