Hiring guide
Can you afford the next hires? A fractional CFO scenario brief
By CFO Index · Published
A hiring decision needs more than dividing the bank balance by last month's spending. Ask your fractional CFO to model when new costs start, when any benefits could arrive and what changes if those benefits are delayed. This is a business planning brief, not a recommendation to hire or cut particular roles.
Describe the hiring decision precisely
List roles, intended start dates and the operational reason for each. Separate replacement hires from added capacity and signed commitments from tentative plans. Ask the recruiting or people owner to provide compensation and recruitment assumptions in an appropriately restricted form. You do not need named employee-level data in every planning discussion. Have local specialists confirm employment-related costs where necessary.
Include more than salary
Consider recruiting fees, equipment, software, training and manager time, identifying which are cash costs and which are capacity constraints. Model recurring costs separately from one-off payments. Do not apply an invented universal payroll uplift across Europe and the US. The relevant cost components depend on location and arrangement; document the source, owner and confidence of each input.
Treat revenue ramp as an assumption
For a sales hire, distinguish start date, productive capacity, contract signing, delivery and cash collection. Avoid assuming that the first salary payment creates immediate revenue. For an operational hire, identify the specific bottleneck the role is intended to relieve. A model should expose that commercial logic so management can challenge it rather than hiding it in an annual growth percentage.
A simplified cash illustration
Hypothetical case: two hires each add €6,000 of monthly cash outflow for six months, plus €8,000 combined setup costs. That is €80,000 before any additional receipts or other effects. If the model assumes €50,000 of incremental cash receipts in that period, the simplified net cash use is €30,000. Show a delayed-receipts scenario too. These are invented inputs, not compensation benchmarks or a complete runway calculation.
Define a review point, not a false guarantee
Ask management what evidence would trigger a pause in further recruitment or a revised commercial plan. Record the date at which a commitment becomes binding and involve the appropriate adviser for employment decisions. A forecast cannot guarantee that cash remains available. Keep financing assumptions separate, particularly if funds are not yet committed or receipt depends on conditions.
What the CFO should hand over
Request a hiring calendar, an assumptions register, dated cash scenarios and a summary of decisions required. Your team should be able to move a start date and trace the effect. The SEC's guide distinguishes profit from cash generation; apply that distinction when a role's accounting cost and payment timing differ. Refresh the decision case when actual hiring or sales information changes.