As a business grows, its finances become more complicated. It’s important to have skilled financial leadership when making strategy choices and handling budgets and cash flow. But not all companies can afford a full-time Chief Financial Officer (CFO). This is especially true for new businesses or mid-sized companies that are growing. In this case, the best outsourced CFO services come in handy.
An hired CFO helps with big-picture financial planning, system optimization, forecasts, and even merger and acquisition advisory, but without all the costs of having a full-time executive. But how do you know which CFO service is best for your business? Let’s look at the most important things you need to think about when choosing a hired CFO partner.
1. Know how much money you need.
Take a look at your company’s current finances and long-term goals before you start looking at services. Do you need help with:
How to predict cash flow?
Making a budget and planning your money?
Getting ready for an audit and compliance?
Getting money or talking to investors?
Advice on mergers and acquisitions?
Being clear about what you need will help you find a service with the right skills. Some hired CFO firms are better at helping new businesses get started, while others are better at helping large companies that run multiple businesses.
2. Look for experience in the field
There are different rules, taxes, and problems in each business when it comes to money. The best contracted CFO services will have worked in your industry before. As an example:
Recurring income models and loss research are important for SaaS companies.
Retailers need accurate predictions of their goods and sales.
Firms in the real estate business might need help with long-term assets and project funding.
If you want to buy another business, make sure the service you choose offers merger and acquisition advice with a track record of closing deals.
To make sure they are an expert in your field, ask for case studies or references.
3. Look at more than just bookkeeping when judging strategic thinking
People often think that hired CFOs only deal with numbers, which is not true. In fact, they play a vital part by finding ways to grow, cut costs, and make the business last for a long time.
When looking at companies, make sure they focus on more than just the basics. The best CFO services that are hired will:
Help make long-term plans for money
Make sure your KPIs are in line with your business goals.
Help improve the business model
Give data-driven ideas to help people make decisions
This is especially important if you’re getting ready for big changes, like expanding into new markets or buying a rival.
4. The ability to give advice on mergers and acquisitions
Mergers and acquisitions (M&A) are tricky, risky business deals that need someone with a lot of financial knowledge. If you want to buy a smaller peer or be bought out, the right CFO partner should be able to give you full merger and acquisition advice.
Look out for these things:
Help with due diligence
Making financial models and valuing
Planning for integration after the deal
Advice on how to negotiate
Setting up the rules of a deal to reduce danger and increase value
If mergers and acquisitions (M&A) are part of your growth plan, make sure the CFO service you choose has a track record of finishing deals.
5. Check the technology and tools
These days, CFO services should use technology to give better information and reports. Inquire about:
Compatibility with accounting tools like QuickBooks, NetSuite, and Xero
Dashboards and tools for making predictions
Reporting options in real time
Protocols for data security
The best cloud-based CFO services will not only use the newest tools, but they will also teach your staff how to use them correctly. This makes things run more smoothly and gives you a better picture of your finances.
6. Think about how to communicate and be available
Outsourced doesn’t mean not there. A good CFO service will stay involved and quick, giving you regular reports, business views, and support during important times.
Think about:
How often will you meet? Once a week, once a month?
If you’ll work with a single CFO or a team that comes and goes,
Being available during important times like year-end reports or merger and acquisition advisory.
The best external CFO services will make you feel like they are part of your leadership team and not a third party that you aren’t in touch with.
7. Look over the team’s credentials and structure
Not only does experience help, but so do credentials and a strong team working behind the scenes. Ask possible providers:
Are their CFOs CPAs, MBAs, or people who used to work for the Big Four?
Do they have experts in tax, compliance, and research, among other financial tasks?
Can they grow as your business does?
A strong team guarantees consistent service and the ability to handle a wide range of financial tasks, which is especially important when you need help with mergers and acquisitions.
8. Know the price and the scope
Cost is important, but it shouldn’t be the only thing that matters. Think about the value you get instead of going for the cheaper choice. Question:
Is the price set or charged by the hour?
What does the service package come with?
Is there an extra charge for big projects like M&A or fundraising?
You won’t be surprised by secret costs with the best hired CFO services because their prices are clear and their tasks are well-defined.
9. Ask for a trial period or pilot project.
If you’re not sure, ask the service for a short-term job to see if they are a good fit. A lot of CFO services offer:
A test period of 30 to 60 days
A clear product, like a strategy plan or cash flow forecast
They work a set number of hours each month as a “fractional CFO.”
This lets you see how knowledgeable they are and how well they can communicate without making a long-term commitment.
10. Put Long-Term Fit First
Lastly, don’t just think about what you need right now. The best hired CFO services can grow with your business, from doing the books for your company to getting ready for an IPO, an M&A, or a private equity investment.
Pick a partner that:
Fits with your goals
Can be scaled up or down
Gives you stability as your needs change
Your CFO should not only keep your books, but also give you the power to make choices as a boss.
In conclusion
It takes more than a Google search to find the best hired CFO services. It requires a careful analysis of your company’s requirements, industry-specific knowledge, and strategy skills, especially if you want to grow through merger and acquisition advice.
When you find the right partner, you get more than just accurate financial information. You get a smart friend who helps you deal with confusion, take opportunities, and achieve long-term success.