For Start-ups and Young companies, the ability to hire CFO talent is one of many critical success factors.  Whether CFO expertise is enlisted full-time, part-time or even on a virtual basis, it frequently makes a substantial difference in the company’s growth trajectory and long-term success. As sales operations and revenue growth gain momentum, having access to financial and operational expertise, strategic planning and efficient funding sources becomes essential.  In addition, engaging financial leadership early to create and execute a comprehensive back-office vision can mitigate many operational risks as the company scales.

It is also extremely helpful to have access to financial resources that can accurately provide break-even analysis, investment guidance and risk management to help de-risk the core business.  CFO resources are tasked with anticipating, prioritizing, and protecting the enterprise from a variety of risks. Navigating risks, such as credit risk, liquidity risk, operational risk, and macro-economic risk can all help organizations steer clear of the rocky shoals of bankruptcy.   Likewise, the ability to efficiently manage A/R, A/P, Deal Desk and Sales Operations to improve profit margins is key to both long-term and short-term success.

Having the luxury of a full-time time CFO is not always an option for many fledgling companies.   At various growth stages and operational inflexion points, acute financial and process pain-points arise and need to be addressed quickly and with an eye towards long-term efficiency.  Numerous quick fixes often mask the problem for a short period of time, but often lead to financial chaos in the long run.  As mentioned above, CFO skill-sets can be purchased in a number of ways:

• Hire a virtual CFO Adviser
• Hire an Interim CFO (part-time or full-time)
• Hire a full-time CFO

In all businesses, value is created or destroyed by a variety of decision makers. By engaging early financial oversight and tracking key financial drivers of the business, Executives have fewer surprises and are more in control of cashflow.

Hire a Virtual CFO Adviser

Many growing businesses reach a point where they need professional financial advice, but can’t afford a permanent full-time CFO or Controller.  In many cases, the company can get by with a part-time Certified Public Accountant (CPA) who helps guide the business remotely.  Topics that are frequently addressed by a Virtual CFO include tax questions, payroll complexities, sales commissions, reporting, cash management and revenue recognition.  Any of these issues can trip-up fledgling companies and lead to profit loss, fines, delays, lawsuits and / or delayed IPOs.

Virtual CFO Advisers can also be used to assist newly minted CFOs get up to speed on their current responsibilities.  In these scenarios, the Virtual CFO acts like a mentor and coach for the new CFO.  The Virtual CFO helps ensure compliance and financial operating capabilities.  In this model, having access to CFO leadership on a fractional basis is of tremendous value to companies that are trying to preserve cash.

Hire an Interim CFO

Much like the services provided by the Virtual CFO, Interim CFOs provide guidance, but will also manage day-to-day responsibility for running the Finance and Operations organizations and processes like A/R, A/P, Cash Management and Management Reporting.  Setting up the companies back-office is also often a top priority for Interim CFOs. In addition, their responsibilities also include working with the CEO and Executive Team to facilitate initial budgeting and forecasting and also managing banking and investment relationships.

In many cases, an Interim CFO is brought into the organization for 6-12 months to facilitate funding events such as new venture rounds or to achieve IPO-readiness.  In these scenarios, the ability to standardize operations and establish reliable Key Performance Indicators (KPIs) is critical to the success of the company.

Full-time CFO Support

Obviously, the best-case scenario for companies is when there is sufficient funding (by early-stage VC or Angel investment) and they can afford a full-time CFO right out-of-the-gate.  The benefit here is that the more permanent CFO can implement the necessary infrastructure like systems, processes and policies required to manage the long-term growth of the company.  This is especially significant in organizations that will have complex Quote to Cash or Supply Chain processes. Early entry of the CFO facilitates the smoothest scaling of the organization measured by investment reliability, accurate forecasting, strong operational controls and meeting KPI objectives.  Likewise, proper tax planning and monitoring also ensures predictability.

The other area that cannot be ignored is meeting compliance standards such as Sarbanes-Oxley, Dodd-Frank Acts, HIPAA and others.  Full-time CFOs have the early opportunity to create a culture of compliance by establishing organizational processes, policies and systems that make it easy for personnel to certify the financials. By creating Enterprise risk management processes and deploying appropriate technologies throughout the company, discrepancies can be easily spotted and Executive can confidently attest to the accuracy and completeness of their financial statements.

Your Financial Team’s Success – HBSC Can Help

In order to help clients quickly address their financial and scalability pain-points, HBSC offers Interim and Virtual CFO Services.  These services enable our Clients to focus on growth objectives like new product and service development, obtaining new customers and other core business issues.  If you are looking for financial and operational expertise as you scale your business, HBSC Strategic Services can help.  Please contact us at 1-800-990-7995 or visit us at www.hbsconsult.com.