A finance director sounds like a role for a company with dozens of employees, multimillion-euro revenue and executive meetings around a long boardroom table.
In reality, the need for financial management expertise often appears long before the need for a full-time finance director. A company may be too small to employ a CFO (Chief Financial Officer) eight hours a day, yet already complex enough for accounting alone to be insufficient. That distinction matters. Accounting explains what happened. Financial management helps decide what to do next.
According to the European Commission’s 2025 SME fact sheet for Estonia, in 2024 94.9% of Estonian businesses were micro-enterprises, kus töötab kuni üheksa inimest. Kokku moodustasid väikese ja keskmise suurusega ettevõtted 99,9% ettevõtetest. [1]
That does not mean 95% of Estonian businesses need a finance director. It does show why the traditional model — first an accountant, then one day a full-time finance director — leaves a very large gap in between.
A business may have five or eight employees and already be making decisions worth hundreds of thousands or millions of euros. It may have several products or services, customers with different margins, rising payroll costs, loans, investments and increasingly complex cash flow. Headcount alone does not reveal the need for financial management.
Revenue is growing. So where is the money?
One of the first signs is rising sales without a comparable improvement in cash or profit.
Revenue can grow while:
- margin declines;
- payroll costs grow faster than sales;
- customers take longer to pay;
- the business finances an increasing amount of working capital itself;
- some services or customer groups earn too little;
- growth continually demands new investment.
Accounting will eventually show that costs rose or profit fell. Management needs to ask the next question: why did it happen, and what, if anything, should we change? This is where the difference between accounting and financial management becomes clear.
When the budget means ‘last year plus a little’
Another sign is a financial plan that lives mainly in the owner’s head. Sales targets come from instinct. Costs are copied from last year. Cash flow receives attention when the bank balance starts to feel uncomfortable. This is common in a small business and can work for a while. The problem begins when decisions carry greater consequences.
Can we afford another employee? Is a 5% price increase enough?
Kui müük kasvab 20%, kui palju lisaraha vajame? Kas (ja kui pika ajaga) uus investeering seadmetesse tasub ära?
What happens if a major customer leaves? How much can we invest in marketing over the next six months?
These are not accounting questions. They are financial management questions.
You may need a finance director before reaching one million in revenue
There is no single revenue threshold at which a business suddenly needs a finance director.
A company with €500,000 in revenue may need strong financial management if margins are low, headcount is high and cash flow is complex. Another company with €2 million in revenue may have a simple business model and low fixed costs and manage for much longer with a lighter finance function. It is therefore more useful to look at the complexity of the decisions.
Finance leadership becomes valuable when management regularly faces decisions that cannot be answered by historical numbers alone. A good finance director does not simply provide more tables. They turn the question ‘Could we do this?’ into ‘What would need to be true for this to make financial sense?’
Paljudel kasvavatel ettevõtetel tekib nn vahepealne etapp. Finantsanalüüsi ja juhtimisinfot on vaja võib-olla üks-kaks päeva nädalas või kuus. Eelarve tuleks kord aastas korralikult üles ehitada ja jooksvalt jälgida. Juht vajab regulaarselt ülevaadet tulemustest, marginaalidest ja rahavoost ning aeg-ajalt tuge mõne suurema investeeringu või hinnastamisotsuse puhul.
The work does not yet require a full-time role. This is where a fractional or outsourced finance director olla ratsionaalseim lahendus.
The business buys the expertise in the amount it actually needs without creating another full-time management position. Given the structure of Estonian enterprise, that is logical. Although micro-enterprises accounted for 94.9% of Estonian businesses in 2024, the European Commission estimated that they also generated 32.2% of the business sector’s value added. [1] A small team does not necessarily mean a small business or simple financial decisions.
At some point, the opposite may become true. If a finance director is needed almost every day, the finance function itself needs leadership, or major decisions are constant, a full-time person may make more sense.
Signs include situations where:
- management needs finance input weekly or daily;
- the company has several entities or markets;
- reporting and forecasting become extensive;
- the finance director needs to lead a dedicated finance team;
- fundraising, acquisitions or major investments become part of everyday business.
Revenue alone does not decide this either. The question is how much financial management expertise the business actually needs.
So, does your business need a finance director?
Not necessarily full-time. But finance leadership is worth considering if these questions keep returning:
Why is profit not growing with revenue?
How much can we genuinely invest?
Are our prices high enough?
Will hiring another person pay off?
How much funding will we need to finance the next six months of growth?
Which customers, products or services genuinely make us money?
If the answers come mainly from instinct, the problem may not be a lack of financial data. The missing link may be between the data and management decisions.
The purpose of financial management is not to make a small company behave like a large one. It is to make better decisions before the wrong ones become expensive. And that does not require a finance director to sit in the next room every day.
[1] European Commission (2025). 2025 SME Country Fact Sheet – Estonia. SME Performance Review. The 2024 figures are Joint Research Centre estimates based on national and Eurostat data from 2008–2023. Micro-enterprises (0–9 employees) were estimated to account for 94.9% of businesses and 32.2% of business-sector value added; SMEs together accounted for 99.9% of businesses.