Whether you are the CEO of a mature company or an emerging business, sound accounting practices are critical to effective decision making.

In a large company the accounting department might be comprised of several bookkeepers handling the routine and clerical items, a controller to perform the analysis work and prepare the financial statements, budgets and cash flows and a chief financial officer who provides the financial advising and analysis of complex financial endeavors.

The dilemma for an emerging business is that it needs the support of all of the levels of an accounting department without the volume or financial resources to support such a department on a full time basis. How then does an emerging company resolve this dilemma? Too often the business owner makes the mistake of taking on the responsibilities for the Company’s accounting, many times with very limited accounting knowledge. Another typical scenario is that staff are hired to handle the routine and clerical items but they lack the experience and expertise to provide the financial advice necessary to the development of the business. Either way these solutions typically result in the business owner not having the financial support and advice that are necessary to effectively manage and develop the company.

A more effective solution is to utilize the services of a consultant who provides part time CFO services. This arrangement allows the business owner to get back to the business of developing the Company with the benefit of the financial advice and support from a seasoned financial expertise without having to make the financial commitment for this level of expertise on a full time basis.

Initially a part-time CFO can establish the company’s accounting system, policies and procedures and develop the monthly and annual financial planning, analysis and management reports. Depending on volume, the part-time CFO can also initially handle many of the HR functions and the more routine accounting functions to minimize staffing requirements and ensure the accuracy of the accounting information as the accounting system is developed.

While it is not always necessary to have a financial statement audit completed in the early stages it is critical that any tax reporting be completed on a timely basis. When a financial statement audit is required or desired, a part-time CFO becomes the liaison with the external auditors minimizing the time and expense to complete an audit.

Although the financial reporting requirements will vary depending on the investor group, the need to manage cash is critical to all emerging businesses. A part time CFO can develop the cash flows, business projections and budgets necessary to position the company for growth and expansion.

As the business develops and the accounting needs increase, a part time CFO can be leveraged with the hiring of bookkeepers and human resource department personnel and be responsible for their training and supervision. Ultimately the part time CFO can participate in the hiring process for a full time replacement with the knowledge of the qualifications which would be most beneficial to the company’s continued growth and success.

From the earliest stage of a company’s development it is critical that management have the tools to understand the impact of all decisions from a financial perspective. The utilization of a part-time CFO in the early stages of a company’s development provides the balance between the need for sound accounting systems and financial expertise within the management team with the limited resources and volume of an enterprise in the early stages of its development.