The CFO'S Perspective

Is Your Interim CFO Right for You?

Is-Your-Interim-CFO-Right-for-You

Large, established companies usually have a full-time Chief Financial Officer (CFO) as an integral member of their executive team. Your business might not be in a position yet to add a CFO to your executive suite. Or you might be ready but finding just the right person takes time. Perhaps you’re not quite sure what to expect from a CFO, and you need to learn more about what they do before hiring one.

Other reasons for not  immediately hiring someone full-time include: 

  • The right person is too expensive for now
  • Your company is in a transition stage, such as a merger, and you need someone with that specific experience for the duration of the transition
  • You have a one-off project that needs financial oversight until the project is completed
  • You need short-term help to implement new systems
  • You have a start-up business, and you need help with growth 

For these or other factors unique to your business, you prefer to add a short-term or temporary person to meet the need for financial expertise. You hired, or plan to hire, an interim expert. Now you’re wondering how to determine if the person is an asset for your company and if you made the right choice.  

What Should You Expect from An Interim CFO?

Interim CFOs are experienced financial management-level specialists that provide the skills you need. They may work full-time for you, but on a short-term contract. Or they may work something less than full-time, depending on your needs. By definition, an interim CFO is a temporary member of your team, and your expectations of their performance can differ from your expectations of other personnel. 

It’s your job to convey your expectations to whomever you hire. That means knowing what you want, discussing that with potential candidates, and ensuring their skill set fits your needs. For example, if you are unsure of how you want your company to grow or what your next step should be, you need to hire someone experienced with business expansion. That person can help you set and implement goals. 

That leads to questions as to how you measure the success of an interim CFO. The short answer, of course, is the same way you evaluate any other employee. You compare job performance with the job description. Obviously, evaluating executive job performance is significantly different from evaluating the performance of the mailroom clerk, but the basics are similar. Start with why you initially hired the person and the job you expected them to do. Then look at how well they are meeting your expectations. 

Executive evaluations typically include an assessment of “soft” skills, such as communication, as opposed to “distributes the mail promptly.” You can find tips for assessing executive performance here. The guidelines pertain to an “executive director” position, but the criteria fit CFO positions equally well. Although any person in an executive position is responsible for the “organization’s financial health” and “overall progress and success,” none are more so than a CFO.

Is the Interim CFO Knowledgeable About Your Business and Market?

An interim CFO must have strong technical skills and a deep understanding of your business and your market. You may choose to promote someone from within your company, based on your knowledge of their abilities. Alternatively, you may select a candidate recommended by a search firm. Professional firms make an effort to match the skills of candidates to your needs.     

In either case, you want someone experienced with managing finances in a company your size. If you have subsidiaries or overseas operations, your interim CFO needs experience in those areas as well. “The right person for this role will have a firm grasp of all relevant regulations, be familiar with GAAP best practices, and know how to put all the right policies and procedures in place from the beginning.” The right person also knows that the position is temporary, which defines their expectations of you. 

A CFO, interim or permanent, has to understand the mission and long-range goals of your company from a financial viewpoint. Do they understand how the products or services you provide contribute to continued success? Do they have suggestions for improvements? How does the interim CFO plan to increase the financial well-being of your company? What kind of strategic insights are they offering? Expect concrete answers.

How Does the Interim CFO Handle Differences of Opinion?

Once the interim CFO is onboard and settled in, you may learn that they don’t agree with the goals you’ve set for the company. Are they able to explain why they disagree? Can they provide solid evidence to support their position? Do they respect your feelings and express a willingness to work with you in resolving differences? You gave them a certain amount of authority to institute changes. Are you still comfortable with having done so? Or are you concerned about the direction in which they’re trying to take your company? You and the CFO have to work closely together. If you don’t feel that you can trust your interim CFO, then they are probably not the right match for you. 

The interim CFO may discover that managerial reporting or internal controls in one or more departments need to be overhauled. Your department managers are resisting changes, especially those proposed by an interim outsider. Does the CFO have a “my way or the highway” attitude? A competent interim CFO will keep the lines of communication open. The ability to inspire trust and build cohesive teams is essential.

Is the Interim CFO A Leader?

Leadership is part of team-building. Although you have given an interim CFO decision-making authority, leadership is more than taking charge. Competent leaders have specific qualities. A career-building site presents what many consider to be the hallmarks of good leadership, as well as describing the traits of a poor leader. Among the positive qualities is the ability to bring out the best in everyone. Good financial leaders have the same general characteristics as other capable leaders, but they also understand how every aspect of the business “fits in with finance and the organization as a whole.” Although you may have agreed on a limited role for your interim CFO, that doesn’t change their obligation to look at the big picture of your business.

Does the Interim CFO Remain Objective?

Nearly every company experience’s rivalries and interoffice politics. The right interim CFO avoids entanglement while remaining sensitive to undercurrents. That can be more difficult if you have promoted someone from within the company to the interim CFO position. You must ensure that the individual is not using the position to grind a personal ax or playing favorites. However, professionals from outside the company are not immune to losing their objectivity. An interim CFO that cannot remain objective is a liability for your company. 

Along with objectivity in performing their job, a CFO, interim or permanent, must be objective in their reports to you. A CFO is responsible for: 

  • Increasing the growth of a company
  • Improving profitability
  • Improving cash flow
  • Obtaining increased leverage
  • Providing financial direction and leadership 

Fulfilling their responsibility means that CFOs have to be confident enough in their abilities to give you information about your company that you may not want to hear. Their objectivity enables them to be honest with you regardless of your possible reaction. If the interim CFO seems fearful or timid when presenting negative information, then they are not fulfilling the responsibilities of the position. That holds true also if their interactions with you are condescending.

Is Your Interim CFO Right for You?

Does the interim CFO increase or decrease your stress? Do you have more or less time to grow your business? Do you feel confidence in your company’s financial future? The answers to these questions will tell you if your interim CFO is the right person.

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Topics: CFO Interim CFO