Everything You Need to Consider When Choosing CFO Service Providers

Did you know that the number of small businesses in the US is 30.2 million? These businesses make up 99.9% of all of the businesses in the US. Also, the number of Americans who are employed by these businesses is 58.9 million.

Considering these numbers, you may feel proud to be part of the small business world. At the same time, however, you might be stressed about the competition.

Fortunately, a CFO service provider can help you with your finances.

In this article, we’ll go over the process of choosing CFO service providers. Finally, you can hire an outsourced CFO and manage your finances better than ever. Read on to learn more.

What Are CFO Services?

Before you start looking into CFO provider options, it’s important that you understand what CFO services are. This way, you can decide if this is a solution you want for your small business. CFO services are also called chief financial officer services.

These are services that financial professionals and an experienced CFO deliver to organizations. These are organizations that are looking to:

  • Realize a higher return on investment on their financial investments
  • Achieve broader business objectives
  • Address key financial challenges

CFO services are a cost-effective and efficient way of getting access to financial expertise at a high level for a specific period or goal. Note that there are many other terms people use when referring to “CFO services.”

These other terms include “virtual CFO services,” “fractional CFO services,” “part-time CFO services,” “contract CFO services,” “interim CFO services,” “CFO consulting services,” “CFO professional services,” and “CFO advisory services.”

The services themselves are broad. This means that they can be tailored so they meet the specific needs of a business.

CFO services also make it possible for business leaders and organizations to tap into a talent pool that’s rich and that includes finance professionals and former enterprise CFOs. As a result, they’ll be able to leverage their expertise.

Specifically, this expertise leverage will be able to occur in planning and supervisory, strategy, advisory, and financial leadership skills.

Who Needs CFO Services?

CFO services are an ideal solution for startups and enterprises that are small- to mid-sized that have a need for financial expertise but don’t have the massive budgets required to hire in-house CFOs full-time. A CFO service budget, on the other hand, wouldn’t be nearly as big.

CFO services will provide these businesses with the expertise and competence they would get from an in-house CFO, but it’s much cheaper.

Choosing CFO Services Providers

Now that you know what CFO services are and who needs these services, we can move on to how to choose CFO services providers. There are many strategies you need to use to find the right CFO services provider for you, so let’s get started.

Find the Right Fit With Queries

While it’s important to find a provider that has the right background and impressive resume, the first step you need to take when choosing the right CFO services provider is to look for one that will be the right fit. Here are three query types you can use to can go about doing this.

Niche Queries

The best way you’ll find a good fit for your organization specifically is by finding a firm or individual that has experience in your business niche and/or your current business situation. So, for example, say you run a software company.

In this case, you should start your search with terms like “software company CFO service providers.”

Specific Question Queries

Another way to find the right fit with queries is to search for a sign that the company knows how to do what you need help with well. One of the best ways to do this is to find content on the website that explains how to do this.

Chances are, if they’ve published a blog post that helps you deal with your problem in a way that’s clear and helpful, they’ll be good at handling this problem when they’re doing CFO services for you.

To do this type of query, type in what you need help with specifically. See what advice comes up from CFO services providers working within your industry.

It’s smart to start as specific as possible. Then, if you aren’t getting too many hits, broaden your query a little.

Keep in mind that, just because a CFO service provider might be an expert in providing a certain type of service, it might not be obvious just from a Google search. But starting with this type of query can help.

Specific Need Queries

Sometimes, organizations will start their virtual CFO service or other types of CFO service provider search because they have a pressing need. These short-term needs might include a cash crunch, a bankruptcy situation, or a forbearance with a bank situation.

They might also include the completion of a one-off project (like a deep pricing analysis), a one-off due diligence exercise, a one-off analysis of a financial gap, an acquisition or merger, or a relocation.

Additionally, they might include having an interim CFO step in for helping to hire a new controller or bookkeeper and train them. For this query, you need to do the same thing you did for the niche query.

You need to look for a CFO service provider that has experience completing the specific task or tasks you need to be completed.

Know What Services You Need

Another way to choose the right CFO service provider for you is to consider what services they offer. Some will offer only CFO services. However, others will have additional services available, engaging at fractional CFO, controller, and bookkeeper levels.

If you were to work with this latter type of company, it would be providing financial services more generally.

To understand which type of services you need, you first need to assess what you need help with on your end. It can help to review the different types of services that CFO services providers offer.

