Losing any C-suite executive can be difficult on an enterprise, regardless of size. The loss or resignation of a Chief Financial Officer can be especially difficult, opening the door to significant company-wide problems if handled improperly. As the business owner or partner, making strategic decisions following the loss or resignation of a CFO allows companies to avoid potentially damaging fallout and mitigate any other issues. Here’s what we recommend to do when a CFO leaves.
The Value of the CFO
From developing financial projections to creating a long-term business strategy, the chief financial officer plays a critical role in the success of any enterprise. As this executive has unique insight into the financial longevity of a company, resignation can be interpreted negatively by less influential individuals as well as shareholders, making it a potentially destabilizing factor.
Replacing a CFO – What are the Options
Hiring a new CFO can take time. With this in mind, finding a feasible solution for the intervening time until a new CFO can be brought on board is critical to preventing the loss of other important decision makers. Some popular options include:
Appointing an Internal Successor:
If there is someone already familiar with processes and company-wide objectives from an upper-level accounting perspective, internal promotion can be a simple way to manage thi transition. However, it is crucial to note that this move shouldn’t be made out of desperation. If an immediate internal successor cannot stay on top of expectations for the position, hold off until you have the opportunity to bring the right individual for the position.
Until a replacement can be found, companies with an existing business strategy may find it easier to redistribute the responsibilities of the CFO to other members of the C-suite. This may be most useful for small to medium sized businesses or start-ups that may have only recently implemented the CFO position and can easily sustain operations for a period of time without seriously compromising their growth plans. Larger businesses and publicly-traded corporations may find this flexibility more difficult to run past shareholders and partners.
Hire a Temporary or Part-Time CFO
In recent years, this option has become a much more popular option among business owners, as it provides companies with the guidance and expertise of a seasoned executive without having to immediately hire full-time personnel. As a result, owners spend time vetting potential candidates for the permanent CFO position without the stress of having to immediately fill the spot. The outside perspective of a temporary CFO can also provide much needed insight into other opportunities for growth that may have been missed by the prior CFO or other executives.
At The Accfin Group, we are proud to provide outsourced CFO services for clients throughout the country. Through this unique service, we provide the executive experience and support your company needs to maintain unimpeded growth throughout transition. To learn more about our other outsourced bookkeeping services, contact our firm today.