The people who are amazing at bill paying aren’t the same people who can partner with the CFO to help you strategize how to finance your next phase of growth. The folks who make sure your financials are review-ready each month likely won’t be the right team to work with the Board to project fund-raising needs a year in advance, let alone navigate complex new accounting rules or build a system to capitalize and track expenses against intangible assets.
The good news? This is completely normal (and natural). The bad news? Most companies wait too long to make a change, at which point they have to replay a year or two of catch-up accounting. Point being, if you recognize yourself in this post, we’re actually telling you you’re in great company.
When Recording transactions isn’t enough
Accounting in the early stages of a business is backward-looking. It’s a necessary evil. Someone has to record what happened, reconcile accounts, and ensure the records are accurate and complete. This is a defined job.
The problem is that a business needs its finance or accounting function to look forward. Financial forecasting, burn rate monitoring, and working capital management are elevations of that core accounting function. They require an entirely separate job function. A team you’ve hired to record transactions and cut checks is already busy doing 100% of exactly that, which means nobody has time left to develop forecasts to manage your cash or to track down past-due receivables.
The monthly close slips. Reports go out, but nobody can determine a decision from the data. Key performance indicators get slipped or measured infrequently. These are the earliest symptoms, and most business owners will write them off as their team being “a little behind” rather than coming to grips with the team being fundamentally under-resourced.
Bridging the Gap Without a $250k Hire
The knee-jerk reaction is to hire a CFO. But a full-time senior finance executive is a significant fixed cost, and for a company at $10M to $30M in revenue, the timing often doesn’t work financially even when the need is clearly there.
This is where a part-time CFO makes sense. The company gets strategic financial oversight, capital allocation decisions, lender relationships, forecasting, board-level reporting, without carrying a full executive salary and benefits package. The internal team keeps running the day-to-day, but now there’s someone setting the framework, catching the gaps, and connecting the accounting function to the broader business strategy.
Finance teams that integrate operational insight with financial efficiency outperform their peers on revenue growth and EBITDA by nearly double (IBM Institute for Business Value). That gap doesn’t come from working harder at the books. It comes from someone asking different questions entirely.
The Compliance Trap That Catches Growing Companies Off Guard
Growing leads to new rules and with them comes the threat of noncompliance. Expanding your business into other states or selling products in states other than your own could trigger tax nexus but, with business booming, you haven’t had time to look into it, let alone track the specifics of each new client’s location or calculate the costs of long-term employee assignments to project they might hit the state’s payroll tax reporting threshold.
You could hire more people. Full-time. With salaries and benefits. People who are experts in multi-state tax law and with the bandwidth to stay on top of each of the minimum 45 state tax laws, not to mention the myriad city tax laws, constantly in a state of flux and oh, also, the international tax laws.
Two of those states have no income tax while one of them has a gross receipts tax. And all of it leans pretty heavily on “nexus,” the theory that a taxpayer just across the border can still be expected to send tax revenue to a state because of their physical presence across the border, or even just because they sold some stuff across the border.
The Key Person Risk Nobody Talks About
In many mid-sized companies, there’s one individual who ‘knows where everything is.’ They’re the person who’s been there for years. Who created the spreadsheets. Who knows why those entries look a little strange in the accounting system.
That’s an operational risk. When that person leaves, or gets sick, or moves on, a massive amount of institutional financial knowledge walks out the door with them. And the business finds it has no processes documented, no controls in place, and no one with the financial history smarts to step in quickly.
Growing companies need systems, not simply talented individuals. The two aren’t the same thing.
What the Transition Actually Looks Like
Changing the perspective from accounting being a compliance-driven function to seeing finance as a strategic, growth-oriented function is not a matter of replacing people. It’s about overlaying a level of thinking that the people you already have likely would’ve provided if they were ever asked, expected, or equipped to do so.
The tools roll in as a natural by-product of the changing thinking and skillsets inside your financial function. Spreadsheets are replaced because they’re no longer the primary tool for managing big parts of your business. Bottlenecks that you could afford when you were smaller suddenly become emergency problems, about the time you’re running an acquisition and need the warm feeling of internal controls to shore up some portion of the purchase price.
The tipping point comes after you decide these problems are symptoms and not a wait-for-a-crisis situation. A lender asks for something you readily know you can’t produce. One key employee on the accounting team leaves you vulnerable. You miss a quarter and no one on the inside saw it coming. The signs were there and inaccurate financial data was one of them.