Core CFO Services

The core CFO services most CFO services providers will offer include strategic financial planning, budgeting and forecasting, fundraising and cashflow forecasting, profitability analysis, business modeling and financial analysis, and mergers and acquisitions.

Strategic Financial Planning

For organizations that are growing fast, it’s easy for strategic financial planning to end up sidetracked as operational issues that are more pressing emerge. However, for an organization to determine what it has to do to achieve its short- and long-term business goals, strategic financial planning is necessary.

When you have a CFO services provider complete this service for you, they’ll help you with the creation of a financial roadmap that’s strategic. This way, you’ll be able to set up profitability and revenue goals that are long-term.

They’ll also assist you in the evaluation of the impact your operations will have on your organization’s financial position in both the present and future. They can also act, in your goal-setting and strategic planning process, as catalysts.

They’ll help you, for your business’s operational side, identify financial benchmarks. They can do this while setting achievable broader business goals.

Budgeting and Forecasting

One of the most integral parts of running a business is budgeting and forecasting. A CFO services provider can assist you in the development and implementation of an annual operating plan, or AOP, or a budget.

With this, they will guide your business’s growth, helping you to track progress, prioritize, and create a projection that’s comprehensive of all your expenses and estimated income.

To create this projection, they’ll base it on what they forecast your sales revenue to be during a financial year. Typically, a financial plan that’s sound would include components broken down.

These components might include tax planning, succession planning, payroll and benefits, working capital management, resource costs, and budget development.

A CFO services provider will also review past performance and historical data. Additionally, they’ll segment your business in terms of headcount and revenue, as well as set targets.

They’ll also set targets, help you with KPIs, review performance, and report.

Additionally, they’ll oversee your budget’s management and maintenance. This will be so your business will be more profitable and on the right track in terms of finance.

Fundraising and Cashflow Forecasting

When they provide these services, a CFO services provider will help you with managing the capital you have better, avoid funding issues, and manage your business’s liquidity. They can also create long- and short-term liquidity plans, as well as reduction plans for interest and debt.

Profitability Analysis

Knowing what your profitability is is important for two reasons. One reason is that it’s a good general business health indicator. Another reason is that it helps you understand which specific units of your business are contributing to the overall growth of your business.

A CFO services provider can help you understand the profitability of a specific business unit. They can also help you understand what specific product lines are contributing to your business.

Business Modeling and Financial Analysis

A CFO services provider can help you in the creation of business and financial models. These will, in turn, help you in predicting the impact a future event could have or a decision made on the company’s bottom line.

These models are key decision-making tools. They will future-proof your business from external variables such as market disruption and policy changes.

They’ll also make it possible for you to perform an analysis of the break-even type and validate a proposed business unit’s profitability.

Mergers and Acquisitions

A CFO services provider will bring to you the investor mindset. They’ll help you in looking at opportunities to fund, partner, buy, or sell your business. They’ll also help you look into the opportunities for fixing your business so you can preserve and add value.

They’ll conduct assessments of your business that are strategic, identify internal capabilities, suggest operational improvements, and perform due diligence. These are all steps in a successful merger and acquisition journey.

Extended CFO Services

In addition to the core services that many CFO services providers provide, there are also extended CFO services you might be interested in. These include performance management, contract life cycle management, and sales process and pipeline management.

They also include board management, unit economics and break-even analysis, and risk management. If you’re looking for one of these services, you should hire a CFO services provider that provides them. 

Ask For Specific Examples of Experience

When you’re taking a look at the different candidates you’re considering, you should ask them for specific examples of the experience you’re looking for. Even if you’ve found someone who wrote a great blog post using one of the above query methods, they might have the answer but not the experience.

Sometimes, these companies might have someone work with you who’s an academic expert, for example. But if they don’t have experience working directly with small businesses, they might not be the right fit.

By asking for specific examples of experience, you can learn that the company has dealt with the specific financial issues you need help with. If they’ve been successful and done this in your niche, even better.

Ask For Sample Reporting Examples

You should also ask for sample reporting examples that represent what your business needs. These examples should also include the reasons why these are your business’s needs. The reason this is an effective strategy is that it will give you a glimpse of what it’s like to work with CFO services providers.

Even if the services they provide are right, if they work in a way that isn’t a right match with your company, you shouldn’t work with them.

