Making the first finance hire

Update 13 Dec 2021

Major changes happening in this Coda document which will soon be retired

This page has been copied to the Handbook (Hiring your FinOps team)

Background

Hiring a finance team is a difficult procedure for any startup. Those choices they make will have a profound effect on what follows, and any mistakes are very costly. How can you hire one person then expect them to do everything?

Hiring an in house finance team

It wouldn't be right to complete this help sheet without mentioning that we started Quantico with the intention of fixing this problem. We provide a mix of skill sets, in your office, when you need them. For more information visit

www.quanticofinancial.com⁠

Making your first hire

CFO first

CFOs focus their attention on the strategic aspects of the finance function, such as raising finance, interpreting key results and planning for the future.

As they have chosen to specialise in a strategic problems, these individuals rarely take well to detailed process planning. This means that starting with the CFO will often lead to operational problems later. These manifest themselves as slow reporting cycles, errors in the reporting and frequent changes in outsourced bookkeeping providers.

Of course there are exceptions and the very best CFOs are competent across all elements of the finance function.

Conclusion:

Hiring a CFO first is a good option if you have one of the rare candidates who is as competent building automated processes as they are raising funding, and you can afford to hire her.

Head of Finance / Finance Manager first

Mid-seniority roles carry a range of titles across startups. It's difficult to generalise, but generally their focus is on operational finance: defining and implementing processes.

In our view hiring at this level is the best first step for the majority of startups. The best candidates at this level will be competent building processes and following them but will also be able to support founders around funding and strategy.

Conclusion:

We think hiring someone with an operational finance background is the best choice for the majority of startups.

Bookkeeper / finance assistant first

Bookkeepers or finance assistants are typically responsible for carrying out the processes built by the operational finance specialists, such as bank reconciliations, payment runs and payroll.

Starting with a bookkeeper is a very common choice for founders. This is because their first experience of pain in the finance area usually comes when they're doing the bookkeeping themselves. It's also the cheapest option, and therefore easiest to justify.

However in our experience starting with a bookkeeper can lead to the most problems (depending on the individual). Often they work remotely, with little commercial understanding of the business or contact with the rest of the team. In the absence of established processes they implement whatever seems convenient to them. This is rarely a good option for rapidly growing companies.

Conclusion:

Whilst affordable this is only a good option in our view when (i) you are able to integrate the bookkeeper into your business and (ii) they are as confident designing processes as they are following them.

Conclusion

The finance function has two raw ingredients: people and processes. As people create processes it makes sense to start with them first, and when you're selecting the first person it makes sense to opt for one who is process oriented. In the majority of cases this will be someone with a Finance Manager, Head of Finance or Financial Controller job title.

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