Part-Time CFO, Big-Time Experience

By Chip Knighton

Many businesses, particularly those in the embryonic stage, could use intensive, forward-thinking financial or technology help. In other words, they need a C-suite executive. But in many cases, they can’t afford to pay C-suite money every year.

That’s where some CPAs, like Chris Fraser, have seen an opportunity. Fraser operates the Fraser Company, a Florida-based business technology consulting firm where he provides C-suite services to companies on a part-time basis, and provides contract services to Mendelson Consulting. His accounting and technology expertise allows him to step in as chief financial officer (CFO) or chief information officer (CIO) and help a company improve its financial standing.

“There are a lot of companies who need expertise or advice or help when it comes to managing their business,” he said. “Especially from a technology aspect, which is such a core part of any business operation these days. There are a lot of companies who aren’t big enough to justify a full-time CIO. So I provide fractional CIO services — helping companies assess their overall system needs and putting new solutions in place.”

To oversimplify the issue, part-time CFOs and other C-suite executives can give a fledgling company more of an air of legitimacy. The leaders of small businesses that have gone through a period of fast growth often find their finances more complicated than they’d previously imagined. And companies looking to raise funds or go public can benefit from the professionalism a CFO — particularly one who has obtained the CPA credential — provides.

That’s without paying C-suite wages year after year. According to a 2012 survey from Robert Half Financial and Accounting, the average salary range for a CFO at a small or mid-sized company can be anywhere between $94,250 to $182,250. That’s a big outlay for a company looking to raise funding or right the ship.

“You’re getting access to a CFO without paying CFO salaries and benefits,” said Jason Miller, CPA, principal of the JS Miller Group PLLC in Washington, now doing business as SoftwareCPAs. “It allows a smaller company to appear larger and more serious about their financials, if they’re going in to get a bank loan or talking to investors. It tells the strategic partners that you’re a lot more serious about numbers than a standard business owner.”

Payment structure for part-time CFOs and CIOs can vary wildly. Some such consultants are engaged for a particular project and are paid accordingly. Others work on an ongoing basis and charge an hourly or monthly fee. Rates can vary based on individual qualifications and professional specializations, client size and industry.

Miller is continuing his part-time CFO work, but limits his clients in that area since he’s rolled that business into a new accounting practice focusing on technology clients. His part-time CFO clients tend to fall into a sweet spot of between $2 and $12 million in revenue.

“Above that, and depending on complexity, you need a full-time CFO,” he said. “Below that, you might not need a CFO at all.”

Bits and Bytes, Debits and Credits

Many CPAs who offer part-time CFO services tend to have expertise in technology to go with their accounting background, and that’s no coincidence. Upgrading systems and processes can go a long way toward improving a company’s financial future.

Many part-time CFOs and (especially) CIOs hold the Certified Information Technology Professional (CITP) credential from the American Institute of CPAs (AICPA). Larry Boyd, CPA, of Resources Connection in New York, says that a well-trained CPA can help a company leverage technology to accomplish the role of a controller and a CFO.

“So much of what I’ve done is to work with the controller on their objectives, but at the same time accomplish the CFO’s role of providing information,” he said. “There are financial and non-financial metrics that lead into the operational leadership of a company. The person who is going to decide what’s coming next in a business usually isn’t the controller.”

“I have jokingly always said I like to translate the bits and bytes to debits and credits and vice versa. But at the core, it’s understanding the business reasons or needs behind something that the business wants and being able to translate that into systems,” Fraser said. “I’ll work with a vendor, and the vendor thinks technically but doesn’t understand the business rationale. I can fill the gap between the two.”

Boyd has never advertised himself as a part-time or interim CFO, but rather as a fixer who will do whatever he can to help a financial organization transform its operations. He assesses where a company is, what it wants to become and how to close the gap through the organizational pillars of people, process and technology.

“I call it a conference room pilot,” he said. “You have to sell people on the journey and how they’re going to get there.”

And while an accounting and technology background is ideal for that task, that doesn’t mean that just anyone with those areas of expertise can do the job.

