The role of a chief financial officer is complex and demanding, requiring a great deal of diligence, concentration, and data analysis. There’s a lot of responsibility that comes with taking on this job, and this is reflected in the average CFO salary.
From a business perspective, if you’re looking to optimise your finances and establish official financial procedures in line with the law and best practices, it’s useful to know what you can expect to pay for a CFO in today’s market.
With this in mind, we’ve put together a quick overview of how much a modern CFO may expect to be paid, as well as what they can do for your business in return and whether or not they’re worth the overall investment.
What is the average CFO salary?
The main question you’re probably wondering is what the average CFO salary is. This varies from company to company and location to location, but according to Glassdoor, the average CFO with two to four years experience in the United Kingdom earns £124,410 per annum. This figure doesn’t take into account additional cash compensations which may also be awarded at larger companies.
The data collected by Glassdoor indicates that £72,000 per year is considered a low salary for a CFO, whilst £215,000 is the top end and considered high. What part of the spectrum someone lands on will be determined by a range of factors, including their experience, their qualifications, their location, and their exact duties.
That being said, a CFO can generally expect to earn well above the national average salary, and it’s possible they may be one of the highest paid members of your team should you choose to bring one onboard.
The duties of a CFO are generally the same across the board, though there may be some differences depending on the specific company, role, and whether they’re full time or part time. To help you better gauge what a CFO is and what it is they do to earn their salaries, we’ve detailed some of the core CFO responsibilities below.
Controllership duties make up the biggest part of a CFO job role and can form the basis for many of the business decisions that are taken thereafter. In essence, controllership is when the CFO presents historical financial information to those involved in making important business decisions in terms of growth, leadership, and investment.
Through controllership duties, a CFO will need to log and trace all important money-related data and compile a report from it. The report will usually be presented to key figures in the business, including any share or stakeholders, senior management, and creditors to name just three.
If the information presented by the CFO through their controllership report is incorrect, it could be disastrous for the business and have serious complications – particularly if important financial decisions such as future investments and employee hiring/firing are based on the data put forward by the CFO.
In short, the controllership report can be used as a central resource for important and big business decisions, meaning it’s vital it’s correct and historically accurate.
Everything else a CFO does will stem from their controllership duties, including any treasury responsibilities they may have to deal with. These can include a broad range of duties and tasks, but mainly they look at the company and its finances at present as opposed to historically. This means thinking about liquidity and linking it to investment opportunities.
Under the guise of treasury responsibilities, a CFO will need to look at the business’ capital structure and whether there are any issues around capital. They can then use the information from their treasury duties to decide on future investment plans for the business based on how things are going right now.
Financial forecasting and growth
As just mentioned, a CFO is responsible for looking at future growth and investment opportunities, meaning treasury duties feed directly into economic forecasting. This is an important part of a CFO’s day to day duties because for most businesses, growth is the goal, and the only way this can happen is with solid financial planning and backing.
A CFO will look at data pulled from their controllership and treasury duties/reports and identify areas that are doing well and areas that are not. They will then formulate a plan as to how they can capitalise on the areas that are doing well as part of future growth and expansion plans.
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All in all, a CFO is responsible for accurately sourcing, interpreting, and presenting past, present, and future financial data for their company. Other members of the team will then use the data the CFO pulls together to make important decisions across the wider company, making the CFO an integral part of the team, and this is reflected in their favourable salary.
Is a CFO worth the investment?
Given how much a CFO salary is, you’re likely wondering whether it’s worth hiring a CFO for your business. After all, there’s every chance they may end up being one of the most highly paid members of your team for what appears to be data collection – at least on the surface, anyway.
Whilst it may seem like a CFO’s job can be done by anyone with an analytical mind, this simply isn’t the case. A CFO holds one of the most important jobs in any company which is why they’re so highly sought after and well compensated, particularly in larger firms or businesses that have a lot of investors to please.
With a CFO on board, you can confidently show your investors your business’ finances and answer any questions they may have about the financial viability of your business and future economic forecasting. This is something you may not otherwise be able to do. Bookkeeping and basic accounting are very different to the role a CFO plays and make up small snippets of their overall job, so it’s a good idea to have a CFO on board for those big meetings.
