This blog post was co-authored by Bryan Starbuck and Janis Machala.
Recently Bryan did a search on Seattle Interim or Contracting CFOs across who specialize in working with startups. Below are the set of CFOs where we filtered through to final discussions and reviewed them in-depth. These are CFOs where we’ve heard great things about them from various people who have worked with them.
The above list was the "short list" for the final stage of Bryan's consideration for his open position. Due to time constraints, Bryan didn't interview CFOs from many of the firms in Seattle. There are many more excellent CFOs and great firms that are used by Seattle startups, such as Atlas Accelerator, CFO Selections, CFO2GO, vCFO, Tatum and many more. This blog was not intended to be a compendium of all resources but feedback from the in-depth interviews and experiences we have had with a subset of the pool.
The rates vary from $140/hour to $185/hour, with a few exceptional people at $125/hour or greater than $185/hr. Many prefer retainers in order to not have to count hours or to encourage overly minimizing hours.
There is a challenge for startups that are really early stage. They may have raised less than $50-100k in external funding and want to work on financial projections for fundraising. The challenge can be if a CFO wants a minimum retainer of $3k/month to make it worth their while for just a minimal number of hours per month, but then that ends up being equal to 70% of the salary of a $50K/year full-time employee. The impact on the startup is that they almost increasing their expense rate by a full head-count for even the minimal number of hours for a CFO.
Bryan is a fan of having one strong general person to act as a "one person finance department" handling everything from bookkeeping up through controller level work for $50/hour to $65/hour. The CFO can still be required periodically to augment the process for reviewing senior level work or for more sophisticated financial modeling and capitalization scenario development.
Many financial firms spread the work across 3 or 4 people: bookkeeper, accountant, controller, and VP of Finance. Bryan feels that this can be a challenge because when you need to make decisions, the knowledge is in pieces in different people's heads and you need to get them all together in order to get decisions made. This requires paying hourly rates for several people for an hour meeting. The meeting can then be inefficient while the finance people ask each other questions to get the full set of facts during decision making.
It is hard to find someone for $65/hour that can do the controller level work on down, but they can be found with enough searching. For early stage startups, they may only need 5 to 10 hours per month to complete all of the accounting. In those cases, Bryan finds paying $65/hour and having one person with all of the information and only needing one person in meetings can be useful. It does not seem optimal to get a bookkeeper for $25 to 50/hour (and others for other rates) as worth the cost savings when the startup only needs them 5 to 10 hours per month. As your complexity increases, you’re venture funded, start having customers you may find the span of a bookkeeper, controller, CFO makes sense.
Janis is a fan of hiring an Office Manager who can do a broad range of duties. Have the Interim CFO or Controller develop the chart of accounts and assemble a schedule for what government (state and federal) forms need to be filed by when and then train the office manager on simple bookkeeping with QuickBooks or find an office manager with prior bookkeeping experience. By having one person dedicated to broad office duties they can be the glue between the Interim CFO and the executive team members. There’s so much to be gained by having administrative help (a person to run errands, go to bank/Coscto/post office, ensure office supplies and vendor management occurs regularly, scheduling meetings with outsiders/insiders, coordinate travel, competitive research, employee morale, etc.). Then the CFO is monitoring cashflow, developing monthly dashboard/metrics, prepping materials for board meetings, negotiating with banks and investors. One gets a lot of mileage out of a can do junior level person and a seasoned part-time war horse who’s seen it all. Oh, outsource payroll…not worth the headaches associated with all the government reporting!