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How outsourcing CFO services can help your business scale faster

Posted by Shivali Anand

August 27, 2021    |     4-minute read (628 words)

Financing procedures and requirements for startups and early-stage small enterprises can be difficult and time-consuming due to their inconsistencies. But if nobody is assigned to manage these responsibilities, your business’s finances can quickly spiral out of control. 

This is where a CFO can assist you in getting your finances in ship-shape. Because hiring a full-time CFO isn’t always feasible, don’t overlook the benefits of outsourcing the role.

An outsourced CFO gives you the skills you need to grow your organization without jeopardizing your bottom line or requiring you to set up the additional infrastructure to fill this position full-time.

Below are some key pointers on how an outsourced CFO can help your business quickly achieve stability.

1. Cash-flow management

Startups have a big issue with financing runway, which is having enough money in place to make it to the next round of investment. Most would likely burn through their initial cash before developing a market presence due to expenses and minimal to no income. A fractional CFO can help in this scenario.

The CFO's responsibility is to manage expenditures and prevent costs from running out of control, thereby ensuring that the company has money in the bank and is solvent through its most difficult early years

2. Creating a strategy

The CFO may use financial data to enhance cost accounting, better understand consumer behavior and much more by providing fresh insights. Increasingly, the function of the CFO has expanded to encompass that of a corporate strategy consultant due to the growing usage of data analytics in organizations.

CFOs may use comprehensive data to better understand the available indicators and build robust growth plans that can help firms compete with their rivals.

3. Assisting with financing

Beginning a business requires a large sum of money to succeed. Venture capitalists are often approached to acquire Series A investment, followed by a Series B round of funding.

 In preparing the company to raise capital, the CFO plays a crucial role. Due diligence, budgetary planning and key performance indicators may all be handled by the outsourced CFO. 

4. Recognizing and seizing on fresh possibilities

Your company's CFO is the company's visionary. As a result of their efforts, promising new business possibilities are more likely to be welcomed with open arms. They may assist you in coming up with alternate ways to take on a new opportunity if they're unable to develop an action plan or time frame.

5. Implementing the groundwork to scale up

The CFO can prepare a startup for success by helping it build a solid foundation. Lack of sufficient finance systems to meet the growth in demand might cause the firm to lose momentum and consumers if a hundredfold rise in client base occurs. Here's where an experienced CFO can step in and implement scalability in nearly every element of the organization, including payment processing, payroll operations, human resources and accounting systems, among other areas.

Get ready for the next step

As long as the firm doesn't fail, a startup grows over time and may decide to expand, go public, merge or be bought out. A CFO's responsibility includes preparing the early-stage company for the worst-case scenario and ensuring a seamless transition.

 The CFO also assists you in making the right decisions as you prepare to develop your company. Where should you focus your foreign expansion efforts? What type of return can you expect? They may also help you determine if you need to hire extra employees.

The outsourced CFO can also help you decide when and how much to spend in a new venture, as well as whether to go all-in or take a step back. To help you understand the benefits and drawbacks of your potential investment/expansion, they can simulate all conceivable outcomes.

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