I have this recurring conversation when I meet with agency owners.
When I happen to ask if the firm might consider hiring a full-time CFO the answer, more often than not, is, “No, not affordable.”
Agency owners tell me, of course, they see the value of bringing aboard a part-time CFO, but often cite prohibitively expensive costs. It’s understandable, but not advisable.
Small- to midsize creative services firms have to manage their labor expenses carefully and a full-time CFO can command $200,000 and up in annual salary. What is more, many agency owners—possessing an entrepreneurial bent—try to manage the numbers themselves.
However, a growing number of agency owners are starting to embrace the idea of hiring a part-time CFO. They are starting to realize it is an investment, not a non-billable operating cost.
For the last several years or so I’ve been getting more and more calls from agency owners and C-level execs throughout the U.S. and Canada asking me to refer a part-time CFO. The calls are music to my ears.
Here are just a few of the key disciplines a part-time CFO will bring to the table for PR firms.
> Effective Budgeting. Budgeting can sometimes be nettlesome for PR agency owners, a left-brain exercise for people who tend to be more right brain. A part-time CFO can create budgets that will be the basis for the fee quotes. She will also prepare a “rolling budget” that is updated monthly, accounting for new hires, new business, lost business and infrastructure investment needed (particularly on the digital front).
> Maintain books and records. A part-time CFO will get your chart of accounts in conformity with Gould+Partners standards. This is crucial, since the chart of accounts is the underpinning for your general ledger and, ultimately, your financial statements.
> Cash Management. Effective cash management is a necessity to sustain and grow any PR agency. A firm may show high profitability, but be insolvent. Sounds incredible, but I have seen it many times. The profits may all be in the receivables. If the receivables are not collected the firm will not survive. The part-time CFO will assure that receivables are collected timely and if not, recommend appropriate action—stop work, collection agency, sue.
All told, the part-time CFO will make cash management, budgeting and predicting the future an ongoing responsibility for your firm.
The CFO will also get a handle on baseline hours, or the available client hours, for each staff person (typically 1,700 hours, but a lot depends on each staffer’s allowance for vacation time, personal time, maternity leave, paid holidays, etc.). In addition, the part-time CFO will price out proposals based on the work projected and the correct billing rates of the staff assigned to the account team.
The growing demand for a part-time CFO reflects larger trends within the public relations industry.
As PR firms take on new practices and recruit new types of talent, such as digital and analytics pros, they’ll need a CFO to ensure that the firm is pricing new services accordingly and inoculate the firm against scope creep/overservicing which seems to be getting worse throughout the PR profession.
To be sure, committing to hiring a part-time CFO requires a great deal of due diligence. Agency owners as best they can have to make sure they’re hiring someone who will serve the firm with distinction and integrity.
Gould+Partners in November rolled out a Part-time CFO Division. The firm welcomes resumes from qualified CFOs looking for part-time work, such as one day a week of several days a month.
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