By Mary Wisenski
As a company grows, so does its financial team. But not all companies have the same finance needs. Which roles should you prioritize? And how do you know when it’s time to fill them?
Most companies start with a bookkeeper. Depending on the size of the company, this might be a part-time position, at least to start with. But taking care of basic tasks like payroll and expenses is a must. Then, if you run into a need for skills the bookkeeper doesn’t have, such as filing taxes, you can outsource that work.
As the company grows, the next role it will need to fill is usually a controller. Sometimes you’ll need a senior accountant as well as a controller. You might, at this stage, be able to eliminate the bookkeeper position in favor of an accountant with a broader knowledge base. For example, if you’re starting to experience significant sales, you’ll need someone who’s able to account for revenue and generate financial statements for the company founders to review.
In most cases, the next role to hire is a CFO. The CFO is in charge of fundraising, forming relationships with banks and driving metrics. As the company grows, it’s increasingly important to have someone on board whose focus is fundraising.
Company needs determine roles
Depending on the rate of growth, you might also need clerks or accountants to handle specific functions within the company. If there’s a high volume of transactions being processed daily, you might hire clerks who focus only on accounts payable or, conversely, accounts receivable.
It’s wise to avoid having a one-person shop once you accumulate significant revenue and bills to process. There are two reasons for this. If the volume of transactions continues to grow, it may be too much for one person to handle. And it can be risky, from a security standpoint, to put all your eggs in one basket. It’s better to limit each person’s duties and access so they’re only working with the information they need for their particular job.
Timing is key
The CFO sits at the top of the financial team and, in addition to fundraising, is usually responsible for a higher-level review of the controller’s work. This includes financial statements, cash-flow analysis and cash-flow forecasting.
It’s important to hire a CFO at the right time. If the company is new and needs financing, or equity financing, you’ll need someone with the expertise to go out and raise money. In that case, the CFO might be hired at the same time as a controller and a senior accountant.
But C-level talent can be expensive. One option for companies that need fundraising expertise but can’t support a full-time CFO is a fractional CFO, or vCFO. This person can commit their network, knowledge and creativity without committing all of their time.
HR and payroll
As the company grows, it’s helpful to increase the segregation of duties—for example, you might want someone who handles payroll, but (as with the early role of bookkeeper) it could be a fairly limited role.
You might not need a full HR team unless you have a large hiring budget and you can forecast bringing on enough personnel to justify having someone to manage new hires, terminations, 401k plans and health insurance. If you don’t expect a lot of growth and don’t have a large hiring budget, it’s possible that the accounting manager can run payroll.
Get it right from the beginning
Your first financial hires are crucial because you’ll have fewer reviews and controls in place. The last thing you need to deal with as you scale are mistakes in the books or tax returns from the company’s early days.
You need financial statements you can rely on from the beginning. That level of trust frees you up to focus on your product or service and on growing your company.
Mary Wisenski is a partner at the accounting and advisory firm Fiondella, Milone & LaSaracina LLP (FML CPAs) with five offices in Connecticut, including Stamford. She can be reached at email@example.com or at 860-657-3651.