When does my company need a CFO?

Many business owners wonder when CFO is needed and when hiring CFO is the right move for their business. As your business grows, finances become more complex and an accountant or controller is not always enough. In this article, we discuss the typical growth stages and signals in which a CFO adds value, explain the difference between a CFO and a chief financial officer, and help you assess whether you are ready for a CFO. We also discuss the costs of various options – from full-time to part-time CFO, interim CFO and fractional CFO – and highlight the situation in various industries (from tech startups to healthcare institutions). Finally, we compare the need for a CFO in startups/scale-ups versus established SMEs.

Growth phases and signals: when is a CFO needed?

Every company goes through growth phases where the need for financial leadership increases. You often notice recognizable signals that indicate it’s time to bring in a CFO. Some common signals in a row:

• Lack of management information: There is no up-to-date financial dashboard and reports invariably come late or are too brief. Without insight into current KPIs and forecasts, looking ahead becomes difficult.

• Financing and investors: You are preparing for an investment round or already have investors on board demanding professional reporting. A CFO can also make all the difference in preparation and confidence when applying for bank financing.

• Cash flow surprises: You run into unexpected cash flow problems – for example, tight on salaries or suppliers – or budgets turn out to be unrealistic. These are red flags that financial foresight and cash management need to be sharper.

• Scale and complexity: The organization has grown significantly (e.g. >50 employees or towards €10+ mln turnover) and financial processes become complex. You may hit the threshold of a statutory audit (mandatory at >50 fte, >€12 mln turnover or >€6 mln balance sheet total) and the administration must scale at that level.

• Entrepreneur’s lack of time: As director/owner, you spend more and more time on ad hoc financial tasks and firefighting, at the expense of strategy and growth. You lack a strategic financial sounding board for the next step.

Do you recognize one or more of these situations? If so, chances are your company could benefit from CFO expertise. Ideally, you engage a CFO before a serious problem or incident occurs. Many companies realize only after a painful miss (e.g., running out of cash or a failed audit) that a CFO should have stepped in sooner. By taking timely action, you ensure that finance grows with the rest of the company and avoid costly mistakes.

Examples of growth moments

To make it more concrete: you often see that around the scale-up phase (at ~30-50 employees or after a few years of rapid growth) the need arises to have someone in the MT for finance. Where in the startup phase you might have had enough with an accountant and occasional financial advisor, a scale-up requires a “heavier” financial professional. Think of situations like: you enter a Series A investment round, you open a second branch, or you expand internationally. Even established SMEs find, for example, that strategic financial direction is needed during an acquisition, merger or succession process. These are typical times when companies bring a CFO on board – sometimes part-time at first, later full-time.

CFO vs. chief financial officer: is there a difference?

The terms CFO (Chief Financial Officer) and chief financial officer are often used interchangeably. Basically, they mean the same thing: the highest financial officer in an organization. Yet there are nuances:

• Language and context: In international or larger companies (where English is the language of communication) one almost always speaks of CFO. In Dutch SMEs, one often uses “financial director” for a similar role.

• Strategic role: A CFO/financial director deals with the big picture of financial health. This includes more than just accounting – think strategy, investments, financing, risk management and consultation with shareholders, banks or investors. In smaller companies without a CFO, the general manager or owner often takes on some of this (in addition to his other duties).

• Formal position: In larger companies, the CFO is almost always part of the executive team/board and co-responsible for the direction of the company. The term “chief financial officer” is sometimes used for someone who manages the finance department but is not necessarily a statutory director.

Summary: CFO and chief financial officer usually refer to the same function and responsibilities. The CFO is the CEO’s financial right-hand man, regardless of what you call the role. More important is when you need such a heavyweight and whether it should be full-time or perhaps in some other form – we’ll address that below.

How do you determine if you need a CFO?

Not every company needs a full-time CFO right away. How do you know if it’s time for your company? Assess this using a few questions and criteria:

1. Complexity of financial administration: Are the financial worries becoming too much for your current team (bookkeeper/administrator)? If month-end closings are running late, forecasting isn’t happening and your controller is working overtime, that’s a sign.

2. Strategic plans: Do you have ambitious growth plans, new markets or products coming up, or major investments in your sights? If so, you need someone who can calculate scenarios, assess risks and convince financiers.

3. Stakeholder demands: Do investors demand more comprehensive reports or does the bank insist on more professional financial forecasts? With such external pressures, a CFO is almost indispensable to meet information demands and maintain confidence.

4. Internal decisions and controls: Do you notice that financial decisions are made ad hoc without substantiation, or that there is too little financial oversight (e.g., no four-eye principle on large expenditures)? A CFO can introduce structure and controls so that your company is “in control.”

5. Time and knowledge: Perhaps the most important: do you as an entrepreneur still have enough time and knowledge to manage the financial side yourself? If financial reports keep surprising you or you feel you’re “groping in the dark” when managing numbers, then it’s time for additional financial expertise.

If you answer “yes” to several of these questions, seriously consider bringing in a CFO (at least part-time). Often, you can start with a temporary or part-time solution to fill key needs, without being immediately stuck with high fixed costs. Such a move can take your organization to the next level and prevent your growth from stagnating due to lack of financial insight.

