Scaling Your Finance Function: A Guide for Growing Companies ($5M-$50M)
When your company outgrows DIY finance but doesn't need a Big 4 infrastructure. A practical guide to building finance capabilities that match your growth.
Key Takeaways
- •Finance typically becomes a growth bottleneck between $5M-$10M revenue
- •Key inflection points occur at $5M, $10M, $20M, and $50M—each requires different capabilities
- •Fractional CFO services bridge the gap between controller-level execution and full-time CFO leadership
- •Building scalable processes matters more than adding headcount
Your business has grown from a small operation to a real company. Revenue is $5M, $10M, maybe $25M. You have real customers, real employees, and real financial complexity. But your finance function might still be running on the same infrastructure you had at $1M.
This is the "messy middle" of finance—too big for the founder to manage finances in spare time, but not yet big enough to justify a full enterprise finance team. Most content about finance is written for either early-stage startups or Fortune 500 companies. Companies with $5M-$50M in revenue are underserved.
This guide addresses that gap. We'll cover when finance becomes a bottleneck, the key inflection points that trigger capability upgrades, how to decide between building and outsourcing, and what a right-sized finance function looks like at different stages.
Who This Guide Is For
Business owners and CEOs of companies with $5M-$50M in revenue who sense their finance function isn't keeping pace with growth. Whether you're founder-led, PE-backed, or a family business, the principles apply.
When Finance Becomes a Bottleneck to Growth
Most growing companies don't have a "finance problem"—they have symptoms that trace back to finance infrastructure that hasn't scaled. Recognizing these symptoms early prevents expensive crises later.
Warning Signs
Operational Symptoms
- Month-end close takes more than 10 business days
- Leadership waits weeks for financial data
- Cash surprises occur regularly
- Budget vs. actual variances are a mystery
- AR and AP are constantly behind
Strategic Symptoms
- Major decisions made without financial analysis
- Can't accurately forecast cash needs
- Pricing decisions based on gut, not data
- Board meetings lack financial depth
- Can't quickly model growth scenarios
The Cost of Ignoring These Signals
Companies that outgrow their finance infrastructure face predictable consequences:
The $5M, $10M, $20M, and $50M Inflection Points
Finance needs don't scale linearly with revenue. Instead, companies hit predictable inflection points where finance requirements step-change. Understanding these helps you prepare before hitting the wall.
The Professionalization Point
Finance needs dedicated attention. The bookkeeper or part-time controller approach starts straining. You need someone thinking about finance, not just doing transactions.
Typical response: Add fractional CFO for strategic guidance, upgrade bookkeeping to full-service accounting.
The Controller Ceiling
Controller-level execution hits its limits. You need strategic finance leadership—someone who can partner with the CEO, work with the board, and drive financial strategy.
Typical response: Engage fractional CFO more heavily or begin searching for full-time CFO. See our guide on the $10M finance inflection point.
The Team Building Point
One person can't do it all. You need a finance team—controller, FP&A, potentially specialized roles. Systems typically need upgrading (QuickBooks to NetSuite).
Typical response: Full-time CFO, controller, dedicated FP&A. Invest in enterprise systems if not already done.
The Enterprise Point
Finance becomes a full function with multiple sub-teams. You need accounting, FP&A, treasury, possibly tax and internal audit. The CFO becomes a true executive partner.
Typical response: Finance team of 5-10+, specialized roles, mature processes, potential for first audit.
Complexity Multipliers
These thresholds assume moderate complexity. If you have multiple entities, international operations, PE ownership, complex revenue recognition, or are in a regulated industry, you'll hit each inflection point earlier and harder.
Building vs. Outsourcing the Finance Function
The right mix of internal and external resources depends on your stage, complexity, and what creates the most value. Here's how to think about it:
Functions That Typically Outsource Well
Bookkeeping & Accounting
Transactional work with clear deliverables. Outsourced providers bring efficiency and coverage that's hard to match with one internal hire.
Payroll
Complexity of compliance, multi-state, benefits integration. Services like Gusto, Rippling, or ADP handle this more reliably than in-house.
Tax Preparation
Specialized expertise needed only periodically. A CPA firm with experience in your situation handles this better than a generalist hire.
Audit
External requirement by definition. The question is which firm—choose based on stage-appropriate experience and cost.
Functions That Often Should Be Internal
Financial Planning & Analysis
FP&A requires deep business context. While a fractional CFO can guide the process, someone needs to own the models, forecasts, and analysis day-to-day as you scale.
Business Partnership
Embedding finance in operations—working with department heads on decisions, providing analysis, challenging assumptions—requires presence and context.
Internal Controls
Designing and enforcing policies, approvals, and safeguards requires authority and institutional knowledge that's hard to outsource.
Strategic Finance
M&A evaluation, capital structure decisions, long-term planning—these need someone deeply invested in your company's success.
The Fractional CFO Model
For companies in the $5M-$30M range, a fractional CFO often provides the best value. You get senior strategic leadership without the $300K+ cost of a full-time executive.
When Fractional CFO Works Best
Finance Team Structure by Stage
The right team structure depends on your revenue, complexity, and growth plans. Here's what a typical progression looks like. For more detail, see our guide on finance team structure for $5M-$50M companies.
| Revenue | Team Structure | Total Cost Range |
|---|---|---|
| $5M-$10M | Outsourced bookkeeping + fractional CFO (or controller) | $60K-$150K/year |
| $10M-$20M | Controller + accounting staff + fractional CFO | $200K-$350K/year |
| $20M-$50M | CFO + controller + 2-4 accounting/FP&A staff | $400K-$700K/year |
| $50M+ | CFO + VP/Director + Controller + specialized teams | $700K-$1.5M/year |
The Hiring Sequence
Most companies follow this progression: Outsourced bookkeeping → Add fractional CFO → Hire controller → Grow accounting team → Hire full-time CFO → Add FP&A → Build specialized roles. See our complete finance hiring roadmap.
