The Freelance Finance Chief

Amy Clayman never planned to become a part-time finance chief. For more than 14 years, she held full-time finance jobs, including four years she spent as treasurer and corporate controller at JBA International, an ERP software and consulting firm.

Amy Clayman, principal at Financial Fluency; freelance CFO

But after having her second child, she couldn’t keep up with the hours and raise her children at the same time. Being her own boss gave her more flexibility. “I came to the realization that I couldn’t really be on a plane all the time or working those crazy hours that the public accounting and corporate finance worlds demand from you,” Clayman says. “So I started thinking about trying to pursue other career paths that would still keep me engaged in higher-level thinking but not put me in a situation where I had to work 50-plus hours a week.”

Clayman had colleagues and friends in public accounting, and one referred her to an $8 million tech company that was hoping to double in revenue over the next five years. “They didn’t really have a plan, they didn’t do any formal budgeting, and they didn’t have the typical level of financial planning and forecasting,” she says. “It was a very comfortable situation for me because I’d done that for a $200 million business, so to implement that for a smaller business wasn’t that hard,” she says.

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Clayman’s freelance business expanded from that first connection. The CEO of that company introduced her to an executive in one of his roundtable groups, leading to another part-time gig.  Now she holds the CFO role at seven or eight business-to-consumer service companies, and she says she wouldn’t want to go back to working for one business.

Clayman’s path — going from full-time financial executive at one company to a freelance CFO at many firms — may be growing more popular, Clayman says. “I feel it in the marketplace,” she says. “When I started this 10 years ago, there would have only been [a handful of] people you could choose to do this work. You had to really look to find them. Now they’re more apparent.”

Indeed, current and aspiring CFOs may need to consider freelance work as competition for the top finance spots gets fierce. Employment among top executives is expected to grow only 5 percent from 2010 to 2020, compared to 14 percent for all occupations, according to the Bureau of Labor Statistics. The BLS estimates that the job market will grow 9 percent for financial managers (such as controllers) over that period. From 2000 to 2010, the BLS projected that employment would grow 15 percent among top executives, 19 percent among financial managers and 15 percent for all occupations.

What exactly does a part-time CFO do? Are there any benefits to being a freelance finance chief? CFO spoke with several part-time CFOs, who share their insights below.

A Valuable Skillset
To start, the term “part-time CFO” is a misnomer; most part-time finance chiefs work at least 40 hours a week. A part-time CFO is distinguished by working for a number of different companies at once.

At most companies, part-time CFOs are not glorified accountants or controllers; rather, they bring sophistication to firms that are “too early-stage to afford a CFO on a full-time basis,” says Lori Reiner, partner at EisnerAmper. They are particularly well-suited to growth companies that want to raise funds or go public, Reiner says. “Without the professionalism that a part time CFO would bring to the [fundraising] process, a smaller, emerging company would never get financing,” Reiner says. A part-time CFO can play a similar role at a company that has financing but needs someone to report to the board of directors periodically, Reiner says.

Tom Coffey, partner at B2B CFO; freelance finance chief

Many companies looking for financing already have a controller, but “often that person isn’t qualified to take on the responsibilities of a CFO,” says Tom Coffey, a part-time finance chief who has provided C-level services to companies with $5 million to $100 million in revenue for eight years. “[Controllers] do the accounting and they’re preparing the financial statements and the debits and the credits, but they’re not working on strategic initiatives.”

Coffey says he find many of his clients through accounting firms, attorneys, and investment bankers he has worked with before. Investment bankers, for instance, have brought him into companies they are preparing to sell. “They recognize that the finance person within the company is not the person they want sitting at the table trying to describe the link between the company’s strategic objectives and the operational aspects and the financials, because they can’t do it,” he says. “Sometimes they need a higher level person in there to help stabilize the financials and make sure the data is consistent and ready for due diligence.”

Sometimes part-time finance chiefs take on higher-level responsibilities later on. At Clayman’s longest standing client, she spends most of her time on analytics, including model building and return-on-investment analysis. “Because it’s my first client and I’m still with them 13 years later, the relationship continues to evolve and change,” she says. “In the beginning, I was shepherding the budgeting and planning. But because the company has grown more successful, we actually have strong internal finance folks, so my involvement is on much a higher level.”

Freedom to Be Candid
Along with providing flexibility, part-time work allows CFOs to be more honest with their coworkers (and the CEO) than they typically could. “I can tell somebody something they don’t want to hear and if they get really mad at me, it’s OK,” Clayman says. “I have a little bit more independence, because I’m not beholden to one client. That helps me tell people the things they don’t want to hear, like ‘you’re spending too much money.’”

Coffey agrees. “You can be very candid with these people and tell them what they need to do to accomplish their goals without being afraid of losing your paycheck, because they might be one of seven or eight clients you’re working with right then.” Indeed, Coffey’s role gives him the freedom to fire clients if necessary. “You help them and you guide them and you tell them all the things that they should be doing and they agree and then they don’t execute. After a while you just tell them, ‘I’ve helped you as much as I can help you, and I think maybe you’re better off working with someone else.’”