“A lot of what’s going on in finance these days is creating business advisory-type roles,” Boyd said. “Not everybody in finance and accounting is good for that. They’re good with data, but not necessarily good with being futuristic and helping an organization move in a direction.

“You can be good at analysis and reporting, but that doesn’t make you good with futurism. That’s a skills gap within most finance organizations.”

So what other skills are necessary to fill C-suite functions on a part-time basis? Tax experience is helpful, particularly in the business arena and in all jurisdictions where your company functions. You’ll also need to be current on regulations and business laws in those localities.

“You have to have CFO experience, hands down,” Miller said.” You cannot become somebody’s part-time CFO without prior CFO experience. People try it. I don’t know if they’re successful at it. But you have to know what it’s like to sit in a board meeting. You have to know how to think like a CFO.”

The proper education is also helpful. The CPA is vital to many aspects of the CFO role, but further business education on top of that can help with the necessary outlook.

“I think the thing that prepared me the most was an MBA in finance,” Boyd said. “The accounting is all about measurement and disclosure, and the MBA in finance put me in the office of the CFO. Prior to that, I was in the office of the controller. Controllers are current-day and past, and CFOs should be envisioning the future and what needs to change to make it happen.”

The Part-Time CFO Sales Pitch

Like any service-based business, there’s a degree of self-promotion required to be successful in the part-time CFO arena. Referrals make up a major part of many part-time CFOs’ business, particularly for those who aren’t part of an established accounting or consulting firm.

Industry groups can help in that regard. Fraser, the son of former Florida Institute of CPAs (FICPA) President Skipp Fraser, CPA, has found success through that organization. He’s also made fruitful connections through the AICPA’s CITP group and local business and leadership organizations. And in addition to all of those outlets, there’s good old-fashioned personal referrals and ad hoc professional networks.

“Everybody has some sort of an expertise. Even though we may do certain similar things, each person probably has an area that they excel at — different tools in the toolbox,” Fraser said. “I have a friend who’s a part-time CFO consultant who specializes in bankruptcies and turnarounds. Others specialize in IT governance. I’m more than happy to swap referrals or needs back and forth with those to bring in the right person to do the right thing.

“It’s a big enough pool that it works better if I help other people and they help me.”

A strong social media presence is also a must, and that doesn’t just mean LinkedIn. Twitter and other outlets can help you position yourself as a thought leader and stand out in a crowded market.

The sales aspect of the part-time C-suite gig isn’t for everyone, whether because of the time commitment — which can be substantial — or for personality reasons. Working as part of a bigger group, as Boyd does, can help in that regard, but involves the attendant sacrifice of professional autonomy. Truly striking out on one’s own means you only eat what you kill.

“It’s something where you have to generate hours,” Miller said. “Every month, you’re resetting your hours. That’s tough. I’m one guy, and the only way to grow your business is to increase your hours or increase your rates.”

In Sickness and in...Sickness

Some clients who engage part-time CFOs are startups looking to legitimize their business through the use of a professional. Many of them are looking to raise money and expand their businesses. Others are seeking help for less positive reasons. That can make for a steeper learning curve and necessitate some tough answers.

“There’s a reason they call you and they need a CFO, and it’s generally not because things are great,” Miller said. “You have to clean it up.”

And whatever their motivation, it’s important for part-time CFOs to make clear to their clients that they’re not getting a full-time employee. Sometimes, their needs won’t be the top priority.

“You get what you pay for. If a company is only going to allocate a certain amount of money, there’s only a certain amount of my services they’ll get,” Fraser said. “They may have a major change that they’re trying to go through, and that could require more time and effort. If they’re only grabbing a day or two per week, that could stretch out the time it takes to do the project.”

Like any accounting specialization, part-time C-suite services can be as fulfilling and lucrative as you’re willing to make it. Whether you’re a forecasting whiz or a technology guru, these services represent yet another career path the CPA credential can make available.

“There’s more to life than debits and credits,” Boyd said. “You can become a key advisor to an organization. People see audit work and tax work as boring, but it’s a training ground. You can do it for the rest of your life, but you can splinter off and do other things.”

Originally published in the May/June 2016 issue of Disclosures.