Finance Operations
When Should a Growing Business Build a Finance Team?
What finance capability does a scaling company actually need, and when should it be hired in-house?
Henry O'Brien
Most companies start without a finance team. They appoint an accountant or bookkeeper, put payroll in place, file the accounts and make sure invoices go out. For an early-stage business, that can be perfectly adequate.
Then the company changes quickly. Revenue grows, headcount increases, new markets open and the number of moving parts multiplies. Overseas hiring brings payroll taxes, benefits, insurance and local employment requirements. Compensation plans create commission liabilities and cash-flow implications. New contracts, systems, vendors and sales initiatives add further complexity.
None of those items is unusual on its own. The problem is how quickly they accumulate.
That is often what catches companies off guard. The business keeps moving, but the finance and operating infrastructure underneath it has not kept pace.
At that point, the question is no longer simply when to hire a finance team. It is what finance capability the business now needs, and how best to build it.
In brief
A growing business should strengthen its finance function when the complexity of the company begins to exceed the capability of its existing setup.
That does not necessarily mean immediately hiring a full department.
The better approach is to establish the finance capability the business needs now, create a clear view of the current position and the next 13 weeks, then decide what should be hired internally, outsourced or automated as the company scales.
The company often needs the function before it needs the department.
Financial architecture should mirror commercial architecture
As the commercial model becomes more complex, the financial architecture needs to evolve with it.
If the business has multiple revenue streams, different contract structures, international payroll, commissions, usage-based pricing or customer-specific implementation, finance needs to preserve those distinctions rather than flatten them into one set of numbers.
That is what makes reporting more reliable, forecasting more useful and management decisions easier to trust.
Start with capabilities, not job titles
The common mistake is to begin with: Do we need a CFO?
A better question is: What does the business need finance to do, and what decisions should better finance enable?
Depending on the stage and complexity of the company, that might include:
reliable accounting, close and financial control
monthly management reporting
cash forecasting and liquidity planning
revenue recognition and gross-margin analysis
customer, product and unit economics
payroll, benefits, commissions and other people-related costs
hiring plans and headcount modelling
working capital, payables and collections
systems, data and automation
board and investor reporting
tax, compliance and audit readiness
compensation plans, ESOP administration and related finance processes
support around new entities, markets and international expansion
capital planning and financing strategy
Those requirements rarely appear at exactly the same time, and they do not necessarily justify a full-time person for each one.
The company needs the function before it needs the department
One of the reasons Ordinal exists is that finance, at its core, is wonderfully objective.
Forecasting introduces judgement. Strategy introduces uncertainty. Planning is always a mix of art and science.
But the present-day financial position of a business is grounded in facts. You have a certain amount of cash. You are owed a certain amount. You owe a certain amount. You have committed costs, payroll, taxes and contractual obligations. You have revenue that has been earned, revenue that has been invoiced and revenue that may or may not recur.
Those facts should be clear.
When they are not, management ends up making decisions on top of uncertainty that does not need to exist.
That is why the first answer does not always need to be a lengthy hiring process.
A growing company can bring experienced finance capability into the business immediately, establish where things stand today, understand the risks and priorities, and build a clear view of the next 13 weeks. For more on the point at which basic accounting stops being enough, see "When Bookkeeping Stops Being Enough →".
From there, the conversation can move to the next three months, the next year, and what the finance function ultimately needs to become.
That may lead to hiring. It may lead to a different systems architecture, clearer reporting, tighter forecasting or changes to the operating model. Often it will be some combination of all of them.
The important thing is sequencing: establish control first, keep the business moving, then build the permanent structure around what the company actually needs.
Complexity is usually the trigger
Revenue alone is a poor indicator of when finance needs to change.
A £10 million business with ten customers, straightforward contracts and strong cash collection can be relatively simple to manage.
A £3 million business operating across several jurisdictions, with usage-based pricing, long payment terms, rapid hiring and external investors, may be considerably more complex.
Signs that the current finance setup is becoming insufficient often include:
management spending too long establishing what the numbers mean
reporting arriving too late to influence decisions
cash forecasting becoming unreliable
multiple entities, currencies or markets
different revenue streams and gross-margin profiles
more demanding board or investor reporting
rapid growth in headcount and operating spend
fundraising or transactions moving onto the roadmap
At that point, bookkeeping alone is unlikely to provide enough support.
Hiring is part of finance design
The natural response is often to hire somebody.
That may be the right answer, but first the business should understand the operating model it is trying to build.
What work exists today? Which activities are repetitive? Which require judgement? What should technology automate? What can remain outsourced? Which areas need permanent ownership? Where does senior experience genuinely add value?
Only then should the company decide which role to recruit.
Otherwise it is easy to hire a finance manager and expect CFO-level work, or recruit a CFO into a business where most of the immediate requirement is still operational accounting.
The role should follow the work.
A modern finance function can remain lean
Technology is changing what a finance team needs to look like. We explore the distinction between accounting and decision support in "Accounting Tells You What Happened. Finance Helps You Decide What Happens Next. →".
Billing, banking, spend, payroll, accounting and reporting systems can increasingly automate work that historically required larger teams.
That does not remove the need for finance. It changes where people add value.
A modern finance function should spend less time moving numbers between systems and more time interpreting performance, challenging assumptions, improving planning and helping management decide what happens next.
As the company grows, finance capability should increase faster than finance headcount.
That is where operating leverage comes from.
What should management expect from finance?
Whatever the team structure, management should increasingly expect finance to answer questions such as:
Where are we against plan, and why?
What happens to cash under different scenarios?
Which customers and products are creating value?
Where is gross margin improving or deteriorating?
What resources can we afford?
When will we need additional capital?
What information would change the decision?
That is the point at which finance becomes a management function rather than simply an accounting function.
There is no single moment to build a finance team
There is no universal revenue threshold or employee count that determines when a company should build finance internally.
The better question is whether the business has moved beyond the capability of its current finance setup.
If it has, the answer does not need to be an immediate full department.
Build the capability first.
Then build the organisation around what the company actually needs.
FAQs
When does a startup need a finance team?
When management requires reliable reporting, forecasting, cash planning and decision support beyond what bookkeeping and year-end accounting can provide.
Should finance be outsourced or hired internally?
It can be both. Operational roles may justify permanent hires while senior finance, transaction or specialist capabilities remain outsourced until the workload warrants full-time ownership.
Does every growing company need a CFO?
No. Many companies need CFO capability before they need a full-time CFO.
What should the first finance hire be?
It depends on the work. For some businesses it is an accountant or finance manager; for others it may be a controller or FP&A professional. The role should follow the operating model.
Let’s talk
If your business is moving faster than the finance function underneath it, we can bring experienced capability in quickly, establish where things stand and help build the function required for what comes next.
Tell us how finance works in your business today.
Ordinal Partners builds and runs finance functions for founder-led, operator-owned and growing businesses. From bookkeeping and financial operations through strategic finance and transactions, we give operators clear numbers, better information for faster decisions, and the financial foundations to scale efficiently, raise capital or transact without distraction.