Of course not. But a great pyramid of accounting talent is often needed to have a high performing team. This is true for large companies, and sometimes it feels like you can never have too much accounting talent. But for smaller companies, staffing even a few of these positions full time can be difficult to afford. Small businesses also experience more ebbs and flows in accounting workload than larger companies. They may need a lot of help at year-end and during tax season but may need less help during the dog days of summer and the holidays. The below accounting pyramid shows the average compensation for common accounting positions.
(source: Glassdoor Feb 2019, Los Angeles area, plus 25% employee benefits load)
Using these budgets as a point of reference, let’s look at the cost of a typical small business setup of General Accountant plus Controller. This pair costs $236,552 annually, or $19,713 per month. This is a permanent monthly fixed expense since these are full-time employees on payroll.
Alternatively, a part-time CFO paired with a full-time Bookkeeper costs only $7,971 per month, or 60% less than the $19,713 full-time Accountant plus Controller. With a CFO, processes and controls will be created so that a Bookkeeper can competently handle the day to day. The true cost of this option will of course vary. The complexity of the work, the frequency and intensity of pre-existing problems, are two factors that influence how many CFO hours are needed per week.
The good news is that more and more small businesses today are seeing the flexible consulting CFO model as a much better fit for their unique situation. They can avoid being overstaffed today then understaffed tomorrow. Right-sizing accounting resources is one of many reasons the part-time CFO model has become increasingly popular. It has become an attractive option for small businesses that:
- Need a specialist, fast.
- Want a flexible budget that fits the week-to-week or month-to-month workload.
- Want to avoid long-term cost commitments.
- Want to avoid the rigor of hiring and firing.
- Want an experienced large company CFO that fits their small business budget.
This cost analysis is not suggesting that either option is superior to the other one. But we should do what we can to raise awareness. As a small businesses, did you know that having your very own best in class accounting function is very much in reach?
To learn more about our affordable, flexible, part-time consulting services, or to get a free CFO review of your financials, call Arima Business Solutions today.