My CFO Just Quit. What Should I Do Now?

September 27, 2024
My CFO Just Quit. What Should I Do Now?

So your Chief Financial Officer just announced plans to leave. If you’re lucky, it’s a planned retirement several months in the future, giving you the time and space you need to conduct a thorough search for exactly the right new CFO. The stock market will have time to digest the news, the finance department staff and leadership team will get comfortable with the idea of a pending transition, and the bankers will remain calm.

But, what if the CFO leaves unexpectedly? It happens. Perhaps the departing CFO is leaving for health reasons. Or has taken a new position. Or is simply burned out after guiding the company through a pandemic, inflation, global uncertainty, and political upheaval.

Whatever the reason, you’re in a bind. You need to act fast to keep everyone calm — investors, stockholders, bankers, employees, the financial watchdogs who oversee public companies.

Enter the Experienced Interim CFO

A leadership gap in the C-suite is always a challenge. But when the gap is in financial management at a public company, it carries a particular set of challenges.

That’s because the 2002 Sarbanes-Oxley law has specific requirements for financial reporting. Chances are you’ll be tempted to convene the board of directors and choose one of the directors to step into the financial leadership role. But there’s something better than appointing a babysitter. You can engage an experienced rock star interim CFO or fractional CFO who can take the financial reins and keep the company moving forward.

Will My CFO Leave?

Globally, CFO turnover hit a 3-year high in the first half of 2024 with 163 new CFOs appointed, according to Russell Reynolds’ Global CFO Turnover Index. That rate outpaces last year, when 271 CFOs were replaced over the full 12 months.

To date, the average 2024 global turnover rate is at 8.9 percent across countries and business sectors. Two sectors — healthcare and tech — recorded three-year highs of 14.2% and 11.4% respectively in the first half of 2024.

And, the consulting firm says, CFO tenure is getting shorter. The average term hit a five-year low of 5.7 years.

Chances are you have a succession plan in the event of a CFO’s departure. Russell Reynolds says more than half of top financial executive vacancies were filled by internal promotions and more than half of new CFOS were first-time finance chiefs.

But there is no replacement for experience. In many cases, InterimExecs RED Team interim CFOs who were brought on to keep the company’s financials on track during the search for a new full-time CFO will stick around during onboarding to mentor the new finance leader.

What to Do When Your CFO Quits

First, you need to take care of the basics — collect the outgoing CFO’s keys, change the passwords, notify the bankers, and ensure the day-to-day financial functions of the company continue uninterrupted. That’s key to keeping the stakeholders calm in the face of the transition — especially employees who expect their paychecks to arrive uninterrupted!

Now it’s time to focus on the big picture: How will the loss of a financial leader affect your company’s profitability, stock price, forecasting, compliance, and more until you identify a permanent new hire to fill the CFO role?

If the company or its stock price was riding high, the unexpected loss of a respected Chief Financial Officer can raise questions about the company’s future and drag down the stock price. If the company or stock price has been underperforming, replacing the CFO might actually be a plus for your company.

In either case, bringing on an experienced interim, fractional, or outsourced CFO sends a strong message to stakeholders that the company is in good hands.

Bring on a Tactical Leader

InterimExecs RED Team CFOs are tactical leaders who work closely with the business owner, CEO, and the board on challenges such as:

  • Providing regular updates to stakeholders, including shareholders and employees, to maintain confidence.
  • Managing risk and daily decision-making.
  • Overseeing financial audits.
  • Directing Sarbanes Oxley and other regulatory compliance.

If you’re in need of a strong finance leader, reach out to us by phone or text at 847.849.2800 for a confidential conversation about how one of our experienced rock star interim or fractional CFOs can help lead your company through the transition.

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