Your company is generating $5 million in annual revenue — a milestone that signals you’ve moved beyond the startup phase. Growth is strong, but you’ve noticed that financial decisions sometimes feel reactive rather than strategic. Cash flow forecasts are tight, compliance deadlines loom, and big opportunities require rapid modeling before you can commit.
At this level, bookkeeping alone isn’t enough. You need financial leadership — a CFO who can turn numbers into actionable strategy, speak the language of investors, navigate compliance standards, and anticipate what’s next for your company.
The question isn’t whether you need CFO support. It’s how you should get it — hiring someone in-house or engaging a fractional CFO. Before weighing the models, it helps to understand exactly what a CFO delivers for a multi-million-dollar business.
What a CFO Actually Does at a $5M Company
For companies in the $5M range, a CFO’s role moves far beyond tracking expenses or producing monthly statements. This is about steering the business with financial foresight and protecting its position in the market.
Here’s what a strong CFO function covers for a company at this scale:
Strategic Financial Planning & Forecasting
- Develops annual budgets and rolling forecasts informed by market trends, historical data, and operational capacity.
- Runs scenario planning — best case, worst case, and most likely outcomes — for major decisions like expansion or product launches.
Cash Flow Optimization
- Maintains liquidity to support growth while avoiding over-leverage.
- Implements policies around receivables, payables, and inventory funding to keep operations smooth.
Compliance Oversight
- Ensures all filings meet GAAP standards and IRS/state regulations.
- Oversees tax strategy to minimize liabilities while ensuring defensibility in audits.
- In certain industries, ensures specialized reporting — e.g., SEC filings for publicly traded entities or state-specific environmental or manufacturing reports.
Risk Management
- Identifies and mitigates financial risks — from currency exposure to contract obligations.
- Ensures adequate insurance coverage aligns with potential liabilities.
Investor & Lender Relations
- Prepares finance packages and KPI reporting for potential investors or creditors.
- Leads conversations with banks, private equity, or venture capital firms to secure favorable terms.
Operational Insight & Decision Support
- Works closely with department heads to assess performance, profitability, and ROI.
- Advises the CEO/COO on strategic initiatives by grounding decisions in hard financial data.
At this point in business maturity, CFO guidance acts as the bridge between your current operations and scalable, profitable growth. The right model — whether in-house or fractional — depends on how these functions fit into your ongoing needs.
In-House CFO: Full-Time, On-Site Leadership
An in-house CFO is a full-time executive hired directly into your company. They become part of your day-to-day leadership team, deeply integrated into the culture and operations.
Typical Advantages:
- Immediate Availability: On site or in meetings every day for quick input on decisions.
- Deep Company Knowledge: Immersion in the nuances of your products, services, and team dynamics.
- Broader Department Oversight: May lead accounting, finance, HR, or compliance departments.
- Internal Influence: Strong voice in executive discussions and strategic planning.
Drawbacks at the $5M Level:
- High Cost: Salary, benefits, bonuses, equity — often $220K–$350K+ annually.
- Recruitment Timeline: Top-tier candidates can take 2–6 months to hire.
- Industry Limitation: Expertise often tied to one company’s circumstances rather than cross-sector strategies.
- Risk of Turnover: Losing a CFO disrupts continuity and creates leadership gaps.
Average Compensation Benchmarks:
- According to the Robert Half Salary Guide and BLS data, mid-market CFOs in $5M companies typically earn a base salary between $220,000 and $280,000, with bonuses and benefits pushing total compensation higher.
- Total overhead can exceed $350K when factoring executive perks, insurance, and retirement contributions.
Fractional CFO: Experienced Strategy, Flexible Engagement
A fractional CFO provides high-level financial leadership on a part-time or retainer basis. They can be an individual or a firm delivering outsourced CFO services — offering the same strategic insight without the full-time cost.
Typical Advantages:
- Significant Cost Savings: Often 60–75% lower than a full-time, in-house CFO.
- Breadth of Experience: Brings insights from multiple industries and business models.
- Scalable Engagement: Hours and involvement adjust as your needs change.
- Quick Start: Onboarding within 2–4 weeks compared to months-long executive hiring processes.
