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Before selecting an outsourced CFO service, companies must weigh the pros and cons. How long does it take for the business to get a positive ROI? How big does the company need to be to experience all the great benefits that a contract CFO service will provide?

We've found that small businesses need to grow to a certain size before they are satisfied with the return they receive from ongoing CFO insights.

We'll cover that minimum size below, as well as an average maximum size, but there are exceptions to the rule which can influence the outcome. So don't just look at the numbers and rule yourself in our out.

Even if you're in the size range of companies which often benefit from outsourced CFO services, you have to be ready and willing to invest in the resources which will allow a CFO to deliver real value to your organization.

Companies That Contract CFO Services Typically See $500K to $50MM in Annual Revenue

As mentioned, businesses must have an existing revenue stream in place. By analyzing existing revenue streams, the CFO advisor has the directional insight needed to deliver a positive and ongoing return.

If you're a running a startup or are sole proprietor with little to no existing revenue, you may benefit from CFO consulting services on a one-time basis, but you probably don't want to plan on contracting CFO services for a long-term relationship just yet.

Generally speaking, $1MM in annual revenue is a minimum threshold for contract CFO services, but there are a few $500K businesses which benefit as well. The common factor for those $500K companies is that they’re hungry to get and use financial insights.

The type of business is also sometimes a factor in how much need exists for C-level financial insights.

A SaaS company in the $750K revenue range could have some very sophisticated needs. This type of company needs to nail the unit economics to ensure the business model is sound. A bookkeeper and even some CFOs would be completely lost figuring out which financial metrics a SaaS company should be tracking. An experienced SaaS CFO service provider knows how to measure these metrics efficiently and how to interpret them to move the business forward.

A $500K professional services company with specific needs can also be a candidate. This company might be:

On the upper end, your company will typically want to consider moving from contract CFO services to an full-time CFO at around $50MM in annual revenue. As we mentioned earlier, a SaaS business generally has more sophisticated needs. That level of sophistication means the business may need a CFO service at less than $1MM in annual revenue and may graduate to full-time at less than $50MM. A SaaS company may need contract CFO services at $500K and could turn hire a full-time CFO at around $35MM, perhaps earlier.

How Old Should a Company Be to Contract CFO Services?

There is no strict rule for how old a business should be to contract CFO services. A new venture could benefit from a one-time engagement with a CFO by defining the business model (e.g., pricing) and budgeting/projections up front.

So, a business of any age could use some financial guidance. The question is, when do they need ongoing services? Speaking generally, when your company has enough transaction volume to warrant a part-time bookkeeper, you should consider a retainer for CFO services.

That being said, we’ve also advised start-up founders that they should do the books themselves for a while (a few months to a couple of years even) because it forces them to work with the numbers and develop a sense for the financial rhythms of the business.

Keep in mind that some contract CFO providers don't do project work, so they may not be an option, even for a one-time engagement. These firms need to see a certain volume of transactions/critical mass of accounting activity before they entertain a mutually beneficial arrangement.

Triggers Which Often Prompt Contract CFO Services

Now that we've covered some general guidelines for business size and age, let's take a look at some of the triggers which often prompt a small business owner to begin thinking about contract CFO services.







Here is a how a CFO might help:

Why Contracting for a Finance Team May be a Better Option Than CFO-Only

Contract CFO services offer a lot of value for the right company, but some CFO providers don't offer that service a la carte. Even if, to this point, you've only considered outsourcing the CFO role, give these full-service companies a look.

By bundling their CFO service with bookkeeping and controller services, these outsourced finance teams provide value which you may not have considered:

If you're looking to gain more financial insights, a great place to start is with our executive growth reports. Do I Need Interim CFO Services or Should I Tough it Out?
What Is A CFO Service? How To Know if You Need One