Org Series

When and How to Build Out a Finance Department

March 14, 2022
Trevor Shanklin

Welcome to Part 1 of our Organizational Structure series. In this first post, we’ll be focusing on how to build and structure your Finance team.

Why Should You Hire a Finance Team?

The Finance department is the company's financial management group, typically encompassing everything from Accounting to Strategic Finance; they're responsible for controlling inflows and outflows of funds, as well as maintaining the books and records required for ongoing compliance. 

From a functional perspective, members of the Finance team might take responsibility for a range of tasks, chief among them oversight, compliance and reporting. In addition to traditional, process-oriented deliverables, such as end-of-period reporting, accounts payable / receivable, payroll, financial statements and tax compliance, a Finance team might also engage in sophisticated data collection and analysis activities to conduct financial forecasts and develop revenue projections for use by company leadership. 

In the early days of a company, some or all of these activities may be outsourced or handled by the most business-minded member of the founding team. As a company grows to a large scale organization, Finance teams could grow to encompass a small army of financial professionals spanning multiple specialties, offices and layers.

How is the Finance Team Changing?

Beyond ensuring that the company has oversight, control and access to the funds it needs, the Finance function adds value to the bottom line by providing valuable strategic support to the business. This trend is increasingly becoming the norm as leaders look to steer their Finance teams’ focus towards strategic finance and data analytics and away from the more traditional activities they’ve handled in the past.

This shift to a more cross-functional, data-infused financial group and away from the transactional duties these teams have been known for is being made possible by recent advances in financial automation tooling. Recent studies have found that 62-87% of today’s transactional processes can be automated with little to no human involvement, and that leading organizations have already increased functionality by 39% or more

Beyond automation, new outsourcing opportunities have quickly sprouted to help offset the need for full-time hires. Third party accounting firms (such as Pilot) and bookkeeping ( such as Xendoo) help to reduce recurring financial administrative workloads. Additionally, staffing agencies, such as Robert Half, can provide trained temporary employees to offer another release valve solution. This type of outsourced model can be very effective says Scott Buxton, Former VP of Finance of Datadog and GitHub and recently CFO of HighRadius, “It’s actually more cost effective to do that, as opposed to hiring, say an Accounting Manager and a Staff Accountant, which you would need, at bare minimum, to do the accounting for a company doing say $5M in revenue”. 

So with the advent of new automated tooling, outsourced solutions and a more agile Finance organization in general, where should you begin?

When Should You Begin Hiring a Finance Team?

The unique business model and revenue characteristics of your company will dictate the exact timeline of your first Finance hire. As Scott Lustig, CFO of ZeroDown, told us, “You could have an extremely large company that’s in a pure R&D phase for a very long time that could still be years away from revenue and you wouldn’t need this hire yet.” According to data from TruePlan, startups that are on the path to revenue-generation start making their first Finance team hiring investments around 2.4 years, or around hires 10 - 50, following their founding. 

This first Finance hire typically lands between the Series A and B fundraises for the business. At this point, startups suddenly have serious amounts of cash with which to work, with the understanding that investors will require more comprehensive reporting and projections than a part-time CFO can reasonably provide. While the Series A round focuses primarily on an idea, Series B looks for evidence of a viable business with appropriate controls and a sound, underlying model for growth and scale, both of which require a skilled Finance team with the requisite technical training. And, as the funding increases, so too do mandatory statutory disclosures - something best handled by an expert with specialized training required to ensure compliance. 

When deciding which role to bring on, the choices run the gamut from Analyst to CFO. However, TruePlan's data shows that more than 70% of the time, the first Finance hire is a leadership position (e.g., CFO, VP of Finance, Head of Finance, etc.). While it may seem a bit daunting to consider your first Finance hire as a senior position, this stance is shared amongst a wide range of VCs. “I’ve never heard a startup CEO say after the fact that they regretted hiring a VP of Finance too early,” says Matt Turck, of First Mark Capital.

