How to Hire and Coach a CFO

Most CEO/founders downplay what they know about their business finances. They think they need some credentialed expert to figure it out. The truth: you built this business. You know where the money comes from, where it goes, and what keeps you up at night. That knowledge is MORE valuable than any CPA certification. What you might be missing isn't understanding — it's structure: • A system for tracking cash weekly (not just checking your bank account) • A way to see margins by service line (not just total P&L) • Someone to turn your intuition into data • A process for the monthly close that delivers on time with recommendations Before you hire: ask yourself what you actually need. Is it: A) A strategic partner who helps you grow (CFO) B) Someone to keep the books clean and close on time (Controller/Accountant) C) Better tools to see your own numbers clearly (Software + AI) Most businesses under $20M need B + C, not A. And B + C costs $2K-4K/month, not $10K+.

The CPA credential tells you someone can pass a test. It doesn't tell you they can: • Understand how YOUR business makes money • Solve problems on the balance sheet • Give recommendations (not just reports) • Communicate without jargon • Think about the business flow, not just accounting rules What to actually evaluate: MUST HAVE: • Can they explain your business model back to you after one conversation? • Do they ask about operations, not just the chart of accounts? • Can they read a balance sheet and tell you what's wrong — not just that it balances? • Do they bring recommendations or just data? RED FLAGS: • They lead with their credentials or Big 4 experience • They talk about "best practices" without asking about your business first • They want to restructure everything before understanding anything • They can't explain something simply — if they can't make you understand it, they don't understand it well enough • They've never worked in a company your size (big company people often struggle at smaller scale) GREEN FLAGS: • They ask more questions than they answer in the first meeting • They talk about cash flow before they talk about the P&L • They've worked in your industry or a similar one • They describe past situations where they solved problems, not just reported them • They're curious about your operations, not just your books

Standard interview questions get standard answers. These questions reveal whether someone is a scorekeeper or an operator: "Walk me through how you'd learn our business in the first 30 days." • Scorekeeper: "I'd review the chart of accounts, financial statements, and audit files." • Operator: "I'd meet every department head, watch how cash flows through the business, and build a 13-week cash forecast." "What's the relationship between the balance sheet and the P&L?" • Scorekeeper: "The P&L flows into retained earnings on the balance sheet." • Operator: "The balance sheet IS the business. The P&L is just the result. If your AR is growing faster than revenue, you have a collection problem that shows up as a cash crisis, not a profitability problem." "Tell me about a time you disagreed with the CEO on a financial decision." • Scorekeeper: "I presented the analysis and let them decide." • Operator: "I pushed back with data. I showed them the three scenarios and recommended the one with the best risk-adjusted return. They went a different way and I supported the decision while tracking the outcome." "How would you explain our gross margin to our operations manager?" • Scorekeeper: "Gross margin is revenue minus cost of goods sold divided by revenue." • Operator: "For every dollar we bring in on a roofing job, we keep 35 cents after paying crews, materials, and subs. That 35 cents has to cover rent, office staff, insurance, and profit. If it drops to 30 cents, we're in trouble."

Hiring right is only half the job. You have to develop them — especially if they came from a pure accounting background. What to share with them: • WHY behind every business decision (not just the financial outcome) • Operational context: bring them to the job site, the warehouse, the sales floor • The vision: 3-year picture, 1-year plan, 90-day goals • Your expectations: "I want recommendations, not just reports" How to develop them: • Weekly 1:1 (30 min minimum, never skip) • Bring them into strategy meetings before they're "ready" • Ask them to present to you FIRST, then to the team • Give them ownership of one cross-functional project • Challenge them: "What would you do if you were CEO?" The coaching conversation framework: 1. "Here's what's working..." (start positive and specific) 2. "Here's what I need more of..." (recommendations, proactive insights, operational fluency) 3. "Here's the context you might be missing..." (share business reality they can't see from the books) 4. "What do you need from me?" (support, access, time, resources) Founders especially: your finance person can't read your mind. If you grew up in the field or in sales, you have context they don't have. Share it explicitly and repeatedly.

Most companies treat the monthly close like a fire drill. Here's the rhythm that actually works: THROUGHOUT THE MONTH (proactive): • Bank reconciliations done weekly (not month-end) • AR reviewed weekly — who owes us, how old, follow up • AP reviewed weekly — what's due, what can wait, what's the cash impact • Revenue recognition kept current (don't let WIP build up) • Accruals updated as they happen, not estimated at month-end BY THE 25TH: • Pre-close checklist complete: 80% of the close is done • AR/AP reconciled, bank recs current, accruals reviewed • The only thing left should be the last 5 days of transactions BY DAY 5-7 AFTER MONTH-END: • Books closed • Financial statements ready • Key variances identified THE CEO PRESENTATION (day 7-10): Not just the numbers. The story: • Here's what happened (key P&L and balance sheet movements) • Here's what it means (the business implications) • Here are the 3 things to act on (specific recommendations) • Here's the cash picture for the next 13 weeks This is what "proactive activities leading to being able to close throughout the month" looks like in practice. The close should feel routine, not like a crisis.

Not every business needs a CFO. Here's when you do: YOU DON'T NEED A CFO IF: • You're under $10M revenue and have a good accountant + tools like Operational CFO • Your financial questions are operational (cash, margins, pricing) not strategic • You need better systems, not more people • A solid controller can handle everything with the right coaching from you YOU NEED A FRACTIONAL CFO IF: • You're doing an acquisition or being acquired • You're raising capital or restructuring debt • You need board-level financial communication you can't do yourself • You're scaling past $20M and the complexity is outrunning your current team • You need someone to build the finance function from scratch YOU NEED A FULL-TIME CFO IF: • Revenue over $50M with multi-entity or multi-state complexity • PE-backed with reporting requirements • Preparing for IPO or major capital events • The strategic workload requires a dedicated executive The honest math for most businesses ($5M-$20M): • Good accountant: $4K-6K/month • Operational CFO platform: $149/month • Total: ~$5K/month vs. • Fractional CFO: $5K-10K/month for less availability You save $2K-5K/month AND get 24/7 tools. The fractional gives you a smart person 10-20 hours/month. The platform gives you tools you can use every day.