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How Much Does Hiring a CFO Cost?

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When I talk to business owners about Chief Financial Services (CFO), it is common for them to ask me how much CFOs cost? The answer is that it depends.

Usually these services require a deeper understanding of the current financials and level of service needed. Before going into this, consider the different hiring options.

Hiring a Full-Time CFO

Traditionally when a company was large enough and could afford it, they would hire a full-time CFO. There are benefits to hiring a full-time CFO, but there are quite a few other things to consider. If you are looking to go public or are a large, complicated business with many divisions and layers of management a full-time CFO may be the way to go. Some companies, over $20 to 30 million in revenue, may want to consider this alternative, especially if they are growing quickly. 

If you hire a full-time CFO, you must consider the following:

  • Salary base of $200,000 plus per year.
  • Bonus structure.
  • Payroll taxes.
  • Insurance and 401k benefits.
  • Stock options or other equity.
  • Computer equipment, software, and office expenses.
  • Expense budget for travel and meals.
  • Hiring, recruiter, and onboarding costs.
  • Difficult and expensive to let go with attorney fees and severance.
  • Additional personnel to help the CFO, such as an Accountant, Controller, or Financial Analyst.

Considering these costs, hiring a full-time CFO could get to the point of costing $250,000 - $400,000 per year, which for some businesses is not an option. 

Hiring a Fractional CFO

When you decide to hire a fractional CFO, you should expect a high level of work at a fraction of the cost of a full-time CFO. 

A fractional CFO’s pricing structure is based on the client's level of service, size, and number of entities. For example, our firm has clients that range from $1,500 to $6,000 per month. At those rates, you can quickly see how $18,000 - $72,000 annually is so much less than the cost of a full-time CFO. You couldn't even hire a Controller for anything less than $120,000 - $150,000 with fully loaded costs. 

Here are some other benefits of a fractional CFO:

  • Only pay for the hours you need. You can use bookkeepers and accountants to do lower-level work rather than paying a CFO to do it. 
  • You can be much smaller before you can afford one. Our firm works with fast-growing start-ups and businesses as small as $1 million in revenue to $20 million in revenue. 
  • You get a diverse level of experience, expertise, and network within the firm.
  • Fractional CFO service firms must stay on top of all the latest technologies, strategies, and accounting practices. 
  • They have a deep network of attorneys, bankers, business brokers, tax CPAs, and insurance specialists that can be helpful. 
  • You can cancel at any time. We ask for 30 days' notice. 

Like with any hiring, there are particulars that you need to look out for when searching for a fractional CFO. 

  • How experienced is the CFO? There are levels of CFOs, from glorified bookkeepers and Controllers, to CFOs with 20 plus years of experience. Usually, you pay for what you get. 
  • At times, a fractional CFO may not be working on site and can be hard to reach. 
  • Some CPA firms provide CFO services along with tax preparation. Tax consulting and preparation is very different from CFO Services. 

You can decrease the risks of hiring a fractional CFO firm by doing the following:

  • Research the fractional CFO firm’s website and LinkedIn profiles. Ask about their experience and even look at their resume if needed. 
  • Ask the firm to give you a good proposal and to look at your financials. Our firm Bender CFO Services always reviews the financials and provides a comprehensive proposal with recommendations, examples of reports, and forecast models.
  • Ensure you have set meetings once a week or month for a status update and to discuss financials, forecasts, processes, and strategies. 
  • Ask how they keep you apprised of tasks and projects. Bender CFO Services uses a project management software called Asana. 
  • Ask them to assess the number of hours worked quarterly and at least annually.

Get a CFO

Any company over $1 million should have a CFO, even a smaller start-up or  fast-growing business should use a CFO. You have many options, but don’t procrastinate because a good CFO provides benefits far outweighing the costs.