If you are the founder/owner/CEO of a growing company that is thinking about or in the process of a hiring a full time Controller or Director of Finance (or know someone who is), read on.

I have seen several companies hire a full-time Controller or Director of Finance as their first managerial accounting and finance person with high expectations of what the hired individual can do for them. In more cases than not, the CEO is significantly disappointed and frustrated. This result might be apparent quickly or it might take months or more until what is asked of the full time financial/accounting manager surpasses his/her experience and/or skill set.

Expectations at the time of hire or later often include:

  • Closing the month on an accrual / GAAP basis, with strong knowledge of current revenue recognition rules
  • Managing through a CPA audit or review
  • Running the accounting department and its various functions like Billing, AR and AP
  • Forecasting and managing cash flow
  • Producing pro forma forecasts of EBITDA
  • Generating a pro forma balance sheet
  • Providing models to investors and/or buyers and clearly being able to answer their questions and manage the related due diligence process
    Participating in strategic planning for long-term growth in revenue, profitability, and enterprise value

The bottom line is that someone who’s been a company’s staff accountant or controller, or a tax CPA or auditor at an accounting firm is unlikely to have the skills to do most of things at a high level, if at all, unless they have had specific on-the-job exposure to them. Having been successful in any of those roles does not necessarily mean that they have the training, skills, and experience to function effectively as an in-house Finance leader on Day 1, Day 180, or even Day 366.

If you’re thinking that when you hire such a person that they can fully grow into the Finance leader role in 6-12 month, you’ll probably be wrong and will likely be struggling to get what you, investors and/or potential acquirers need.

I was fortunate to have had mentors early in my career who gave me the opportunity to observe and learn from people who already mastered the key functions of a Finance leader. I worked on these activities over a period of more than a year with access to these mentors to guide me before I did any of it completely on my own. For some people you hire, it can happen quickly, but most will probably need up to three years with mentoring to become masters.

Thus, we urge entrepreneurs who are thinking about hiring their first managerial level accountant, to consider our experience. It goes without saying that we think a fractional CFO is a great solution to getting the strategic, capital-raising, M&A-experienced Chief Financial Officer you may need without hiring someone at that level on a full-time basis. What I also want you to know is you can hire a full-time Controller or Director of Finance to take on the numerous accounting tasks, including month end close, without setting them up for failure by expecting them to take on CFO-level functions they don’t yet know how to do. They can get the exposure and experience they need under the watchful eye and mentorship of a CFO Options fractional CFO.

We can serve the entrepreneur’s need for that strategic CFO for a few years while also helping build the full-time financial manager up to the point where they can take on most if not all the CFO duties. We can’t turn copper into gold. Some people are very strong accountants and that may be as high on the Finance ladder as they’ll every rise, no matter how much mentoring they get. This is great because the world needs strong accountants. But if the question of whether it makes sense to invest in developing someone is on the table, we can help the entrepreneur determine who is likely to be able to grow into the CFO role—first during the hiring process and later as we mentor them.

If you’d like to learn more or have feedback to provide, please reach out to me at llevy@CFOoptionsinc.com.