A growing SaaS company brings in new finance and accounting challenges at every stage of its business operation, and it highlights the need for an experienced financial leader, a SaaS CFO. The attitude of SaaS companies towards outsourced CFO services has come a long way.
Dynamic, high growth SaaS companies turn to outsourced CFO instead of looking for a traditional in-house CFO for their offerings at an affordable quotation. In this guide, we’ll know the reasons for this transition from conventional CFOs to outsourced CFO services uk, and the following:
- What is an outsourced CFO?
- 6 reasons why SaaS companies are turning toward outsourced CFO services.
- Can outsourced CFO service increase SaaS industry value?
- Wrapping up
What is an outsourced CFO?
An outsourced CFO is a expert that works with businesses of different sizes and types and provides services on a part-time or project basis. They act as a financial advisor to the executive team and outline business strategies and the company’s financial plan.
Check our guide: What is a CFO? When do you know you need one?
Outsourcing CFO Services saves you money as the service cost is less than hiring an in-house CFO. Moreover, they don’t have any interest in the company’s success and therefore are capable of making faster, unbiased strategic decisions.
The following is set of typical outsourced CFO services:
- Developing an overall Financial strategy
- Raising capital
- Long-term and short-term forecasting
- Cash flow analysis
- Enabling mergers and acquisitions
- Profit planning
- Scenario modelling
- Scalable financial technology solutions
- Revenue streams and product pricing decisions
When do I hire a CFO for my SaaS company?
SaaS companies’ finance and accounting needs keep changing at different stages of SaaS growth. Most owners find it confusing whether to hire a full-time CFO or an outsourced CFO. However, it depends on the gap between your current financial team’s expertise and your future needs.
Suppose you are running a SaaS startup with little to no existing revenue; looking for CFO consulting services on a one-time basis will benefit you, rather than contracting CFO services for a long-term relationship.
You can look for outsourcing CFO services when your company is looking for mergers and acquisitions, opening a branch office, looking for funds, developing outstanding business strategies, etc.
There is no strict rule for a company to be large or old to hire CFO services. You can look for a CFO whenever your business needs one.
6 reasons why SaaS companies are turning toward outsourced CFO services
1. Access to expertise
Most SaaS companies are hovering over the outsourced CFO firms for getting access to top-class expertise from experienced CFOs. Such firms rarely hire CFOs at the beginning of their careers. These individuals have to prove their expertise and efficiency in working in a corporate environment. Therefore, SaaS companies getting in touch with an outsourcing CFO firm can find a bunch of experienced CFOs who offer best in class services.
Additionally, they have a team-based approach which ensures an excellent level of expertise in every role they play within a business. The team can include controllers, accountants, analysts, lawyers and other professionals who work together to develop the best SaaS financial strategy.
2. Offers interim services
One of the reasons for outsourcing CFO services is you don’t have to wait longer or invest time in hiring the right candidate. Additionally, you can contact an outsourcing CFO Services London to fulfil your immediate needs until you find a full-time in-house CFO. These professionals help you keep your company running while you fetch a full-time CFO.
Outsourcing CFO Services costs you less than hiring in-house CFOs, while they provide the same level of experience, knowledge, and expertise. You don’t have to pay several salaries plus employee benefits, training expenses, turnover costs, and others to an outsourced CFO.
3. Experienced professionals
An outsourcing CFO firm consists of individuals with years of experience and knowledge of your industry. They might have previous experience resolving challenges and meeting goals that resemble yours. They can provide you services like overcoming cash flow issues, maximising profit margin, fundraising, helping in mergers or acquisitions, etc. It gives confidence to company owners that the CFO you are hiring has likely faced a situation similar to yours and can help you find the best solutions depending on their prior knowledge.
4. Provides objective insights
An outsourced CFO is responsible for providing your company with transparent and objective financials. They usually have no connections with your internal teams and therefore provide unbiased decisions and remain honest about company finances. They have no issue in reporting a problem that is necessary for owners to know and don’t hesitate to provide the best solutions.
Companies may have found an issue with in-house CFOs as they have personal ties with your company and do not have the freedom to express an unbiased viewpoint. The relationships within a company and among the workers make it difficult to find financial problems objectively and result in avoidance of reporting them.
5. Support fast growth
SaaS companies generally have the potential to experience fast business growth. Outsourced CFOs can bring you quick results. They know where to begin and how to offer the best outcomes and every stage of your business. As business owners have a short-term contract with outsourced CFOs, compared to full-timers, their model demands fast-paced and seamless transitions and a faster ramp to results.
6. Diverse network
SaaS companies need to stay in touch with a diverse network that an outsourced CFO can offer. It is essential to focus on who you know more than what you know in the SaaS industry.
As your business grows, you need to look for investors, customers, suppliers and others who help scale your business. A CFO has been working for years and has relationships with all the professionals you need. You can use their contacts at times of fundraising, negotiating with vendors, gaining industry insights, seeking legal help, and more.
Can outsourced CFO service increase SaaS industry value?
The goal of maximum SaaS business is to maximise valuation. An outsourced CFO service provider has specialisations in SAS Finance and Accounting solutions that can help you increase business value in several ways.
Additionally, they are cost-effective services that help you free up funds for other business operations. Instead of investing a huge chunk of money in hiring an in-house CFO, you can invest in getting a sales manager or bringing more sales reps to increase Annual Recurring Revenue ARR ( a metric of SaaS business).
In terms of expertise, outsourcing CFO service will provide you with a high level of financial leadership that better understands your business value drivers. They have experience working with similar industry types and can help you manage and optimise your current value.
Finally, outsourced CFOs always have the right resources and stay updated with government regulations. They can offer you a fully integrated solution that fills up every gap in your business, offering a new level of depth to your Finance and Accounting operations.
Finding the perfect CFO for your business can be challenging and time taking. Therefore, SaaS businesses prefer outsourcing CFO services and spend their saved money, time, and effort on different business operations.
Outsourced CFO services are not only restricted to technology companies but offer a wide range of expertise in a variety of industries. Business owners need to spend a little time interviewing the firms or providing them with your industry requirements to find the right candidate for business.