This CFO/VP will be required to handle a wide range of activities as you likely won’t have all your G&A functions structured in the early days. “The CFO you bring on is going to be kind of like a jack of all trades. They're going to be doing stuff that is well below their pay grade like collections or processing a vendor invoice - CFO's don't normally do that”, says Scott Buxton, “They're basically like a Head of Finance because a real, seasoned CFO is likely not going to join a 50 person company and be doing Accounts Payable. This is where you start to see these Heads of Finance titles or Finance and Operations because they're all handling finance-related responsibilities.”

Following the first Finance hire, TruePlan found that a second Finance hire typically follows 1.5 years thereafter. This timespan between hires 1 and 2 allows enough time for the CFO/VP to start, ramp up on the business, align on goals and vision, establish priorities, and develop early models or tooling before undertaking any hiring. Once these are in place, the CFO/VP typically hires a Manager/Director in either Finance or Accounting to act as their right-hand person to work closely on executing on their vision. The decision on whether the person is a Finance or Accounting professional depends on the company and the degree to which the CFO/VP wishes to be involved in the underlying accounting compliance decisions.

From the second hire forward, we begin to see deviations in one of two paths. The first, is to continue filling more senior level roles (e.g., Controller, FP&A or Accounting Director). The second, is to move towards more junior to early manager hires to plug existing gaps and maintain a lean team. In the latter case, this is when companies should look to consider a ratio-based approach - as Scott Lustig says, “I think of it as a five-to-one ratio. Where you have more than five sales members, then you’ll likely need more than one Finance person. That’s, in my experience, where things start to break down.” This ratio will likely be dependent on your own business though and the degree of automation you’re able to deploy. “It’s the revenue generating engine and the amount of people in it that is driving your Finance hires,” explains Lustig.

Based on TruePlan data, a typical hiring plan would look similar to the following:

Finance Hire Number 1 2 3 4
Company Hire Number 10 - 50 50 - 100 75 - 125 125 - 175
Role / Title CFO or
Head of Finance
Controller or
Dir. Finance
Accounting or
Finance Manager
Accounting Manager or
Timing (Yrs) 2.4 3.6 4.1 4.7

How Should You Structure a Finance Team?

As mentioned above, the first hire will likely be a CFO/VP of Finance that will be the leader of the department. From there, nuances begin to arise as you start assessing and responding to the needs of the function. However, it’s difficult to get away from the requirement to have a CFO/VP without the dual support of senior leaders in both Accounting and Finance functions. These are two distinct functions that should operate in tandem, but largely with independent responsibilities and teams. The most typical org chart we’ve encountered has been similar to the one below for a 150 person company.

Finance Org Chart

The ultimate composition of the team will vary depending on the company’s business model, but the org structure will likely be split between the Finance and Accounting teams within this department. In our work, we’ve found that as Finance departments grow and mature with the company, what started out as a relatively even distribution between Finance and Accounting of 1:1 for senior leadership grew to be largely one-sided as the company grew in size with roughly a 4:1 ratio of Accounting to Finance team members. This also tracks with data from larger companies who typically hold a roughly 3:1 ratio between Accounting and Finance team members.

In the context of the broader company, when you’re still a small company that’s making trade-offs, you’ll need to keep your Finance team lean so you can devote the majority of your spend to R&D and S&M functions and away from G&A. “Between a 10 and 300 person company, G&A operating costs should be less than 10% of total operating expenses because you're just not going to have fully built out Finance, HR and Legal teams, which are kind of the three pillars of G&A,” says Scott Buxton.


While our conversation here has provided a roadmap for how to build out a Finance department, you’ll need to be hyper-conscious when assessing your own needs to ensure you’re hiring at the right time, bringing on the right people and scaling in response to growth. As Scott Buxton put it, “It’s a double-edged sword, if you’re proactive in investing in a Finance team, then you’re probably wasting a lot of money. But if you’re too late, it can bite you in so many different ways (i.e., prevent you from closing a round of funding or getting acquired since you can’t pass due diligence tests or your board loses faith in you). That’s where it becomes the fine line of ‘When do you ultimately decide to invest in a Finance department’.”

There’s so much to consider when creating your Finance Team. We hope this post helps shed light on some of the core items to consider. Be on the lookout for our next Organization Structure series post where we’ll focus on how to build out another business function. 

Are you ready to begin building out your Finance Team or need help doing it - TruePlan can help! Reach out to us at, or book a quick 15-minute demo with us today.

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