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.