The service industry is booming and so is startup culture. That means that there are plenty of new services claiming to benefit your tech startup, provide you with the newest software, shiniest branding, or the best office space. But when it comes to your finances, you can’t afford to be distracted by the shiny new toys and services tailored specifically to tech startups. You need a reliable service that will provide concrete benefits for your company.
An outsourced CFO can provide you with concrete benefits. But let’s break it down and see if they’re the benefits you actually need.
What is an Outsourced CFO?
To start with, what is an outsourced CFO? According to Investopedia, a Chief Financial Officer is “the senior executive responsible for managing the financial actions of a company. The CFO’s duties include tracking cash flow and financial planning as well as analyzing the company’s financial strengths and weaknesses and proposing corrective actions.”
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Think of the CFO like the rudder of a ship. They guide the financial decisions of a company to steer them safely through murky waters.
An outsourced CFO has the same role as your typical Chief Financial Officer but is external to the company instead of coming from within. In order to obtain an outsourced CFO, you wouldn’t hire new personnel; instead, you’d hire a service organization like Global Shared Services.
Don’t confuse an outsourced CFO with a fractional CFO– while they have some of the same duties, they’re not exactly the same. A fractional CFO is an outsourced CFO that you bring on for specific events – such as an audit or merger – where you need high-level financial advice. They’re with your company for specific moments in time.
An outsourced CFO can be brought on for full-time CFO duties. Here at GSS, we’re able to customize our outsourced CFO services to meet your needs.
Now that we know what an outsourced CFO is, let’s get down to brass tacks. When do you need an outsourced CFO?
Are You Experiencing Rapid Growth?
A somewhat-common phenomenon with tech startups is the period of rapid growth. Sometimes a tech startup will go from a garage-based workshop to a large successful corporation in what feels like overnight.
If this happened to you, congratulations on your success! But I’m sure you know that your finances go through a period of rapid growth as well. Instead of just attempting to balance income and expenses and make ends meet, now you’re handling employee payroll, rent, manufacturing expenses, etc.
When your finances become more complicated, it can be very difficult to stay on top of them. Here, an outsourced CFO can help you develop a financial plan for the future. They’ll be able to guide you through organizing your finances, planning for the next period of rapid growth, and enabling you to make large financial decisions.
Are There Large Financial Decisions Looming in the Future?
Oftentimes, tech startups are faced with the decision of selling their young company to a corporation. These decisions are hard for many reasons. Are you willing to lose control of your company and product?
While an outsourced CFO can’t help you with all of the mental, emotional, and nostalgic decisions that need to be made in the event of an acquisitions deal, they can help you when it comes to financial negotiations.
When you walk into a room with experienced lawyers and a lot of money on the table, it can be easy to feel intimidated – especially if you have limited experience in navigating high-pressure financial situations. But when you walk in and sit down at that conference table with an outsourced CFO by your side, you can rest easier knowing an experienced financial officer has your back.
An outsourced CFO can guide you through the negotiations process that comes with mergers and acquisitions. They’ll make sure that you’re getting the deal you deserve and aren’t being taken advantage of.
How Do You Know If You Need an In-House CFO?
So if you’ve gotten to this point, you’ve read through the whole thing and probably agree that it sounds like a good idea to hire an outsourced CFO. But why not take it one step further and hire an in-house CFO?
When you hire an in-house CFO, you’ll find yourself worrying about being able to afford benefits and the salary of a CFO. How will they fit in with the company culture? What type of training will you need to give them to get them up to speed? On top of that, if you only need your CFO for large financial decisions, why go through all the hassle and cost of hiring one on to your team when you can outsource it as needed?
How are you going to be able to find an in-house CFO that has the experience you need at the budget you can afford? The last thing you want to do is hire your brother-in-law who graduated with a degree in accounting because he’ll give you a good deal and after all, family is family. When you hire an outsourced CFO for your tech firm, you’re getting years of experience at an affordable price.
You won’t have to worry about screening an in-house CFO and going through the resumes of dozens of CFOs when your only experience in finances is that one summer job where you worked a cash register. When you go with an outsourced CFO, you’re choosing an expert in the industry who has already been screened by the clients that came before you. Look at the testimonies of others in your position and you’ll be able to see what you’re getting.
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The Answer: Yes.
The answer to the question, “Could an outsourced CFO benefit your tech startup?” is a resounding “yes.” But it also depends on what you’re looking for. Do you need an outsourced CFO you can call up just for large financial decisions? Do you need help with your daily financial planning and steering your finances through a period of rapid growth?
At Global Shared Services, we’re proud to offer customizable packages that meet your needs. Whether you’re looking for just an outsourced CFO, or need more day-to-day accounting services, we’ve got you covered. Our job is to help your business succeed with the expertise you’ve been waiting for.