Is the Interim CFO Right for You?

In established corporations, a full-time Chief Financial Officer (CFO) is a vital member of the executive team. However, your company might not be ready to onboard a full-time CFO just yet. It could be due to financial constraints or the time-consuming process of finding the perfect candidate. If you’re unfamiliar with the role of a CFO, you might want to gather more information before making a hiring decision.

There are various reasons why hiring a full-time CFO might not be immediate:

    1. Cost: The ideal candidate might be too expensive at the moment.
    2. Transitional Phase: During mergers or transitions, you might need specialized CFO expertise temporarily.
  1. Project Oversight: One-off projects may require financial supervision until completion.
  2. System Implementation: Short-term assistance might be necessary to implement new financial systems.
  3. Startup Support: If you’re a startup, you might need financial guidance for growth.
Given your unique circumstances, you’re considering hiring an interim CFO to meet your short-term financial needs. Now, the challenge is evaluating whether this individual is beneficial for your company and if your choice was right.

What to Expect from an Interim CFO

Interim CFOs are seasoned financial management specialists who offer the skills you require. They can work full-time under short-term contracts or part-time based on your needs. An interim CFO is a temporary team member, which means your performance expectations might differ from those of permanent staff. It’s your responsibility to communicate your expectations clearly to the person you hire. This involves understanding your needs, discussing them with potential candidates, and ensuring their skill set aligns with your requirements.

For instance, if you’re uncertain about your company’s growth direction, hiring an experienced professional in business expansion can help set and achieve goals.

Assessing the Success of an Interim CFO

Measuring the success of an interim CFO is similar to evaluating any other employee. You compare their performance to the job description. While evaluating executive roles differs from assessing entry-level positions, the core principles remain the same. Start with the initial reasons for hiring and the expected job responsibilities. Then, analyze how well they’re fulfilling your expectations.

Executive evaluations encompass “soft” skills like communication, in contrast to tasks like mail distribution. While this link focuses on evaluating an “executive director,” the principles apply equally to CFO positions. Any executive is responsible for the organization’s financial health and overall progress, with CFOs bearing even greater responsibility.

Is the Interim CFO Knowledgeable About Your Business and Market?

An interim CFO should possess strong technical skills and an in-depth understanding of your business and market. You might consider promoting an internal candidate with known capabilities or selecting someone recommended by a search firm. Professional firms strive to match candidates’ skills to your needs.

Regardless of the source, your interim CFO should have experience managing finances in a company of your size. If you have subsidiaries or international operations, expertise in those areas is crucial. The right candidate understands relevant regulations, GAAP best practices, and how to establish effective policies and procedures from the outset. They also recognize the temporary nature of their role.

A CFO, whether interim or permanent, must comprehend your company’s mission and long-term financial goals. They should grasp how your products or services contribute to sustained success and offer actionable insights for improvement.

How Does the Interim CFO Handle Differences of Opinion?

Once the interim CFO is integrated, you might discover disagreements over company goals. Can they articulate their dissent and provide evidence to support their stance? Are they respectful of your viewpoint and willing to collaborate on solutions? Since you’ve granted them authority for change, do you remain comfortable with their direction?

Close collaboration between you and the CFO is essential. If trust is lacking, they might not be the right fit.

If the interim CFO identifies areas needing improvement, how do they handle resistance from department managers? An effective CFO maintains open communication and builds trust within the team.

Is the Interim CFO a Leader?

Leadership is integral to team-building. While an interim CFO possesses decision-making authority, leadership encompasses more than just taking charge. Successful leaders exhibit specific qualities, such as bringing out the best in everyone. Financial leaders share general leadership traits while understanding how each aspect of the business relates to finance and the organization as a whole.

Despite their limited role, an interim CFO should still consider the broader business context.

Is the Interim CFO Objective?

Navigating office politics and rivalries is a common challenge. A competent interim CFO remains objective while being attuned to underlying dynamics. This might be trickier if you’ve promoted someone internally to this position. Regardless of origin, they must avoid personal biases and favoritism.

Objective reporting is equally important. CFOs are accountable for fostering company growth, profitability, cash flow, and financial direction. This necessitates presenting sometimes unwelcome information objectively. If the interim CFO seems apprehensive or patronizing, they aren’t fulfilling their role.

Is the Interim CFO the Right Fit for You?

Consider whether the interim CFO adds or reduces stress, frees up or constrains your time for business growth, and instills confidence in your company’s financial trajectory. Your answers to these questions will guide you in assessing whether the interim CFO aligns with your needs.

Paul Petersen

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