When & How to Hire a VP of Finance
What does a VP of Finance do?
As a vital member of the executive team, the VP of Finance is responsible for reporting the financial operations of the company to the CEO and President. They assume responsibility for the finance team, from the executive level to daily business activities.
When should I hire a VP of Finance?
Most new companies begin by employing a bookkeeper to handle their accounting needs. Moreover, if a small business stays small, a good, qualified bookkeeper is all it will ever need. However, small businesses frequently expand into larger enterprises. At some point, it may become evident that your business has outgrown your bookkeeper and that it’s time to hire someone with more advanced accounting skills.
Although it varies by industry, there are sometimes meaningful reasons why a business decides to hire a Vice President of Finance:
The size of the business – Bookkeeping is the simple recording of a business’s day-to-day operations, and for most small businesses, this is sufficient. However, as a company grows, aspects of the business become increasingly complex. This can include growing operations, capital expenditures, managing inventories, increases in headcount, etc. All activities must be recorded, regulated, and coordinated, which typically requires a vice president of finance.
Company Growth – Another factor in determining whether a company needs a Vice President of Finance is rapid growth. Any substantial growth, and especially rapid growth, can be effectively managed by automated systems. Additionally, the company may require adequate financing to support the growth. In this scenario, it is crucial to hire a qualified VP of finance in order to make the appropriate technology investments and gain access to additional capital.
Mergers and Acquisitions – The decision to hire a VP of finance is also heavily influenced by anticipated mergers or acquisitions of other companies, business lines, or physical facilities. A Vice President of Finance is able to assemble the appropriate team to evaluate the transaction and make a recommendation regarding the deal’s viability and effect on current and future operations. Additionally, the VP of Finance can prepare the information required by a potential lender or investor to fund the transaction.
Difficulty due to size – The complexity of the transactions within a company can play a significant role in determining whether a higher level of expertise or experience is required. What is the annual revenue? Is it experiencing year over year rapid growth? Our new product lines or revenue streams adding to the scale of the business? Depending on the answer to these end any other questions, your company may require a more sophisticated approach to handling finance.
Top Qualities of a VP of Finance
The ideal VP of Finance is analytical, detail-oriented, and has excellent problem-solving skills. They should also be able to communicate complex matters to all levels of the organization. Additionally, the VP of Finance should work well under pressure, meet deadlines and take pride in producing accurate information.
The Skills a VP of Finance Needs
A VP of Finance needs to have a strong understanding of accounting, financial analysis, and financial modeling to succeed. They should also be proficient in Excel and have experience with Xero, QuickBooks, Sage, or other accounting software, as tax is digital in most countries now. Additionally, the VP of Finance should have excellent communication and presentation skills, as they will need to communicate to leadership with varying amounts of accounting knowledge about the financial priorities of the business and what it needs to grow/sustain itself.
VP of Finance Essential Competencies:
- Critical reasoning.
- Analytical abilities
- Computation skills.
- Attention to detail.
- Outstanding oral and written communication abilities.
- Leadership competencies.
How to Hire a VP of Finance
When hiring a VP of Finance you need to include the people they will work with and report to in the hiring process. You need to be sure they know how to work with your accounting systems, understand your country’s tax laws, and your business model. These are my top tips on how to hire a VP of Finance:
Create a Search Team
Assemble a team of key stakeholders, including those the VP of Finance will report to and work with. As a team, you will be able to establish better your needs for your new hire, their responsibilities, and the reporting structure.
Establish the vision of your business for the next 6-24 months
As a team, you need to understand the vision of your business and how this new hire will help you with it in the short and long term. Understanding where you hope your business will be and the steps needed to get there, ensure you hire a VP of Finance with the required experience and skills to enable you every step of the way. Doing this as a team removes bias and will align those involved in the search so that they all find worthwhile candidates more efficiently.
How will your VP of Finance enable that?
So really dive deep into your plan. Will you double or triple in size in the next two years? Are you going to do an IPO? Are you planning to merge or be acquired? Are you hoping to do multiple of these things? Understanding each step of your vision and the knowledge gap in your team that your VP of Finance could fill will help you identify the best hire possible for your business.
Who will your VP of finance report to?
How will the VP of finance sit in your corporate structure, and who will they report to? These people will understand the knowledge gap the most and should give significant input into the process and participate in the interviews. Most commonly in start-ups, this may be the founder or CEO. In larger companies, this is commonly the CFO, if there is one, or the President.
Work with an executive Search Firm
Hiring any senior leadership or executive, such as a VP of Finance, is exceptionally challenging from identifying a good candidate, approaching them, and convincing them to come to interviews. This often takes months. That is why most companies rely on Executive Search Firms to help them. What do executive search firms do? They:
- Deep dive into your company to understand your specific needs and knowledge gaps.
- Unlike contingent recruiters, they head-hunt both the active and passive market to find the best candidates.
- Organize meetings and manage the process of interviews and hiring
- Use their specialized experience, knowledge, and network to find you better talent faster.
- Take the workload of finding talent off your leadership, enabling them to focus on the core business.
If you are looking for help with an executive search for a VP of Finance, please contact me. As a Managing Partner with over 25 years of experience at Boyden, I can assist you personally or connect you with the executive search consultant in your local or regional office who is the best fit for your business needs. With offices in 43 countries, each staffed by a variety of industry- and function-specific specialists, I can find the executive search consultant who best meets your needs. One who best understands your market and unique region requirements. I can assist in confidentially conducting a regional or global search for a Vice President of Finance or an entire finance team.
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