CFO Services for Startups: Leverage Financial Expertise

July 19, 2023

Jonathan Charpentier

We’re all familiar with the traditional C-suite positions, like CEO, COO, CMO, and CFO. These top-level business leaders are responsible for the overall performance of an organization, but only the most prominent enterprises have the cash to pay for each of these leaders. 

For the typical start-up, the proposition of paying several people hundreds of thousands of dollars in addition to benefits, stock options, and performance bonuses is simply out of reach. But the expertise, experience, and capabilities a chief financial officer brings are hard to ignore. 

To combat the capital demands of CFOs, startups, SaaS companies, and small businesses turn to CFO service providers. A CFO service provider, or fractional CFO, is an individual or organization that accomplishes the same functions as a CFO but on a smaller scale. 

Typically a fractional CFO will complete day-to-day tasks on a per-project basis or with a part-time arrangement. While it may sound like you’re taking a shortcut on a vital component of your business, CFO services have undeniable benefits. 

What can CFO services do?

CFOs take on enormous responsibilities in the organizations they are a part of. Replacing their expertise and capabilities won’t be easy. However, with CFO services or a fractional CFO, you can offload some of the more critical functions on a per-project basis or part-time. 

With CFO services, you can outsource financial functions in areas including:

  • Financial reporting and analysis
  • Fundraising activities and run-on campaigns
  • Cash flow reporting and financial management
  • Investor relations
  • Mergers, acquisitions, and other financial ventures
  • Tax compliance, planning, and filing
  • Capital and financial forecasting and planning

Your business model will determine the most essential activities in day-to-day operations. For example, a SaaS company’s financial strategy may focus less on other financial activities and more on fundraising. By using CFO services, you can deploy a part-time CFO to projects that help you make informed business decisions. 

Why use CFO services as a startup

While having an in-house CFO on the payroll is a notable achievement for any organization, using CFO services as a startup has benefits you won’t receive by opting for the alternative. These benefits include everything you need to hit your business goals, including:

  • Flexibility – Outsourced CFO services allow you to scale your finance team as you need them. As your operation grows, you can purchase additional financial services to meet the startup's needs or scale back when economic forces tighten. 
  • Cost-effectiveness – During early-stage operations, business owners are investing capital in product development, marketing, and their overall growth strategy. A fractional CFO allows these businesses to employ financial experts on a shoestring budget. 
  • Industry expertise – Fractional CFOs have a wealth of experience working with entrepreneurs from all types of industries. And many have years of experience helping startup founders grow their ideas. That experience and expertise are invaluable for financial planning and obtaining capital. 
  • Better decision-making – Fractional CFO services enable small businesses to benefit from financial experts’ ability to make rock-solid financial projections. These projections, in turn, help with strategic planning, especially at critical junctures. 

With so many benefits of using fractional CFO services, you may never need a full-time CFO for meaningful operations. In fact, more businesses are opting for fractional CFO services and utilizing modern C-suite experts, such as chief technology officers, instead. 

Tips for choosing the right CFO service

When it’s time to invest in startup CFO services, there will be obvious signs, like a struggle with financial statements, financial reporting, growth, valuation, and courting investors. Finding the perfect CFO service is vital to maximizing profitability, and using these tips will help you in your search. 

Understand your business needs

Before you even begin to search for CFO services, consult your business plan, co-founders, and other leaders to ensure you have a clear understanding of what your business needs financially. It’s best to examine the areas of your operation where you need the most help. 

Considering your needs before making a purchase not only saves you money but it helps you locate the service provider that fits within your business strategy. In-depth discussions with critical stakeholders help identify your most prominent areas of opportunity and priority. 

Consider costs

Although CFO services are much more affordable than the traditional chief financial officer, it is still an expense you must budget for. Meet with your bookkeeping team, CPA, or accounting services provider to verify how much you can afford to spend on CFO services. 

In conjunction with understanding your business needs, your budget for CFO services will help you prioritize a provider with the services you need most. Also, consider your future needs and costs to ensure that the provider can continue to grow with you. 

Lean on recommendations

CFO services aren’t uncommon, and many businesses use CFO services to provide financial modeling and the expertise needed to be successful. And because several organizations utilize the same providers for their CFO services, you can reach out to your professional network for recommendations.

Likewise, you can use your connections to verify the performance of the providers on your shortlist. It never hurts to gain a second opinion, especially when it comes to your financial health.  

Verify integration capabilities 

Onboarding a fractional CFO or CFO provider comes with integration challenges, particularly if you opt for a virtual CFO model. That’s why during your search, it’s an excellent idea to verify if a service provider will fit into your pre-existing system.

A fractional CFO service provider that requires you to overhaul everything you have isn’t just disruptive but potentially expensive. Regardless of reputation, there should be some level of seamless integration to maximize the benefit you get.

Gain the CFO support you need with Facta

It’s no secret that C-suite teams command a massive salary with plenty of ancillary benefits because of the level of experience, skill, and expertise they bring to the table. Although a CFO is a critical piece of the business chessboard, not every organization can afford to employ a full-time individual. 

Businesses that don’t have the capital for full-time C-suite leaders have options for CFO prowess in the form of fractional CFO services. These services provide leaders competent with financial data, metrics, and responsibilities so startups can make informed business decisions. 

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