More Fun, Less Stress
Coffey has spent more than 30 years in finance, including as a partner at KPMG and the finance chief of a $3 billion turnaround company. In 2005, he left his job as a vice president of finance at Unisys after a management change. “I interviewed for other public company CFO positions. And I think I was just a little exhausted. After I went through the interviews and met with some of the CEOs, I just didn’t want to go through it again. So I decided that I would consult part time.”

An investment banker friend of his was helping to sell a company and he brought Coffey on as a consultant. Coffey developed a website and became a partner at B2B CFO, a firm that provides part-time CFO services to companies. Now, he says, his part-time CFO role is an on-ramp to retirement. His wife often teases him, saying he’s not really retired because he works too hard. But Coffey assures that he still takes time off to travel to Florida and play golf. “It’s what you make of it. I mean, I’m very engaged in business still. I get energized by it. But trust me, I take a couple of days off.”

Coffey doesn’t make as much money as he did when he was a public-company CFO and received stock options and bonuses, but he has had some lucrative years as a freelance finance chief. “If we have a successful exit I get a success fee for helping them close the transaction,” Coffey says. “Some years if I have a couple of transaction closings in addition to my hourly fees I do very well. But it depends on the size of the company.”

When Coffey was CFO of a $3 billion dollar public company, he faced an SEC investigation, shareholder lawsuits, refinancings and other problems. “For all that stress and agony, and the fact that I probably aged a decade in two-and-a-half years, they pay you very well,” he says. But being a part-time CFO is worth the trade-off, because Coffey takes on only the clients he thinks he can help.

Coffey particularly likes working with entrepreneurial businesses, because they have fewer internal politics and external pressures. “They don’t worry about quarterly earnings,” he says. “They worry more about creating profit over a longer period.” And the early-stage firms appreciate a part-time CFO more than mature companies. “They’re very appreciative of the skill sets that someone with a CFO background can bring to help them establish some infrastructure and methodology, so they can become better at planning and budgeting.”

Gene Godick, another freelance finance chief who previously held full-time CFO positions, says being part-time allows him to work with companies that excite him. “You can do all the things that are, you know, the sexier part of being a CFO without having to be there for the day-to-day drama,” he says.

Godick has a lot of creative freedom, since he runs his own company. After he left his job as CEO at Tafford Uniforms, a nursing uniform online retailer, he spoke with a venture capitalist in Philadelphia who suggested that he start a part-time CFO business. He launched a CFO services firm, G-Squared Partners, last year, and he just hired his first employee. “I’ve found that this is a way to provide value for a company where they need expertise, but they either don’t need it every day or can’t afford it every day.” Godick has eight or nine clients that each earn up to $100 million in revenue, mostly in the tech industry. Most are in the process of raising money.

Clayman runs a bookkeeping service with four employees. “What ended up happening is I started uncovering this need: I was constantly asked for bookkeepers. That’s not the work I like to do … but I just sort of fell into the role of providing bookkeeping services.” The company, Financial Fluency, does bookkeeping work for about 25 firms.

Having to Hustle
Being a part-time CFO has its downsides. For one, you have to drum up your own business. “The biggest challenge in being a consultant is finding your clients,” Coffey says. “Networking and finding new clients absorbs a lot of time.”

Even if your pipeline stays full, there’s always the looming fear it could run dry, Clayman says. “I’ve been doing this for 13 years and I’ve never had a moment where I haven’t been very busy,” she says. “But just because I haven’t had that moment doesn’t mean I don’t have anxiety over it. There’s always that uncertainty about losing a big client. How am I going to make up that income?

To address this fear, Clayman says she’s always networking. Apart from that, “the only thing that can do to assure that I maintain my clients is that I do good work,” she says. Being a part-time CFO also means you have to do your own billing, health insurance, and accounting, says Godick. “The person’s books who are in the worst shape are mine,” he says.

A Lifestyle Change
Despite the drawbacks, all three freelance CFOs said they wouldn’t want to go back. The first company Amy Clayman did freelance work for, which now pulls in about $32 million in revenue and projects $38 million next year, recently asked her to become its full-time CFO. “I just wasn’t ready to make that kind of commitment,” she says. “I think I would enjoy it, but I really like what I do now. And I’ve built a little business that would be hard for me to give up.”

Coffey wouldn’t want a full-time position at this point either, he says. “I’m 61. My wife wanted me to retire about three years ago. But I enjoy what I do. Honestly, most of the time I don’t consider it work.”

Godick says for him to take a full-time finance chief role, the client would have to be preparing to go public and he would want the title of CFO and chief operating officer. Until then, “I like what I’m doing,” he says.

“If I thought about the profile of a half a dozen part time CFO’s that I know, they all landed there for somewhat different reasons,” says EisnerAmper’s Reiner. “And I would say that most of them made the decision to not seek full-time employment again.”

While there may have been a few part-time CFOs that started off seeking full-time employment, especially around 2008, they quickly decided that it wasn’t going to happen, Reiner says. “But they also quickly realized that this is a great profession, being a part-time CFO, because they feel very valuable to the company that they’re working with. That value can be transported to the next company [they do work for] because they’re extremely knowledgeable, whether selling a company or raising money or putting together a business plan.”