What exactly is an outsourced CFO?
An outsourced CFO, or Chief Financial Officer, provides financial and accounting services and is a senior executive who offers a broad range of support without being an in-house resource and full-time cost for the business.
The question, ‘Is outsourcing your finance function good for my business?’ shouldn’t just be a passing thought for fast-growth SMEs - it's now a strategic imperative. For businesses in the e-commerce sector, particularly those that are well funded through seed or series A funding, this question carries even greater weight. As the funding landscape becomes more competitive and technology-driven, the right answer to this question could be the key to follow-on growth and success.
A portfolio or fractional CFO can do the heavy lifting and leave you to focus on running of your business. They can become a sounding board for your company and deliver critical financial decisions on your behalf.
This type of service is ideal for start-ups looking to get the level of support that a CFO brings but don’t have the need or resource to hire someone full-time or in-house.
Why outsource my finance function?
If you're looking to attract investment, you'll want a CFO who understands your business model.
Managing a business's finances can be a daunting task, especially for rapidly scaling start-ups. In-house finance teams often struggle to keep up with the evolving financial complexities that come with growth. This is where outsourced accounting services come in.
Outsourcing your finance function isn't just about delegating tedious bookkeeping tasks to an external party. That’s just basic accounting. It's about partnering with a good accountant who knows technology, understands your industry's unique financial needs, and can provide strategic financial insights to drive your business forward.
Speaking to flinder Portfolio CFO, Fatima Salhab, she shared, ‘An outsourced CFO can support your e-commerce business in many ways, some of which include the following:
- Create and maintain a financial model to support your business plan - you will have plans and aspirations for your business with high-level views of what you need to do to hit those goals you’ll need someone with financial expertise that supports those goals, to make sure that they stack up financially. This is the key to understanding the viability of your plans and time frames, which will have an impact on potential fundraises and milestones to meet those fundraising goals as well as support cash runways and routes to profitability.
- Prepare for sustained growth - scaling a fast-growth business is very hard. It puts huge demands on working capital and internal resources – head count, hiring plans, your product and customer success. Having an understanding of the financial implications of such growth and knowing when and what triggers the increased investment in each area to allow the growth to continue at the desired pace but in a controlled fashion is critical. A fractional CFO can manage that.
- Offer a CFO solution - the key points of having a portfolio CFO as part of your senior leadership team adds balance and a conscience to the group as well as a dose of realism. A full-time CFO is going to cost more and is an expensive resource. A fractional CFO is an ideal solution for growing businesses that don’t need a full-time resource and offers expertise without the expense. An outsourced CFO will be able to grasp the key aspects within your business quickly but deliver in a part-time capacity.
- Build credibility and maintain balance - having someone to refer to as your CFO, adds credibility to your pitch deck and interactions with customers, suppliers, banks and investors. It allows a founder to step away from those financials decisions and pass them to someone more qualified. It offers the chance for the founder to defer and let the CFO be the one to say ‘no’ when needed.
- Industry-specific portfolio CFO - bringing industry-specific experience, tracking metrics in the right places for the e-commerce sector, while bringing a wide range of experience as well as seeing the trends and relevant news to share with clients helps them keep up with the constantly changing landscape all fast-growth businesses have to navigate.
The bottom line
Outsourcing your finance function to a tech-savvy accounting firm can free up your time and resources, provide you with access to advanced financial expertise and technology, and ultimately, drive your business's growth and success. If you're a fast-growth SME in the e-commerce sector, it's time ask yourself again: 'Is outsourcing your finance function good?' The answer might just supercharge your business!