Another benefit of having a CFO is that you’ll be able to reduce the risk of cash bleeding. This is because most finance departments look at the present, and only look back on the year just gone when they’re doing taxes. This means there’s a usual tendency for things to not add up and money to be needlessly lost. A CFO can prevent this because they’re always actively assessing your finances in the past, present, and future.
On top of this, with a CFO on board, you’ll likely find that your company becomes far more efficient in its day-to-day running. A CFO will usually sit at the helm of the financial department, offering expert support and guidance to those below them. If there’s any department within your company that needs to be efficient, it’s your accounting team, so if you’re noticing the odd mistake or a hindrance in the smooth running of the department, look at hiring a CFO to take charge.
To summarise, a CFO is well worth the investment, but only if you can afford one. If not, you could find yourself in financial difficulty simply by paying someone who has been brought in to help you avoid just that.
Outsourcing a CFO
If you’re a smaller business and can’t quite afford a full time CFO, or if you don’t need a full time CFO due to the fact your business is smaller or doesn’t have enough work to warrant a full time wage, you may look at outsourcing a CFO for as and when you need them. So, how much does it cost to hire a part time CFO and what can they do for your business?
In essence, a part time CFO can do the same for your business as a full time CFO, although you may find the depth of the services is slightly reduced in line with the fact they do not work for you full time. In this sense, many businesses employ a part time CFO during times of financial struggles or vital growth peaks to see them through. It’s cheaper than hiring someone on a full time basis, but they’re able to provide a similar level of service that can prove to be vital to the business in question.
What to look for in an outsourced CFO
Your company’s financial information is incredibly sensitive. Most businesses don’t share their finances with their full time employees, let alone an outsourced team member. With this in mind, it’s important to find a CFO who you can trust, and that means keeping an eye out for some key traits.
Firstly, you’ll need to look at experience. Whilst the outsourced CFO cost will be considerably less than a full-time salary, it’s still a big expense, so you want to make sure you’re paying the right person for the job. Experience is key here, so make a point of scouting out a CFO who has previous experience in helping a company similar to yours. It’s recommended to look for someone who has a few years of experience in the role, but finding a CFO who has worked for a business like yours or in a similar industry to yours can be additionally advantageous.
Another key thing to look out for is communication skills. You need your CFO to be able to communicate with your in-house finance department in order to source the data they need and delegate tasks, but also to investors and stakeholders in your business. Given the nature of the controllership duties associated with a CFO’s job role, it’s completely understandable that those who sit on the board of directors at your company will want to liaise with the CFO directly. To do this, the CFO you hire will need to be competent in the way of open lines of communication, even if they’re only part-time.
Finally, the main attribute you need to look for in a CFO is a commitment to your business. With a dedicated CFO on board who wants nothing but the best for your company, you’re likely to find that you’ll be on the path to growth in no time, far ahead of your competitors and exceeding any goals you have set. If the CFO you choose isn’t committed to genuinely helping your business through its financial frustrations, you’ll find that you stay stagnant and instead end up wasting precious time and money.
Of course, you’ll also be looking at cost. Hiring a CFO isn’t just about finding someone to tick a box for the cheapest price – you need to be prepared to pay for what you want. Some CFOs who work on a part-time basis might
A CFO plays a vital role in any business looking to stand in good financial stead and get on the path to growth, making them a key asset to any company. That being said, not every business will need an in-house CFO, and that’s where Accountancy Cloud can help.
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At Accountancy Cloud, we are experts in everything financial. In addition to our bookkeeping service and accounting software, we also provide a comprehensive outsourced CFO service to those who need it. Our CFOs will be able to guide you with a researched strategy aimed at boosting your profitability and maximising your cash flow. They also help you get a better grip on your finances by bolstering your reports, refining your budgets, and helping you to meet all relative deadlines to stay compliant.
If you would like to find out more about our team of expert CFO specialists, book a free consultation with us today. We will discuss your needs with you and support you however you need it. To find out more, please get in touch with us.
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