A long commitment to climb the corporate ladder at a single company is no longer the only career option for finance professionals.
Part-time, interim, or project-based work at a startup or rapidly growing small or midsize company, or indeed a larger organisation, is an alternative that is becoming increasingly popular worldwide amongst finance professionals early in their careers, said Tim Hird, executive director of Robert Half Management Resources, which recruits senior-level talent for project and consulting roles.
"What's important to them is to get as much experience as possible in work that gets them out of their comfort zone," Hird said. "As a result, they will learn more quickly. Two or three interim engagements in a couple of years can gain them more experience than staying in one position for five years."
On-demand finance jobs aren't for everybody. They are basically freelance assignments that lack the security of a full-time job. They require a combination of technical and change management skills and expertise in IT systems. And they tend to take candidates to hotspots of innovation and entrepreneurship.
These hotspots are sprinkled all over the world and include Tokyo, the San Francisco-San José area, Paris, Sydney, Berlin, and Toronto. Ranked 27th amongst the 100 most innovative cities in 2018 is Hong Kong, an emerging startup hotspot in fintech, health technology, and consumer electronics.
The vast majority of Hong Kong's small and medium-size entities (SMEs) and startups do not employ senior finance support; they simply cannot afford to. Yet the potential is there: Profits are not maximised, processes are not optimised, and SME owners consistently undervalue the worth of the company to the right buyer. Adding to that potential are multinational companies with a continual need to flex, scale, and reposition resources.
Companies are taking on more large, one-time, and transformation projects despite having lean middle-management teams and often lacking the specialised skills needed, Hird said. External experts, including interim CFOs, can come in, support the project, and transfer their knowledge of the initiative to the company's full-time staff.
It is within this ecosystem that the part-time finance professional can strive to develop, building upon previous achievements.
An on-demand finance industry is emerging
CFO Counsel has offered clients in Hong Kong contract CFO services on a part-time or project basis for nearly 25 years. Rob Christie, who experienced China's economic growth as a finance professional working in Hong Kong, mainland China, and Singapore, founded the company to counsel CEOs and business owners to be effective in areas and on issues not in their realm of expertise.
The CFO Centre Group, a UK-based company that provides CFO services to SMEs on a part-time basis, entered the Hong Kong market in 2013 and has now grown to a team of 15 part-time CFOs across Greater China. Gary Chan, the Hong Kong and Greater China CEO of The CFO Centre Group, said it is increasingly viable for candidates to create their own "portfolio lifestyle" to make active choices of where and how to utilise their time both professionally and personally.
Finding the right CFO
What SMEs often need, Christie said, is access to CFO resources: the knowledge to help build and grow the business and to lead or guide the back office, get the right systems, make the right decisions, and understand where to obtain financing. When times are tough, it is someone who already has an intimate knowledge of the business to guide it through. This type of guidance is available for clients from part-time finance professionals, at a much lower cost.
The crux is matching the right company, at the right stage in its development, with the right part-time CFO. The true advantage of the on-the-ground, fully focused part-time CFO is that he or she can identify and extract significant value at key points in the full business cycle without investing for the entirety of that cycle. This requires a correctly attuned individual aligned to a receptive client.
There is a prerequisite for individuals entering the part-time C-suite market. They need a breadth and depth of experience combined with an ability to apply and transfer it. This is not a career path to enter lightly. Participation is an evolution, and candidates need to have earned their stripes.
The CFO Centre Group and Robert Half Management Resources look for these features on a candidate's CV:
- A professional accounting accreditation like the CPA and the CGMA designation.
- Foundational accounting experience. The candidate should have technical skills in public accounting, for example as an external auditor, and understand accounting and finance regulations.
- A senior finance background (not necessarily a CFO title).
- Change management experience that reflects good strategic and communication skills, and the ability to work with nonfinance people.
- An ability to cement a professional relationship quickly in an informal setting. This is critical because it relates to the innate ability of an individual to make connections and develop relationships in a short amount of time.
- An understanding of IT systems and the expertise to access and analyse data.
In The CFO Centre Group's case, the general career structure candidates can expect consists of 14 to 15 working days a month spread over a roster of five to six clients and support from a network of candidates across four continents. Usually, 60% of the pay goes to the candidate and 40% goes to The CFO Centre Group. It could take up to a year to establish such a portfolio, but once it is in place, it is rare for complete turnover of clients to occur at one time.
