It’s becoming increasingly common to see companies turning to an outsourced CFO instead of a traditional in-house CFO. This is especially true for the dynamic, high-growth SaaS industry.
SaaS companies are finding that outsourced CFOs specializing in SaaS are often more prepared to handle high levels of growth, overcome challenges, and find/rise to opportunities than traditional in-house, full-time CFO.
Why are SaaS Companies Turning to Outsourced CFO Services?
For companies poised to grow quickly, having a leader at the helm that has “been there, done that” can be the difference between failure and success. In a high-growth situation, there is a lot of room for error—and problems that go unnoticed can have devastating consequences down the road.
Many traditional in-house, full-time CFOs have had proven success with a few companies in their past. However, an outsourced CFO has often been in a leadership position for multiple companies facing significant challenges and opportunities, and has a significant, concentrated track record of proven expertise and success.
Below are 6 reasons high-growth SaaS companies are choosing outsourced CFO solutions.
1. Meets Part-Time Needs
One of the main reasons SaaS companies choose outsourced CFOs is because it allows them to hire sooner. Experienced full-time in-house CFOs are expensive, especially when you account for recruitment costs and benefits.
The need for a CFO often precludes the ability to afford one. This leaves many companies considering a part-time in-house solution, a less-experienced hire or in-house promotion, or an outsourced solution. Of these options, an outsourced solution provides the highest level of experience, top-class expertise, and decreased risk.
2. Wider Range of Experience
Outsourced SaaS CFOs are more likely to have experience facing a wide range of challenges and goals—such as sustaining fast growth, overcoming cash flow issues, increasing profit margins, raising capital, facilitating a merger or acquisition, and more. This is because outsourced CFOs are more frequently sought during times of challenge or opportunity, and because an outsourced CFO will work with multiple companies over a shorter period than will a full-time, in-house CFO.
This means if you’re working with an experienced outsourced CFO, they will have likely faced a situation similar to yours and will be able to draw upon that prior knowledge to help your company achieve the best outcomes for success.
3. Higher Level of Experience
-Outsourced CFOs are rarely at the beginning of their careers. More often, an outsourced CFO has substantially proven their expertise and efficacy in the corporate environment before being given the opportunity to outsource their services. Companies like Preferred CFO hand-pick from these experienced CFOs to create a best-in-class team of outsourced CFOs.
4. Supports Fast Growth
Many tech companies, especially SaaS companies, have the potential to experience fast growth.
Outsourced CFOs hit the ground running. Since they are contracted for a relatively short period—compared to full-time CFOs who anticipate a long-term hire—the outsourced model demands a fast and effective ramp-up period.
In addition, since many companies hire outsourced CFOs when they experience high levels of growth, most outsourced CFOs come with significant experience in developing and executing strategies for making growth more profitable and sustainable.
5. Lower Risk
Full-time, in-house CFO hires come with high salaries, bonuses, benefits, and a slower ramp-up process. A business is also “betting” on the CFO, hoping their chosen candidate truly proves to be the best decision for their needs.
Many tech companies choose to decrease this risk by hiring an outsourced CFO company. An outsourced CFO company hires their team of CFOs based on high levels of performance and efficacy. While your company will be matched to the CFO whose experience best matches your needs, in an employee-based organization like Preferred CFO, you will also be gaining the entire CFO team’s expertise. This means there is a system of checks and balances ensuring the work is being performed to the best of the company’s abilities, there is less risk of a gap in work since there is a team to pick up the slack if the CFO falls ill or takes a vacation, and if for some reason the CFO isn’t the right fit, there are other options to quickly replace them without having to restart the hiring process. A CFO company is also often bound by an agreement of deliverables, whereas an in-house CFO’s deliverables are typically at their own discretion.
6. Diverse Network
Finally, outsourced CFOs also offer SaaS companies a larger, more diverse network. In the tech industry, who you know is as important as what you know. This is especially true when it comes to capital raises or other transactions. Successful CFOs often have strong networks—but an outsourced CFO can glean from the entire CFO team’s relationships. This means you benefit from the contacts of the entire CFO company when it comes time to raising debt or equity capital, negotiating vendor relationships, gaining industry insights, seeking legal counsel, and more.
Preferred CFO is an outsourced CFO firm based in Silicon Slopes. With an expert team of CFOs, financial controllers, and bookkeepers, Preferred CFO provides top-quality outsourced financial services to companies across the country. Because of their Utah Valley/Silicon Slopes ties, Preferred CFO has concentrated experience in the tech and SaaS industries as well as significant experience leading companies in this niche to growth and success. Preferred CFO is founded by Jerry Vance, who is widely considered one of the most experienced outsourced CFOs in the United States.
About the Author
Wayne Vance has over 20 years of SaaS industry experience in both Silicon Valley and Silicon Slopes, including raising over $100M in public and private funding, participating in and facilitating 10+ acquisitions, and helping complete a $1.8B sale of Omniture to Adobe.
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