What does a CFO cost? – Full-time, part-time, interim or fractional

An important consideration is in what form you deploy a CFO, as costs can vary considerably. We list the options with indicative costs:

1. Full-time salaried CFO: This is the traditional option – you recruit a CFO as a permanent employee on the payroll. However, an experienced CFO is one of the most expensive employees in your company. Consider a gross annual salary that quickly exceeds €100,000 in SMEs (and much higher in larger companies), plus employer fees and bonuses. On the other hand, a full-time CFO is fully dedicated and always on standby, which is especially valuable for larger organizations. For smaller companies, this is often too costly before they reach a certain size.

2. Part-time CFO: Many growing companies need high-level financial advice , but not a CFO for 40 hours a week. A part-time CFO is then ideal. This is a CFO who works for you, say, 1-2 days a week (often as an external consultant). The costs are much lower than a full-time salary – a part-time CFO can be found starting at around €3,000 per month (for one day per week of work), depending on experience and agreements. So you only pay for the time needed. In addition, a part-time CFO often brings a fresh outside perspective and experience from multiple companies.

3. Interim CFO: If you have an acute need for a CFO, for example due to the departure of the current financial director or a sudden project (such as an acquisition or crisis), you can bring in an interim CFO. This is a temporary CFO on a full-time basis, usually for a few months to a year. Interim CFOs usually work on a daily rate – often in the range of €1000-€1500 per day in the Netherlands, depending on the severity of the job. This is pricey, but the advantage is that you get top quality and immediate availability, without a long recruitment process. An interim CFO bridges the period until you have a permanent solution or guides specific changes (such as a restructuring).

4. Fractional CFO: The term fractional CFO is widely used for a CFO you share with other companies – essentially also a part-time or external CFO, but often even more flexible. This concept is also offered as CFO as a Service. Here, you can hire an experienced CFO for, say, a few days a month or on demand, through a service provider that provides CFO services. The big advantage is scalability and cost control: you get strategic financial insight when you need it, usually at a fixed subscription or hourly rate, without the obligation of a full-time contract. This can come out to several thousand euros a month for a few days’ deployment, for example, depending on the arrangements. Fractional CFOs are popular with startups and smaller SMEs that want expertise, but do not (yet) have 5 days a week of work for a CFO.

As you can see, there is an appropriate solution for every situation. An important insight here: you can start on a smaller scale. Many organizations start with a part-time or fractional CFO and eventually grow to employ a fulltime CFO as soon as it is really necessary and affordable. That way, you don’t pay unnecessarily early for excess capacity, but you do have the necessary knowledge on board in good time.

Industry-specific challenges and CFO needs

Every type of company has its own financial challenges. We look at a number of industries and when a CFO becomes relevant there – and why exactly a part-time or external CFO is often the best choice initially.

Tech / SaaS startups

Tech and SaaS startups often have a high burn rate and depend on investor money. Key financial challenges include monitoring MRR/ARR, churn and runway (how many months can you go on with the cash?). Once such a startup gains serious traction and moves toward Series A/B funding, a CFO becomes indispensable to build financial models, provide investor reports and support valuation.

Because startups usually cannot yet fund a full CFO at this stage, a part-time or fractional CFO is the perfect solution. It can help with fundraising, budgeting and cash flow management, while keeping costs manageable. This way you do get the strategic financial insight, without a leaden fixed burden on the budget.

E-commerce companies

E-commerce players process large volumes of transactions, manage inventory, and often operate with thin margins and strong competition. Typical challenges include inventory financing, cash flow during periods of seasonal peaks, and monitoring healthy margins per product.

As a webshop grows (international, multiple channels, own warehouse/logistics), the complexity increases explosively. A CFO becomes relevant once that scale is reached: he/she can ensure tight financial planning, inventory optimization and cost control. Because e-commerce can often scale quickly (but can also be erratic), many companies opt for an external CFO on a flexible basis.

A part-time CFO can set up systems (e.g., for real-time sales and margin analysis) and oversee finances, without having to immediately justify an expensive full-time salary in an industry where margin pressure is constant. For example, our financial dashboard & monthly report can be a great addition to your business.

Manufacturing/manufacturing

Production companies and the manufacturing industry deal with capital-intensive processes: investments in machinery, inventory raw materials, complex supply chains and cost calculations. Financial challenges here include costing, efficiency improvements, inventory management and managing investments (and associated financing/loans).

A CFO becomes relevant when the company grows to multiple production lines or locations, or opens its own plant, for example – the scale at which financial planning and investment analysis requires specialized knowledge. In many mid-sized manufacturing companies, however, it is not efficient to immediately hire a full-time CFO. A part-time CFO or CFO as a Service model then offers a solution. Such an external CFO can spend a few days a month monitoring financial strategy, calculating investments and ensuring that there is sufficient working capital, while operational people can focus on production. As a manufacturing company, this gives you the best of both worlds: tailored professional financial management.