Christie overtly avoids candidates looking for a full-time job. "The best-suited candidates are those who want to work part time for a reason," he said.
The perception of the part-time CFO role being a stopgap career continues to pervade, but it is beginning to shift in Hong Kong. An increase in domestic talent is dampening the necessity for troubleshooting expats and is forcing part-time CFOs to evolve their skills, said Gary Riseham, an Australian who has worked in South-East Asia as a senior controller, finance director, and CFO across public practice, corporate, and private-equity companies.
Additionally, as capital flows pivot from Western investors to Chinese corporates, they bring a shift in the mobile CFO's softer-skill requirements. Language requirements are commonplace.
The first year is the toughest
Professionals with varied experience should not discount or assume that the market and working title of CFO preclude them. The same opportunities exist for multinationals' managers and controllers with a spectrum of experience as for those with an SME background; the key precepts are the transferability and application of individual skillsets and a preoccupation with business of all kinds.
Christie understands that the effort required to gain traction in the marketplace is often the most disheartening. "The first year was very slow. For those looking for full-time work or for whom financial security is paramount, ... this industry may not be best for them," he said. "On the other side, if you want freedom, it is incredibly satisfying and varied work."
When SMEs need part-time CFOs the most
Based upon the Greiner Curve, which was created in 1978 by Larry Greiner and updated in 1987 by Mel Scott and Richard Bruce, small businesses typically move through five stages in their life cycle, from inception to maturity, with crisis points in between (see the graphic, "The Small Business Life Cycle," above). Chan notes that no single factor at these crisis points presents risk, but rather it's the cumulation of red flags as enterprises move through their evolution.
Christie observed that it is often not easy for entrepreneurs to admit they lack expertise at these pain points — their financial strategy is often inarticulate, and the causal effects of their decision-making are unclear. He noted that this is often starkest in cash flow management.
Throughout, Christie said, "Owners appreciate the issues, but often there is a gap between their understanding and the accounts and cash flow which are too often historical and backwards-looking. These issues can be fixed reasonably easily to make the finance function forward-looking and so to improve decision-making. This is the core market of the part-time CFO."
If the ultimate goal is maximising sellout valuation, Christie said, then "there are simply too many areas of a business which are not improving value and could be adjusted to improve the exit price".
Christie and Chan agree that inception, the big idea, is the purview of the entrepreneur. However, it is also at this stage that strong relationships are founded and the bedrock for future value established. (For tips on inquiries SMEs should make before engaging a part-time CFO, see the sidebar, "5 Key Questions Companies Should Ask When Seeking an On-Demand Finance Match," below.)
Christie prefers to engage two to five years before any planned sale. Identifying the right partner is essential, and the need for a solid proposition is paramount. The strength of a candidate's niche is about identifying the right client rather than jumping on trends or isolating markets. Christie is looking for operationally excellent clients, ideally looking to sell at some point, who will benefit from his independence. He needs their engagement and a capacity to listen. It is about personality as much as it is about sector.
Christie offers three tips to finance professionals starting their first engagements:
- Focus on the client's core activities.
- Find profitable and sustainable growth in the client.
- Ensure clients have reliable cash flow forecasts; poor understanding of cash flow leads to many failures in SMEs.
5 key questions companies should ask when seeking an on-demand finance match
With over 330,000 small and medium-size entities (SMEs) in Hong Kong alone, finding and winning clients across diverse industries has not been a problem for The CFO Centre Group. But matching them to the right CFO can be problematic, and cultural perceptions become important. The expectations of Chinese, European, and North American owners often differ when it comes to a CFO. It is important to clarify these expectations upfront.
The CFO Centre Group encourages SME owners to ask themselves five questions during their development to ascertain if a part-time CFO is right for them. The emphasis is on a CFO, not another accountant:
- Does the business have ambitious growth plans?
- Does your business have a turnover of between $2 million and $100 million?
- Do you recognise that you lack the necessary strategy and financial skillset to meet the increasingly sophisticated demands of a growing company?
- Do you have no desire, need, or budget to employ a full-time CFO?
- Do you want to scale up your business fast?
John Pearson worked as a financial controller, commercial manager, and operating officer in Hong Kong and Asia for ten years and currently resides in the UK. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.