- Access to Networks: Often connected to lenders, investors, and service providers, smoothing deals and partnerships.
Drawbacks:
- Not Onsite Daily: Requires strong communication tools and regular check-ins.
- Integration Time: Can take longer to absorb your company culture and processes.
Average Investment:
- Monthly retainers typically range $5K–$10K for companies at the $5M stage, translating to $60K–$120K annually.
- Some engagements are project-based — e.g., preparing for an investor round or implementing a new ERP system.
Side-by-Side Comparison: In-House vs. Fractional CFO
| Factor | In-House CFO | Fractional CFO |
| Cost (Annualized) | $220K–$350K+ (salary + benefits) | $60K–$120K (retainer/project-based) |
| Availability | Full-time, onsite | Part-time / flexible hours |
| Industry Breadth | Single-company focus | Multi-industry experience |
| Speed to Onboard | 2–6 months recruiting | 2–4 weeks setup |
| Scalability | Fixed salary and role | Engagement scales up/down with company needs |
| Network Access | Internal contacts | Broader external network |
| Cultural Fit | Deeply embedded in company culture | Learns and adapts over time |
How to Decide Which Is Right for Your $5M Company
Choosing between an in-house CFO and a fractional CFO comes down to your current stage of growth, operational complexity, and budget priorities.
Here are the key decision points:
- Growth Stage:
- If you’re in rapid expansion, acquisitions, or preparing for IPO, daily CFO presence may be worth the cost.
- For steady growth or targeted projects, fractional engagement can deliver expertise without long-term overhead.
- Internal Team Strength:
- If your controllers and accountants are strong and autonomous, a fractional CFO can provide strategic oversight.
- If your finance team needs daily direction, an in-house CFO may fit better.
- Investor or Lender Expectations:
- Venture capital and private equity firms often require a CFO presence. A fractional CFO often satisfies those requirements if contractually defined.
- Budget Impact:
- Calculate opportunity cost: Will tying up $300K+ in fixed CFO costs slow other growth initiatives like product development or market entry?
Case Scenario Examples
Manufacturing Firm at $5M Revenue
- Needed ERP implementation to control inventory and production costs.
- Fractional CFO provided project-specific leadership, negotiated vendor pricing, and trained staff — cost was 70% less than hiring full-time.
Tech Startup Scaling to $10M
- Preparing for Series B funding required sophisticated forecasting, KPI dashboards, and investor-ready pitch books.
- Fractional CFO engagement delivered all within 90 days, aligning exactly with capital raise timelines.
Legal & Compliance Considerations
Finance leadership—whether in-house or outsourced—comes with fiduciary duties and compliance responsibilities.
For In-House CFOs:
- Subject to employment laws, contracts, non-compete clauses, and severance liabilities.
- Direct oversight under corporate governance standards; must comply with GAAP and applicable tax codes.
For Fractional CFOs:
- Bound by service agreements outlining confidentiality, GAAP adherence, and cybersecurity protocols.
- Requires secure access to company financial systems to meet compliance safely.
- Still personally responsible for accuracy in filings and strategic advice under professional ethics rules.
Northstar Finance’s CFO Solutions for $5M Companies
At $5M revenue, your company’s future depends on precise, strategic financial leadership. Whether you opt for an in-house CFO or consider a fractional model, the priority is accurate data, compliance certainty, and actionable insight — without tying up resources you need to stay competitive.
Northstar Finance’s Fractional CFO services are built for this stage of growth. We combine deep industry knowledge, GAAP-compliant processes, and investor-grade financial strategy — all without the $300K+ overhead of a full-time hire. Our approach integrates:
- Strategic forecasting aligned with your growth goals.
- Cash flow optimization that prevents operational bottlenecks.
- Tax efficiency and risk management that stand up to auditor scrutiny.
- Investor and lender communications to secure favorable terms.
Because we also provide Bookkeeping and Accounting and Tax Compliance and Strategy , we can deliver a full finance stack for your business — from daily transaction reporting to board-level strategic planning. That means fewer vendors, tighter integration, and more time for you to focus on growth.
If you are ready to access CFO-level leadership without the full-time cost commitment,
👉 Talk to Northstar Finance about your Fractional CFO plan today.