When an Accountant is Not Enough (is it Time to Hire a CFO?)

From CFO Selections: If you’re a business owner or CEO, you need some kind of financial guidance. Maybe you create addicting video games for smartphones, run a local real estate agency, or are a health services provider. No matter what your trade involves, being in business can be a challenge.

But unless you run a CPA firm, you probably didn’t go into business to stare at numbers and comply with financial regulations. These are often perceived as a pain, but they are a necessary piece of any successful endeavor. Hopefully, you already have some help in this regard.

Unfortunately, hiring financial help is often either an afterthought or a hastily made decision, and you don’t get the guidance you need and deserve. Even worse, your business meanders down the wrong path and ends up being just another scary statistic.

A successful business needs not only financial assistance but also guidance that is effective. On the one hand, you might just have the wrong accountant in your corner, but there’s also a chance that your company needs something more.

Does Your Business Just Have the Wrong Accountant?

If Cousin Joey is handling your company’s books because he was “available” and comes cheap, this might not be the best choice for your business. In truth, many small business owners make the mistake of hiring their personal tax professional as a business accountant, and this often doesn’t turn out to be a good fit for the company.

Your business might be able to manage just fine with an accountant if they are the right one. But, a wrong pick could lead to disaster. There’s no shame in admitting a mistake and making a switch. In fact, one survey by tech firm Accountex determined that nearly half of small businesses have changed accountants at least once. The main reason for switching? The accountant did not give proactive advice.

This leads us to several signs that you might have the wrong accountant on board.

  1. Your accountant is reactive instead of proactive. Are you getting excellent financial advice from everyone BUT your company’s accountant? If you’re the one consistently bringing money-saving ideas to the table, it’s time to look for someone else. Likewise, if your accountant is putting out financial fires instead of anticipating trouble and helping your company avoid it, you have the wrong provider.
  2. Your accountant isn’t familiar with your industry. An effective accountant should be familiar with your industry. There might be particular tax breaks that apply to your sector as well as regulations. If they don’t have this familiarity, it could not only cost you money but also get you into hot water with regulators.
  3. Your accountant isn’t responsive. When you call or email your accountant with a question, you should expect a quick answer. Even during the busiest season of the year, you are still the boss or client, and they are the service provider. Your business deserves a high level of service.
  4. You don’t get what you pay for. As a business owner or CEO, you shouldn’t have to worry that your accountant is missing deadlines or filing inaccurate reports. If this is happening, fire your accountant as quickly as possible.

If you’re going to fire your accountant and get someone new, doing this right after your March or April taxes are due is a good time. In many cases, however, your company’s needs might go much further…

When an Accountant Isn’t Enough

Running your business without any accounting help is a terrible idea. But, what if you have the right accountant in place and it’s still not enough? You’ve worked hard enough to build your business, and it would be a tragedy to make no forward progress, or, worse yet, lose everything because you lack the financial guidance you need to get to the next level or handle a critical deal.

Many businesses reach a point at which a CFO either becomes a necessity or a strong recommendation. Tactically, a CFO can assist with inventory control, help create profitable pricing models, and provide visibility into areas impacting margins. Strategically, they can contribute to creating a beneficial capital and organizational structure as well as develop a strong business growth plan.

These are all vital areas within your organization and failure to have experienced leadership there could result in diminished capital and subpar growth. So, how do you decide that an accountant isn’t enough for your business and it’s time to hire a CFO? Here are several key indicators:

  • Growth

If your company is experiencing growth or plans for fast growth, you’re going to need focused financial guidance. This means that you need a qualified expert that can not only provide oversight for your day to day financial obligations but also ensure that cash flow obligations are met.

Beyond this, getting to the next level requires a significant amount of strategic planning. Whether this involves hiring more talent, expanding your products and services, opening new locations, or all of the above, you need someone in your corner that is skilled at evaluating these changes for profitability and soundness. Your CFO will be the manager that is your right-hand partner to ensure you are putting the right growth plan in place.

  • Capital Needs

If you are raising debt, or expanding your working capital, your CFO will be invaluable. Choose the right kind of debt, and it can boost your company’s credibility and ability to grow. Choose the wrong kind, and it can cost you more money than necessary and jeopardize your cash position.

Whether it’s a line of credit, bank loan, or an equity infusion from an investor, your CFO can help negotiate terms and handle the complex reporting requirements that come along with debt covenants. Your CFO can also make sure that the existing stake of the company’s founders remains protected.

  • M&A

There are risks involved with adding to your business through acquisitions or strategic alliances. While mergers and acquisitions activity can be a catalyst for massive business growth, it can also be the source of fatal errors.

Whether your goal is to expand your geography or product offerings, or you want to be the target of a major acquisition, you’re going to need some help. As your company approaches these deals, your CFO will ensure that it has the most accurate information available and gets the best terms, so you achieve your goals.

  • Complex Financials

At some point, every business becomes too complex to rely on the financial data provided by an accountant. Not only do you need accurate and timely financial information about your business and its sector, but also someone that can interpret this data for you and make recommendations so that you remain relevant and competitive.

Whether your company is considering going public, handling a more diverse portfolio of business, or some other major change, your decision making could become even more complex. A CFO can help your business navigate any process to ensure that you are avoiding unnecessary risks and making the types of decisions that will enhance your bottom line.

We Need Something More. Now What?

Maybe you’ve determined that it’s time for your business to graduate from having an accountant to a CFO. What’s the next move? That depends.

First, someone who serves as an accountant or controller isn’t necessarily the best choice as your company’s CFO.  To help guide the financial strategies of your business a CFO must be looking at the future. They should have a wide breadth of financial experience, including knowledge about leadership and team building, mergers and acquisitions, international markets, and exposure to the market and stakeholders.

Next, no rule book requires that you hire a permanent or full-time CFO immediately. In fact, you can bring on an interim CFO while you conduct a more exhaustive search or even a part-time CFO to complement your current program.

Developing and managing a finance team while also running a business is no simple task. A vital thing to remember as a business owner is that you must focus on running and growing your organization. You’ll need the best available information and strategies to accomplish this, and it’s worth the investment to have the right financial team in place to help you get there.

CFO Selections can help you with interim and part-time CFOs. Our executive search services can also help your company fill these roles with qualified full-time professionals.

Contact us to schedule a complimentary consultation if you’d like to discuss your unique situation.

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