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Is a CFO Worth the Cost?


Are Chief Financial Officers becoming a financial drain on your business?

The role of the CFO has come under scrutiny in recent years. With the rise of technology and data, some have argued that the CFO is no longer needed. After all, isn’t that what computers are for, and if so, is a CFO worth the cost?

But as any business owner will tell you, numbers are just one part of the equation.

A CFO brings a wealth of experience and knowledge to the table that can’t be replaced by a computer. Let’s explore the role of the CFO and whether or not they are a valuable addition to your business.

We’ll look at the duties of a CFO and how they can help your business grow. We’ll also dispel some myths about the role of a CFO so that you can make an informed decision about whether hiring one is the right move for your business. This blog covers:

What is a CFO?

What does a CFO do?

Pros and Cons of having a CFO

The CFO value proposition

How to decide if a CFO is worth the cost for your business

How to reduce the cost of a CFO

Our take

CFO helping a business owner with financial calcuations

What is a CFO?

A CFO, or Chief Financial Officer, is a corporate executive responsible for financial planning and management. The CFO's primary responsibilities include financial reporting, risk management, and capital budgeting. For startups, a CFO will also be responsible for excellent financial hygiene and providing financial models to attract investors to boost fundraising.

The CFO is typically considered the second in command in a business, behind only the CEO. As such, the CFO is often seen as a key member of a company's senior management team.

While the CFO role has been a “must have”, it has become increasingly important in recent decades as businesses and finances have grown larger and more complex. In many cases, the CFO is now seen as the "quarterback" of a company's financial operations.

With extensive experience and advanced degrees in business, economics, accounting and finance, CFOs are essential at larger corporations. But, some people question the need for CFO services for small businesses.

Chief Financial Officer in a black suit helping a startup with finances

What does a CFO do?

A CFO isn’t just responsible for the financial wellbeing of a company. It’s their job to add value to the business in a number of ways.

These can include:

  • Producing in depth financial reports

  • Enable quick growth & handle the additional responsibilities of scaling up

  • Improve cash flow

  • Secure Seed and Series A&B funding

  • Provide actionable advice as a financial leader within the business

  • Pitch Deck reviews

  • Due diligence

  • Cash flow forecasting

They produce financial reports, monitor spending, and develop strategies to reduce costs. They also work with other departments to ensure that the company is operating efficiently and effectively.

Startup founder and outsourced CFO shaking hands after making a business agreement

Pros and cons of having a CFO

There are many factors to consider when deciding whether a CFO is worth the cost to your business. The pros and cons of having a CFO can vary depending on the size, goals and immediate needs of your company.

One of the main advantages of having a CFO is that they can provide financial expertise and guidance. A CFO can help you create a budget, track expenses, and make financial decisions that will benefit your company both immediately and in the future. They can also help you raise capital, secure loans, and manage investments.

The long payoff of hiring a CFO is that they can help you develop your long term strategic plans and goals. They can also help you track progress and measure success over time. This can be especially helpful if you’re trying to grow or expand your business.

On the other hand, the main disadvantage of having a CFO is the cost.

The salary for hiring a full time, in house CFO can be expensive, especially for small businesses. Too often, startups can lack the financial knowledge and expertise needed because they simply don’t have the resources available to manage the cost of hiring an in house CFO. They also require a lot of responsibility and work. This means they may not have as much time to devote to other aspects of running a business.

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The CFO Value Proposition

The CFO value proposition is simple: they are the financial leader of the organisation who provides critical insights, analysis, and decision-making support to help the company grow and succeed.

And they frequently pay for themselves a dozen times over.

A CFO brings a wealth of experience and knowledge to the table. They understand financial statements, cash flow, and how to manage risk. As a startup your future is uncertain, and they help you navigate the vagaries of business finance. They also have a pulse on the latest trends in their industry so they can help their company stay ahead of the curve.

Most importantly, a CFO is focused on creating shareholder value. They work closely with the CEO to develop strategies that will grow the business and increase profits. And they make sure that those strategies are executed effectively and efficiently.

So if you're wondering whether a CFO is worth the cost, just ask yourself this: would you rather have someone who understands finance leading your company, or someone who doesn't? The answer should be clear.

Man in smart suit concentrating on CFO guidance on laptop

How to decide if a CFO is worth the cost for your business

If you're a small business owner, you may be wondering if a CFO is right for your business. After all, hiring a CFO can be a significant expense.

Here are some factors to consider when deciding if a CFO is right for your business:

1. Does your business have complex financial needs?

If your business is large or has complex financial needs, then a CFO can help you navigate the financial landscape and make sound decisions for your business.

2. Can you afford a CFO?

A CFO can be a costly addition to your team, so you'll need to make sure you can afford the salary and benefits package.

3. Do you have the time to manage finances?

If you don't have the time or inclination to manage finances, then hiring a CFO can free up your time to focus on other aspects of running your business.

4. Is your business growing?

A CFO should help you manage the growth of a rapidly growing business. They will prepare your financial model to meet your scaling needs and ensure that your business doesn’t lose momentum.

5. Do you need help with fundraising?

Valuable CFOs not only ensure excellent financial hygiene to attract angel investors and capital investors, but they create financial models that give these investors confidence to invest within your business.

If you answer yes to any of these questions, then hiring a CFO is definitely the right call.

Man in jumper and glasses deep in thought, trying to decide if a CFO is worth the cost

How to reduce the cost of a CFO

In house CFOs are excellent resources, but they’re also expensive for startups.

When it comes to large corporations, CFOs often make a fraction of the increase in profits that they create - and we are talking profits of millions. But for small businesses, that kind of price isn’t on the cards. So, how can you reduce the cost of a CFO? The answer’s simple…

Outsource your CFO.

An outsourced CFO can work with you on an as needed basis. Not only do you get a CFO that has a wealth of experience working with startups just like yours, but you also get that expertise at a fraction of the price.

With the right outsourced CFO service, you can retain flexible, scalable financial help, without feeling the financial drain.

Our take

At the end of the day, a CFO is an invaluable asset to any business. Regardless of size, they can increase cash flow, raise capital and lend you their knowledge when it comes to big financial decisions.

The only question is sourcing a CFO that fits into your budget.

Our outsourced CFO services are designed specifically for startups. We even offer a free CFO platform to give startups an edge as they begin their business journey. This means that you can scale up your CFO services to match your CFO needs.

So, get in touch with a finance specialist today and learn more about the worth of a CFO. Learn about the savings possible with our R&D Tax Credit service which has saved £30 million+ and counting for small businesses, and keep ahead of your accounting responsibilities with our accountancy services for startups.

You also have free access to our School of Startups. A database of articles, guides, webinars and videos from CEOs, CFOs and other professionals talking about what it takes to succeed in business.

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