This service is particularly helpful when you’re preparing for meetings with investors. Having key financial documents on hand means you can respond immediately to requests and avoid the embarrassment of looking disorganized. Plus, your outsourced CFO will review and confirm the accuracy of your key monthly financial statements — Profit & Loss (P&L) or Income statement, Cash Flow Statement, and Balance Sheet. An outsourced CFO solution can help you establish and track the unit economics for your business model. For SaaS companies, this usually involves looking at the average revenue and costs per customer.
Founders who are new to the startup world (and sometimes even those who aren’t!) may make strategic decisions that have unexpected consequences on their expenses or revenue growth. An experienced outsourced CFO will help you avoid these kinds of mistakes by advising on strategies that work from both finance and business viewpoints. For example, the interim CFO may be able to give advice on the business models you’re designing, and suggest an alternative model that might be a better fit. Outsourcing CFO functions can save money by reducing the overhead of bringing on board an in-house CFO. Growing businesses usually reach a point where CFO services are needed, but the costs of attracting a full-time high-level executive are prohibitive.
Hiring an outsourced CFO is like hiring any other type of executive. First, develop a job description highlighting the skills and traits you would expect to see in a qualified candidate, then post the position on LinkedIn and reach out to your networking organizations. Then develop a great list of CFO interview questions to help you gain deeper insight into each candidate’s experience.
- Though, digging into the books, handling accounts, checking on taxes, and looking into many other accounting responsibilities can become overwhelming for small business owners.
- However, when do you know your medium-sized business needs CFO services?
- They should also be able to guide you through potential capital investments and help you develop policies that will position your business for success.
- When searching for a fractional CFO, you should ask yourself what services you need to help your business grow.
- And bonus points to anyone who has built a company of their own, as they will understand the daily challenges and stressors your CEO faces.
The CFO will likely monitor the ratio of customer lifetime value (LTV) to customer acquisition cost (CAC) to show how sustainable your business is, and to indicate ways you can improve profitability. The budget sets targets for how the startup should perform each month in order to achieve the results in your projections. To monitor whether the business is on track or underperforming, the outsourced CFO will compare your actual financial data to the budget and report back on where you stand. Calculating the variance between your budget and actuals highlights where you may need to adjust your strategy or review whether the budget is achievable. An outsourced CFO solution will use your financial results from previous periods to help predict how the company will perform over future months and years.
Benefits of Outsourced CFO Services
It’s essential to note that while outsourcing the CFO services may seem costly, it can be more cost-effective than hiring a full-time CFO. Moreover, the cost of the outsourced CFO will be relative to the value they bring to your business in terms of financial performance and growth. At a fraction of the total cost of hiring a full-time CFO internally, you can access the very same high-caliber financial services and expertise by using a virtual CFO. Your need for their services will hopefully grow as your business does, but you’d be able to scale up along the way. An outsourced CFO can help your business create strategy and business forecasts and plans.
- This is then compared to the same expense item for the same time frame in the prior period.
- This is due to most of their personal assets, such as their retirement investments and their personal home, are tied up with the business.
- With Zeni you get a dedicated always-on finance concierge, and access to a sleek finance dashboard that turns your accounting data into powerful visualizations.
- The numbers alone can only get you so far – sometimes you need CFO services.
- Below, we’ll look at 11 services that are typically beneficial for startups.
- Another important task for your outsourced CFO is risk management.
Clients needing CFO support pay an extra $2,000 to $5,000 a month. “We also will just do ad hoc CFO services for 300 bucks an hour with some of the smaller clients,” Arndt says. The outsourced CFO service should be able to give you a 90 to 120-day roadmap of everything that will occur in this period.
Chapter 5 – Ready to Grow
Dashboard compilation should put all the crucial KPIs into a format you can glance at and they can walk you through them. It might be an actual digital dashboard, but it could also just be a routine report that they deliver to you. The best part working with Escalon is having a trusted partner… There’s a level of trust in the partnership I have that gives me a sense of safety & security. They don’t really know what a CFO does (many think a CFO is the head accountant).
