Given today’s climate, outsourcing strategic CFO services is trending upward and more companies are embracing the strategy to bring on board skilled CFOs so that executives can focus on the core strengths of the company. The reasons these companies are eager and willing to do so vary and include:
Receipt of Funding
When companies receive an infusion of capital they look for support in improving processes and fiscal management. Having a new member of the team can help realize and protect the company’s financial goals and mitigate risk. Activities may include forecasting/budgeting, valuation analysis, investor reporting, etc.
Interest in Raising Additional Capital
Companies that are interested in raising additional capital need someone who is familiar and has experience with helping to secure first round funding. This process begins with creating the business model, developing the materials that prospective investors will need to understand the business (executive summary, investor deck, term sheet, key investment factors, “teaser” pieces, legal documentation), creating an implementation process (initial investor pipeline / tracking system, development of communication pieces, project management), and putting the plan into practice.
Experience and Strategy To Grow the Business
Client companies can draw on the experience of an outsourced firm as opposed to one individual serving in that capacity (institutionalizing the strategic CFO function). Sometimes when companies are not looking for funding but rather strategy, outsourced CFOs who are familiar with business operations, team compensation, Board formation, and contract negotiations across a broad spectrum of industries can help accelerate the growth of the company.
Not to mention, different CFO skill sets at different stages of the business are key. An outsourced strategic CFO firm allows the company to have people working on multiple projects within finance and accounting to keep pace with the growth.
Flexibility that Outsourcing Provides
A fractional or part-time CFO can cut both time and cost involved, as many early-stage or small companies cannot afford, and often do not need, a full-time CFO. They are able to bring existing relationships (professional network), better terms of negotiation, and more defined expectations, often reducing the cost, the time and the effort, that the firm would otherwise not be able to hire on a full-time basis.
Whether a company has the funding, needs assistance raising the funding, implementing the strategy, or simply needs the focus to grow the business, these are just some of the benefits of outsourcing CFOs. From reducing costs, to increase in the quality of services delivered, to providing your current executives better focus, to casting a larger pool of experts, and for larger projects, outsourcing yields a high return on investment.