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Jessica Kates has spent her finance career on both sides of the table: She has over 10 years of private equity experience, coupled with eight years of C-suite management experience. More recently, she’s added a new job title to her CV: interim CFO. Here, she talks with CFO Brew about the changing nature of the CFO role, and what makes someone a good fit for an interim position.
This interview has been lightly edited for length and clarity.
Part of the rise of interim CFOs right now is really about the changing definition of what a CFO is, and what a CFO can be. What sets someone up for success as an interim CFO?
I definitely think someone who has a strategic mindset and can be creative…If it’s a very mature company, maybe it’s not as relevant, but if it’s an earlier stage, high-growth company, I think that’s all of it. And [continue] educating yourself on the industry and comparable companies, comparable transactions…You could really go outside of your world, the bubble that is the CFO job description…It’s always [helpful] just to be proactive and continue to learn, and support the CEO and the team in ways that go beyond your job description.
I do think that, even though it’s often not written in a job description, it’s sort of a bonus if you also understand what the industry looks like, generally, how things are trading, valuations, your competitive landscape, and how you are set against that in terms of comps. A lot of people dont think about that out of the gate.
What are common mistakes an interim CFO might make? Or what would you anticipate as a potential challenge?
If I put myself in the shoes of hiring an interim CFO, I would want them to think like an employee and not like a consultant. [They’d] feel like whatever time they have with the company is just as important as if they were an employee, and contribute to the company and not just literally check the box off of: “They were hired to do X and they did X.” [Instead, they’d] really go above and beyond.
I also think that’s good for networking and future referrals, so you can show that you are capable of more than managing monthly financial statements or putting together board communication, and that you become known for being really, really helpful and really strategic. Sometimes when people are [interim CFOs] they don’t necessarily think outside the box because maybe they think they just don’t have to, or they’re not getting paid to, or it doesn’t matter because they’re not a long-term employee. But I do think you still have to act like you’re one and maybe that sets certain people apart from others.
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What do you think about the current wave of interim CFOs? Do you think it will continue? What changes can we anticipate down the road?
There will always be a need for it, especially for companies that are in an earlier stage, in either pre-revenue or startup or high growth, because they think they just don’t need to have someone that’s full-time before a certain level. I don’t think it’ll go away, and I think it’ll probably continue to grow because there are so many startups that we see every single year.
There’s going to continue to be a growth and a need for really high quality CFOs that are placed on an interim basis. More and more, it’s going to require a skill set that goes beyond the four walls of [the] more traditional, old school CFO, and require someone who could be more on the transactional side, investor-facing, and strategic. I think the role is broadening a little bit more that way.
What advice do you have for future interim CFOs?
Do self-reflection to understand what you want to get out of it. If it’s just a filler because you need income and you’re waiting to start your own company or do something, then that’s fine, obviously…But I think just to have the understanding of your desire, because if it’s that, and it’s just a placeholder, that’s fine, but if ultimately you want to go in-house somewhere as a full time CFO then you should look for opportunities that provide you with that experience. If you want to get exposure to private equity or financial sponsors, you should go somewhere like that.
Just look a bit more holistically at what the opportunity specifically is, and if it aligns with your five or 10 year plan of what you want to accomplish from a career perspective.