This type of company has a team that is accustomed to working together, is centrally managed, and is finely-tuned and cost-effective. The result of those efficiencies is that you can save a lot of money by getting the most out of a higher-paid CFO. The CFO will engage ONLY when needed because everything he needs has been teed up by the team beforehand. It is helpful to understand, before you make a commitment, what the first few months of an engagement will look like.
Some companies group CFO responsibilities with bookkeeping and controller services. These companies provide a turnkey solution to organizations which are in a position to outsource day-to-day tasks as well as the larger decision-making responsibilities. The implications of faulty financial inputs, including quantities, costs, margins, inventory, cash flows, and so on, can be profound, affecting profitability, market share, and access to capital. An Outsourced cfo is a finance leader outside of your organization that provides top-tier finance, business, accounting, and operational guidance for your business. An outsourced CFO can be used full-time, part-time, or as an interim for the duration of a project. With significant growth, the top revenue number should be based on the budget for each individual product or service.
What is an outsourced CFO?
Zeni is a next-generation, full-service financial firm that handles finance functions more cost-effectively and intelligently than traditional outsourced CFO solutions. In order to provide useful guidance, an outsourced CFO service will need extensive knowledge of your business model, capacity, and how your team operates. That type of knowledge isn’t attainable with 3-4 hours of work per month. Your team will need to fully understand your startup, so set reasonable expectations. Leverage the knowledge of a full-time CFO with the reduced cost of an outsourced CFO. Take your business to the next level, reach your long-term business goals, and generate more cash.
NOW CFO is a “roll-up our sleeves” full service consulting firm with a singular focus on outsourced CFO, Controller, accounting, and finance needs. I am so glad we chose NOW CFO to help us with our accounting needs. Our controller level support has been phenomenal with the expertise, insights and commitment to our company. If we need anything, they are there and ready to jump in and help. An in-house hire typically means an annually salary plus benefits which, for a c-suite executive can often be cost-prohibitive, especially when you consider annual raises. To hire an affordable CFO, many organizations have to sacrifice experience level to make a practical hire.
While there are many advantages to outsourcing, there are some potential disadvantages that you need to consider as well. Every strong business needs a solid succession plan in order to ensure that it will thrive for years to come. Unfortunately, this can sometimes be an afterthought and left for the last minute. Even if your target date is just around the corner, we can help you plan, prepare, and execute a smart exit strategy that will help ensure the continued success of your business.
Public Companies
With one integrated team managing every aspect of your financial management and planning, results are fast, accurate, and actionable every time. Achieve your business goals with a progressive financial plan designed and executed by your Fractional CFO advisor. A growing company requires professional financial management to thrive. Windes Client Accounting Services provides tailored advice at a fraction of the expense of hiring a full-time employee, but with all the expertise, systems, and processes needed to support your company’s growth.
They do this by breaking down future sales between new customers and established customers. The biggest benefit is they will have the ability to run a ‘what-if’ analysis on minor and major changes to a company. Having an individual budget allows for microchanges to operations and the determination of any inefficiencies. Understanding the FCF of a business is vital to the overall health of a company. This is due to most of their personal assets, such as their retirement investments and their personal home, are tied up with the business.
Too often, businesses choose between doing without a CFO and not addressing the critical functions that could help grow their business, and stretching to pay a high salary and benefits for a C-suite executive. The option of hiring an Outsourced CFO is a cost-effective third option that can keep your overhead in line without sacrificing the expertise that your business really needs. The benefits of outsourced CFO services include cost-effectiveness, flexibility, scalability, and access to expertise and insights that businesses may not otherwise have. Outsourcing CFO services can also provide businesses with a fresh perspective and objective assessment of their financial operations.
My Toptal financial expert helped steer Sidekick’s business model, which resulted in an initial ROI of 650x! My experience with Toptal has given me great confidence in the future. Mario has a proven track record of improving a company’s financial results, such as turnaround of a loss-making company or costs and yield losses reduction by over 10% in Heinz Kraft.