Options to Build Your Finance Team

Below, we’ve outlined four traditional options for founders who need to fill gaps in their finance expertise. The best option for a given startup will depend on who else is on the team, what they bring to the table, and the company’s needs.

“The best option for a given startup will depend on who else is on the team, what they bring to the table, and the company’s needs.” 

Part Time Accountant or Bookkeeper

Pros: A competent part-time accountant or bookkeeper will manage accounts payable and accounts receivable, and stay on top of the monthly closing of the books. They will also oversee payroll and employee expense reimbursements. With relatively low fees, billed hourly, a part-time accountant or bookkeeper is the most inexpensive accounting support option available to startups. So if money is especially tight, and needs fairly limited, this isn’t a bad option, at least in the short term. (If you want a deep dive on bookkeeping for startups, click here to check out our previous article all about the subject.)

Cons: The downside, as ever, is that you get what you pay for. Someone in this role generally isn’t going to have a very broad range of expertise. They’re unlikely to provide early alerts or financial insights. Their service tends to be on the slow side, and it’s often going to be difficult getting in touch with them over the weekend or after business hours. They often aren’t very tech-forward in their methods. And though founders might save money on a part-time bookkeeper or accountant, chances are they’ll also need to consult on a part-time basis with an advisory CFO and tax accountant—adding to total costs.

Temp or Advisor CFO

Pros: Though the expertise of the person (or people) who fills this role will vary, they should be qualified to provide at least limited, forward-looking financial insights. They’ll also be able to prepare financial reports and analysis, and to review the work done by whoever’s handling the startup’s basic bookkeeping and accounting needs. A good temp CFO should also have a solid network, facilitating introductions to VCs and potential partners. In some cases, they’ll participate in board meetings and presentations to investors.

Cons: But just as a founder who opts for a part-time bookkeeper or accountant will likely also need to enlist a part-time or temporary CFO, a startup with a part-time or temporary CFO will likely need to bring on someone at a lower level to handle basic bookkeeping and accounting. Temp/part-time CFOs do not come cheap, billing at high hourly rates, and their accessibility and speed of service tend to be middling, at best. Again, the people who fill these roles don’t often have a tech-forward approach.

Controller/Head of Finance (Full-time)

Pros: The first full-time solution that we’ve discussed, a controller or head of finance (these titles may or may not have meaningful differences) will take care of everything that a part-time bookkeeper/accountant would. But they’ll also fulfill most if not all of the duties handled by a part-time or temp CFO, including financial reporting and analysis, as well as reconciliations. Without other clients to attend to, like other full-time employees, a controller/head of finance will offer speedy, (often) round-the-clock service—or else soon be seeking employment elsewhere.

The person who’s going to be suitable for this role will be fairly experienced, but their particular range of expertise will vary. So it’s ultimately up to the founder or whoever they’ve put in charge of hiring. The same goes for how tech savvy they are, as well as how likely they’ll be to offer proactive alerts and insights. In the end, it’s a matter of preference.

Cons: A controller or head of finance is an expensive hire, necessitating a high, VP-level annual salary. But as we’ve outlined above, founders can get a lot of bang for their buck by making the right choice for this role. Nonetheless, a startup with someone in this role will probably still need someone else for bookkeeping, and tax accounting services.

Finance Firm

Pros: For startups lacking in-house financial expertise, the finance firm is a one-stop shop, providing all of the functions that we’ve already discussed in this section of our article, including tax accounting. In other words, by hiring a reputable finance firm, startup founders can save themselves the headaches associated with coordinating various employees, contractors, and services to cover their finance needs. Because such firms invariably have a deep bench, they also offer a broad range of expertise.

Cons: This all sounds good so far, but finance firms also have some notable drawbacks. For one, they can be expensive, with steep hourly billing rates—and unpredictable monthly costs. With many layers of management and extensive client lists, their service is often slow—and again, largely limited to standard business hours. They’re generally not particularly tech-forward. Nor do they excel at providing proactive industry alerts and insights.

Source: https://www.zeni.ai/blog/when-to-hire-cfo