What is the Best Time for Startups to Hire for Finance?

Hiring for financial roles at your growing business can feel a little like dehydration—if you’re thirsty for help, you’ve probably needed it for a long time.

But the fact of the matter is, many founders are a little reluctant to hire for these positions—for reasons ranging from lack of knowledge to competing priorities in their hiring budget elsewhere. Most founders are skilled in sales, marketing, engineering, or operations, but it’s somewhat rare for company leaders to have deep skills in accounting or finance. But just because the skillset isn’t there doesn’t mean the need isn’t.

Deciding when to add in-house financial expertise to your team is a tough decision. However there are a few key stages at high-growth companies where some level of financial guidance becomes necessary:

• Early growth (Series A, B)
• 6-figure annual run rate
• Liquidity or exit events

Understanding the indicators for when to hire full-time accounting or finance roles can mean the difference between success and failure at each of these stages. This brings us to the question of the day:

When do you know when it’s time to hire on a full-time finance role (or department) at your organization?

In this post we’ll break down a few common scenarios for adding financial professionals to your team, tips for hiring, and some practical advice for navigating financial hires at high-growth companies.

From MVP to IPO to Exit—Meet the Financial Professionals Who Can Help You Along Your Journey

Financial professionals are not a one-size-fits-all—and depending on what stage your business is in, some skills will be more useful at your company.

For new startups who have either just closed their Series A funding or are close, the two financial skills that will have the biggest impact are:

• Accounting
• Financial planning and analysis (FPNA)

You’ll be looking for somebody who is great at forecasting and putting together models, but can also jump in and own the transactional side of things. It’s imperative for companies in these early stages to pay their bills on time and intelligently manage their cash flow.

Typically, this need can be fulfilled with a role like Head of Finance or VP of Finance.

Once you’ve raised your Series B and have more capital, you may consider delineating the accounting function from finance. At this point you might decide to either promote your current accounting employee into a more strategic role and bring in a Controller, or the opposite.

Later-stage companies will be looking for a completely different skill set. For companies looking to go public, a CFO with experience and existing relationships in banking can be indispensable. The person in this role should have connections and a knack for managing the expectations and perception there. Additionally, deep knowledge of SEC compliance and regulations is a must. Over the last few years there’s also been a trend of hiring CFOs with banking experience. Installing this position before your IPO is a good idea, as they can help protect your blind side from the challenges inherent in taking a company public.

Tips for Hiring Financial Professionals

Consider this advice when adding financial talent to your team.

Hire for Need; Not Roadmap

Startup founders think about the future by nature—they’re always thinking about growth, when to pivot, and seeing the ‘third horizon.’ But when it comes to hiring for financial positions, it is imperative that they hire for their current needs and not what they’ll need two years down the road.

i.e. don’t hire a CFO when what you need today is a Controller.

Stay flexible

If you’re hiring for your current needs, as recommended, understand that you can always make changes in the future. You do not have to promote your Controller to VP of Finance—you can always install a better fit for them to report to in the future. Early-stage companies often outsource the accounting function or bring in fractional CFOs for this very reason.

The right person today may very well not be what you’ll need two years from now, and that’s OK. Structure and restructure your employment offers and organizational charts accordingly.

Take advantage of technology

Financial software has gotten really good over the last several years. You can use QuickBooks Online for accounting and Stampli for AP automation. All of these advances have made managing transaction-level accounting much, much easier for employees. They’ve also made company financial data far more accurate and insightful.

What this means is that you don’t necessarily need a full panel of finance professionals to run the finance function, especially in the beginning. Instead, you may be able to hire a smaller team that can do wonders with the help of automation, achieving the same results as a larger team.

Take advantage of these advances in accounting technology early on and put more focus on growing the business to a stage where you’ll really benefit from expert financial guidance.

And if you’re looking for resources on AP automation, you’re in the right place! We have an entire resources library full of case studies, practical advice, and tons of webinars and guides to help you manage your accounts payable. Or if you’d like the more personal touch, reach out to one of our AP Heroes today!