Technology That Unlocks Scale
Systems either enable or constrain your finance function. The right technology at the right time creates leverage; the wrong technology creates expensive complexity.
Accounting System Evolution
Supporting Tools
Expense Management
Corporate cards with built-in expense capture. Essential once you have 10+ employees.
Examples: Ramp, Brex, BILL Spend & Expense
AP Automation
Automated invoice capture, approval workflows, payment execution.
Examples: BILL, Tipalti, Airbase
FP&A Tools
Move beyond spreadsheets for budgeting, forecasting, and reporting.
Examples: Datarails, Cube, Mosaic, Jirav
Revenue/Billing
Especially important for subscription businesses with complex pricing.
Examples: Stripe Billing, Chargebee, Maxio
Process Maturity: The Hidden Driver of Scale
You can have great people and great systems, but without mature processes, everything depends on heroics. Process maturity is what allows your finance function to deliver consistent results as you grow. See our complete guide on building scalable finance processes.
Key Process Areas
| Process | $5M Standard | $20M Standard | $50M Standard |
|---|---|---|---|
| Monthly Close | Day 15 | Day 10 | Day 5-7 |
| Forecasting | Quarterly | Monthly rolling | Weekly/monthly rolling |
| Board Reporting | Informal or quarterly | Monthly or quarterly | Monthly with depth |
| AP/AR | Batch processing | Weekly cycles | Daily processing |
| Controls | Basic approval limits | Documented policies | SOX-lite framework |
Getting Started: Assess and Plan
Scaling your finance function is a journey. Here's how to assess where you are and plan your next steps.
Self-Assessment Questions
- How many days does your monthly close take?
- Can you produce a 13-week cash flow forecast?
- How much time does leadership spend on finance issues?
- Could you survive a PE firm's financial due diligence?
- Are your systems appropriate for your complexity?
- Do you have documented finance policies and procedures?
- Can you quickly answer questions about profitability by product/customer?
Continue Learning
Explore these related guides to dive deeper into specific topics:
The $10M Finance Inflection Point
What changes when you scale past $10M
Controller to CFO
When your business needs strategic finance leadership
Finance Team Structure
Right-sized teams for $5M-$50M companies
Fractional CFO for Established Businesses
When and how fractional makes sense
Scalable Finance Processes
The operations playbook for growth
Finance Hiring Roadmap
From bookkeeper to finance team
Frequently Asked Questions
When does a growing company need a CFO?
Companies typically need CFO-level leadership when they reach $5M-$10M in revenue, are planning significant growth investments, preparing for PE investment or acquisition, or find their controller spending more time on strategy than operations. A fractional CFO can bridge the gap before a full-time hire makes sense.
What's the difference between a controller and a CFO?
A controller manages accounting operations: closing books, financial statements, compliance, and day-to-day finance. A CFO provides strategic leadership: financial planning, capital strategy, board communication, and business partnership. Controllers ensure accuracy; CFOs drive strategy. Many mid-market companies need both.
How much does a fractional CFO cost for an established business?
For companies with $5M-$50M in revenue, fractional CFO services typically cost $5,000-$15,000 per month depending on complexity and hours needed. This is significantly less than a full-time CFO ($250K-$400K+ total compensation) while providing similar strategic capabilities.
What finance team structure do I need at $10M revenue?
At $10M revenue, most companies need: a bookkeeper or accounting clerk for transactions, a controller for close and reporting, and CFO-level guidance for strategy (often fractional). Some also add an FP&A analyst. The exact structure depends on complexity—multi-entity, international, or PE-backed companies need more.
When should I upgrade from QuickBooks to NetSuite?
Consider migrating when you have multi-entity consolidation needs, complex revenue recognition, international operations, are preparing for audit, or hit $10M-$30M in revenue. Don't migrate just because you've 'outgrown' it—migrate when specific functionality gaps are blocking your business.
What are the key finance inflection points for growing companies?
Key inflection points occur at $5M (need dedicated finance attention), $10M (controller ceiling, need strategic finance), $20M (likely need full-time CFO), and $50M+ (need finance team of 5-10). Each point triggers different capability requirements and team structures.
Should I hire a full-time CFO or use a fractional CFO?
Use a fractional CFO when you need strategic guidance but not 40+ hours per week, when your needs are project-based (fundraising, M&A prep), or when you're between $5M-$30M revenue. Consider full-time when you need dedicated executive presence, have complex ongoing needs, or are PE-backed with heavy reporting requirements.
How do I know if my finance function is a bottleneck?
Warning signs include: month-end close taking more than 10 days, inability to produce accurate forecasts, leadership making decisions without financial data, board meetings lacking financial insight, cash surprises, and the CEO spending significant time on finance issues instead of growth.
What finance processes should a $10M company have?
Essential processes include: 5-7 day monthly close, annual budgeting with quarterly re-forecasts, weekly cash flow monitoring, documented approval workflows, vendor management, monthly financial review with leadership, and board/stakeholder reporting. Process maturity correlates with growth capability.
How do I prepare my finance function for PE investment?
PE-readiness requires: clean GAAP-compliant financials, documented accounting policies, clear revenue recognition, normalized EBITDA with supportable adjustments, 3+ years of historical data, management reporting capabilities, and the ability to withstand Quality of Earnings scrutiny. Start preparing 12-24 months before a process.
Ready to Scale Your Finance Function?
Eagle Rock CFO helps growing companies build finance capabilities that match their ambitions. Let's discuss where you are and where you need to go.
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