Last issue the president of a Toronto-based transportation company wrote to ask PROFIT-Xtra readers:
“I’ve been managing my company’s finances myself. Now that our revenue has topped $3 million, I’m wondering if I should hire a controller or a CFO. I’d love to take some of the load off my hands, but I’m reluctant to spend $70,000 a year to hire someone to manage finances that aren’t all that complicated. When is a company big enough that it really needs a CFO?”
Best reader responses
Kelly J. Ramsay:
While there is no specific revenue threshold at which a company needs a CFO (who is a CA), there are certain times when one is advisable. It would be a good idea—even if the CFO is only a temporary one—in the following cases:
- If the company’s financial structure is becoming very complex;
- If it’s preparing to raise additional outside capital from private or institutional sources;
- If it wishes to make the transition from being private to public.
If, on the other hand, you want someone who can handle payables, receivables, payroll, bookkeeping, ledger posting and the completion of government filings, then you might want to consider hiring a controller who has a CMA or CGA designation. By the same token, this person could be hired part-time until such time as the workload becomes a full-time job. That way, you cost-effectively relieve the burden from your shoulders, allowing you to pursue other things.
Wayne Edgar, Trade Exchange Canada:
I believe the simplest way to look at this is: can you generate enough additional revenue to justify hiring someone for $70,000 a year? Can you make your company an additional $70,000-plus if you aren’t tied up doing the company finances?
Also, $70,000 may be a bit of overkill at this point. If the finances are not overly complex, consider having your accounting firm take over some of the load and telling you if you even really need a CFO at this point.
As well, look inside your company to see if there is someone who has the kind of skill level to handle what you do, then increase their salary (though to far less that $70,000 per year) to compensate for the extra work they will be doing. Do you have a family member who you would entrust to do some of the work? That’s a great way to income split and keep the money in your family’s pocket rather than someone else’s.
For his answer, Wayne Edgar will receive a copy of Never Give Up: How I Turned My Biggest Challenges Into Success,by Donald Trump.
Have a question for your fellow entrepreneurs? Send it to Peer-to-Peer.
Watch for another Peer-to-Peer Poll in the next PROFIT-Xtra.