News/Publications

Hiring a CFO or Controller

June 15, 2018

Do you sometimes feel a bit overwhelmed by the financial side of your business? Sure, your dealership’s basic accounting needs are being met (hopefully). But when it comes to the bigger financial picture, you see shortcomings.

Perhaps you think it’s time to add a financial executive — a CFO or controller — to your staff. But can your dealership afford one, and exactly what might that person bring to the game? 

Size up your situation

Dealerships usually need to reach a minimum size before it’s financially feasible to hire a financial executive. Generally, two thresholds exist: 1) If your business has revenues of around $75 million, or you operate multiple smaller stores, you may be ready to hire a controller, and 2) if you have revenues of around $300 million and run multiple locations, it may be time to hire a CFO.

If you’re already at one of these thresholds, or soon will be, hiring a financial executive can have significant benefits. Perhaps the most important is the ability of this kind of professional to bring a higher level of analytical and strategic skills to your store’s financial management. Those skills go far beyond basic number crunching.

Consider the broad role

The strategic direction that a CFO or controller can bring to the game includes looking beyond day-to-day financial management to more holistic, big-picture planning of financial and operational goals. This individual will take a seat at the executive table and serve as the owner’s go-to person for all matters of dealership finances and operations.

A CFO or controller can go beyond merely compiling financial data to providing an interpretation of the data that shows how financial decisions will impact all areas of your dealership. And that individual can plan capital acquisition strategies so your business has access to financing as needed to meet working capital and operating expenses.

In addition, a CFO or controller will serve as the primary liaison between your dealership and its bank to ensure your financial statements meet the bank’s requirement to help negotiate any loans.

Analyzing possible merger, acquisition and other expansion opportunities also falls within a CFO’s or controller’s purview.

Define the responsibilities

A CFO or controller typically has a set of core responsibilities that link to the financial oversight of your operation. That includes making sure there are adequate internal controls to help safeguard the dealership from internal fraud and embezzlement.

This individual also should be able to implement improved cash management practices that will boost your dealership’s cash flow and improve budgeting and cash forecasting. He or she should perform ratio analysis and compare the dealership’s financial performance to benchmarks established by similar-size dealerships in the same geographic area. And a controller or CFO should analyze the tax and cash flow implications of different capital acquisition strategies ― for example, leasing vs. buying equipment and real estate.

If you have multiple franchise locations, a CFO or controller can analyze the different operations from a financial perspective, and look for ways that your business can benefit from economies of scale.
Options are available

Hiring a full-time CFO or controller represents a major commitment in both money and time. This executive likely will command a six-figure salary and an attractive benefits package, so first make sure your dealership has the financial resources to commit to this level of compensation.

Too expensive? Your dealership might want to consider bringing in an outsourced CFO. You can discuss with your CPA — and your existing financial staff — whether that option would work at your store.

© 2018