Why A Full Time CFO May Not Make Sense
May 24, 2010
In these challenging economic times, I think it's worth evaluating where you spend your accounting dollar and how effectively you are using resources.
Every company in a recession does a lot of soul searching about cost-cutting, and as payroll is generally the elephant in the room we eventually have to get to the tough decisions on employment. Generally, it's your CFO making those decisions and they don't usually recommend themselves for the chop. So in the interest of fairness - and my own business development - I would like to review some of your options.
A seasoned CFO costs between $150,000 and $200,000 or more. If your "CFO" is earning less than, say, $120,000, then they are not really a qualified CFO - most likely a Controller. A good source on this is Salary.com. Benefits and taxes would add about $30,000 to this number. You may pay a 20% annual bonus, so add another $30,000. It's probably unlikely they have a car or other big corporate benefits, so we will not add anything here. Figure another $20,000 for office space and other connected overhead and we're looking at $230,000 to $280,000 a year. That's a lot of green!
Now, in a company with $10 million to $30 million in sales, it is extremely unlikely that a CFO is actively busy in a CFO role for 40+ hours a week. At B2B CFO®, we typically direct the high level financial activities of this type of company within one day a week - more if we are in clean up mode, less once systems, procedures and well trained accounting staff are in place. Thus, it may be that you are paying premium pricing to have your "CFO" perform many mundane tasks as they fill their weekly schedule. At B2B CFO® we firmly believe in delegating tasks to the most cost effective level. Not only is this efficient, it also ensures you have a more balanced financial organization with qualified and well trained staff ready to step into a higher role if someone leaves.
A highly seasoned and experienced B2B CFO® would cost less than 10% - 20% of the full time CFO. Finally, does your full time CFO belong to an active network of over 100 highly qualified CFOs - many with experience with well known top-drawer companies, or former partners with Big 15 CPA firms, bringing a vast store of industry specific knowledge to bear on your business problems?
If you are not happy with your current CFO, or feel that you are not getting timely and acurate financial information, or would like an independent discussion about your business then it's time to talk with B2B CFO®.
For a conversation about the best way to re-organize your accounting department, and to start improving profitability and company value, call David Kirkup, your B2B CFO® on 770 845 6897 today.