Healthcare institutions

Healthcare institutions (such as clinics, mental health facilities, elderly care, etc.) operate under strict regulations and budgetary constraints. They have to deal with insurers, subsidies and complex claim streams. Typical challenges are achieving a balanced operation despite tight budgets, complying with regulations (e.g. annual accounting for healthcare, horizontal supervision) and calculating investments in quality or innovation responsibly.

A CFO becomes relevant in healthcare as soon as the organization becomes larger or when an increase in scale takes place (mergers, growth of healthcare activities) – the financial and administrative burden then increases significantly. Many healthcare institutions opt for an interim or part-time CFO construction, especially if the need is temporary (for example, to lead a change process or set up the financial organization). External CFOs with specific healthcare experience can steer the institution through crunch times without causing payroll costs to skyrocket structurally. Moreover, an external CFO brings best practices from other organizations, which can be very valuable in the healthcare sector.

Service companies (lawyers, consultants, etc.)

Service providers sell hours and expertise. In law firms, consulting firms and the like, the emphasis is on revenue per employee, billability and cash flow (accounts receivable management). Financially, challenges are: ensuring that hours are properly converted into revenue, rates break even, and that growth in staff is accompanied by healthy profitability. Often such a company grows first by hiring good professionals, and only later does the need for financial management emerge. A CFO becomes relevant when, for example, the organization opens multiple offices, new partners join, or investments in marketing/IT are needed to scale.

In this industry, a part-time CFO is almost always the best first step: you don’t need to hire a full-time CFO for a few strategic financial issues a week. A hired CFO can put processes in place for better reporting (e.g., understanding revenue by service or client, profitability by project), and advise the business owner on pricing, costs and growth – for example, how to finance growth or build reserves. So you benefit from financial leadership while keeping costs relatively low and flexible.

Logistics/transportation

Logistics companies and carriers operate with high fixed costs (vehicles, fuel, personnel) and often low margins. Challenges include managing fuel price fluctuations, efficient route planning (so that costs per trip decrease), investments in new equipment or IT, and securing sufficient cash flow in an industry with tight payment terms.

When a transportation company grows from a few trucks to an entire fleet or multiple distribution centers, financial management becomes crucial. A CFO can then help provide insight into cost prices per trip, calculate contracts financially and manage financial risks (such as long accounts receivable terms or lease obligations).

Because margins make it difficult to sustain high overhead, we often see a part-time CFO or interim CFO employed in this industry. This person may fill the role one day a week, for example, or temporarily lead a specific project (such as implementation of a new financial system or refinancing of the vehicle fleet). This way, you still get expert guidance on improving profitability and raising capital, without an expensive force on the payroll 5 days a week.

Startups & scale-ups vs. established SMEs

The need for a CFO may differ between young startups/scale-ups and more established small and medium-sized enterprises (SMEs):

• Startups & Scale-ups: With startups, growth (often explosive growth) is key. In the beginning, founders often manage finances themselves or with a part-time accountant. As the company moves toward scale-up – for example, after seed funding and growth to dozens of employees – the need for more professional financial management arises. Here we often see people first bring in a part-time or fractional CFO to help with things like setting up financial models, investor reporting and cash flow planning. Flexibility is key, because things change quickly. In a scale-up phase, the CFO can act (even if part-time) as the CEO’s strategic co-pilot, for example by working through business plans together or financially guiding an international expansion. Startups sometimes hire a CFO relatively early – even “too early” in terms of size – precisely because investing in good finance helps them scale faster and responsibly. A rule of thumb: from the moment you raise external funding and/or the organization grows to ±30-50 people, it pays to seriously look at a CFO role (even if not immediately full-time).

• Established SMEs: In traditional SMEs (family businesses, established service providers, etc.), there often has not been a separate CFO for many years. The owner or a financial manager (controller/accountant) handled the finances. Here, a CFO often comes into the picture at a later time, such as when the company passes a certain turnover threshold, or during a special event: such as business transfer to the next generation, a major growth spurt after years of stability, or the desire to professionalize in order to remain competitive. In these situations, the CFO’s role is more focused on optimization and monitoring than pure growth chasing. Consider improving profitability, internal controls, cost savings, and long-term strategic planning (e.g., owner retirement, sales readiness, assessing new investments). Again, often the first step is a part-time or interim CFO to help “sort things out.” Some SMEs will eventually hire an in-house CFO, but others prefer to maintain a flexible solution (e.g., an experienced CFO for a few days a month) to keep costs down while still securing expertise.

Conclusion: Startups and scale-ups typically need CFO expertise earlier in their life cycle to facilitate growth, while established companies often shift gears later to assist professionalization or transitions. In both cases, flexible deployment – via part-time, interim or external CFO – can be an excellent way to meet the need without an immediate full-time commitment.

Does your company need customized CFO support?

Do you feel that your company would benefit from additional financial leadership, but are not sure in what form? Or do you recognize the signs and stages of growth we outline above? Then feel free to contact us. Our experienced CFOs are ready to help you. Together we will look at what best suits your company, so that you can continue to grow with confidence and grip on the numbers.