A good company should be able to adapt to the way you do business. They should be able to adjust to your business, customizing their report based on the information type you can effectively process.

Find Out if You’ve Got a Team on Your Side

One of the biggest benefits of hiring a CFO service provider is that they have a team of financial professionals who can help you with your financial needs and processes. However, sometimes these providers will assign you one specific person who will do your CFO services for you.

In this case, you should find out if you’ve got a team on your side. Ask what would happen if they left the CFO services company.

Would you be left in the lurch, or would the team come in and have all the information necessary to keep doing the work they had been doing? By making sure they would do the latter, you can be sure you’ll get the help you need.

Look For Good Communication Skills

When you’re working with a CFO service provider, good communication is essential. If they aren’t good at explaining what you need to change or how they can help you with the financial aspects of your business, they will only be able to help you so much.

Additionally, if they’re difficult to work with, or don’t get back to you quickly when you call or email them, they won’t be able to do much for you, either.

For this reason, you should look for good communication skills when considering different options. If they don’t have these, take them off your list of potential CFO service providers.

Ask What Their Onboarding Process Looks Like

A high-quality CFO service provider will have an onboarding period that becomes the foundation for your future success as you work with them. For this reason, you should ask what their onboarding process looks like. Here are some of the activities their onboarding process might often include.

Goal Setting

The beginning of the onboarding process should include goal setting. This is where the CFO service provider will learn about the long- and short-term goals you have. This will help them understand what milestones to hit.

Additionally, when you provide them with your information requirements, they can pass this on to their tech team. Their tech team will then be able to come up with the process required to generate it.

Report Design

When it comes to report design, there are two considerations. One of these is the key performance indicators, or KPIs. With the CFO service provider, you’ll come up with which ones are the best ones for your growth stage and industry.

They’ll identify which ones you need to focus on currently. Additionally, they should change what the KPIs are as your business opportunities and challenges change.

The second consideration is in which way to make the report data consumable. This will depend on you and what type of data presentation you consume most easily.

The CFO service provider should have enough experience to know how to present data in their reports to you. If that’s visual data, they’ll present it to you in graphs and charts.

If that’s numbers data, then they’ll present it to you with only numerical data.

Technology Recommendations

Something else the CFO service provider might provide you with during the onboarding process is technology recommendations. If they see that your systems would work in a way that was more efficient with a technology solution, they might give you these recommendations.

Ideally, they’ll provide you with the recommendation of a software solution that has a balance of stability, security, performance, and price.

Checking Out Your Accounting Foundation

Another step the provider might have to take during the onboarding process is to make sure that your business’s foundation of accounting is sound. They might need to do some reworking of your balance sheet so that their picture of the financial reality can be more accurate.

Enhance or Build Financial Processes

Another benefit that you get when you work with a CFO service provider is that you’re getting more than only access to financial management expertise. You’ll also be able to borrow from the processes knowledge they’ve used or built in other businesses.

As a result, during the onboarding process, you’ll be able to restructure your business’s processes to have better productivity.

Note the Timeline

When you’re asking potential CFO providers about their onboarding process, note what timeline they give you. Ideally, the amount of time the onboarding process should occurring during is somewhere between 90 and 120 days.

Additionally, they should be able to let you know exactly what steps you will take together during the onboarding process during this period.

Read Online Reviews

By reading online reviews, you’ll get an idea as to whether the benefits of CFO services you’re looking to get are ones that past clients have received when working with the CFO service providers you’re considering. For this reason, you should read online reviews.

Get started by looking on the company website for reviews. Additionally, don’t forget about the importance of asking them for the contact details of past clients they can refer you to.

If the company doesn’t have this contact information to give you, this could be a sign that they haven’t had happy clients in the past.

Once you’ve done all this, look on third-party websites for reviews. This way, you can be sure to get as objective information as possible.

Keep in mind that a few negative reviews are nothing to worry about. However, if there are many, this is a sign that you should take that CFO service provider you’re considering off your list.

Choosing CFO Service Providers?

Now that you know what steps are involved in choosing CFO service providers, you might have decided to start looking for one. In this case, you should look no further than Bennett Financials. We’re experts when it comes to the CFO services you need.

We offer CFO services, as well as bookkeeping, tax planning, and tax resolution services. To learn more about how we can help you, get a free consultation now.