Should You Outsource These Mission-Critical CFO Services?

Donny | Graphite - Startup Accounting Services

Josh Leider, Head of Growth at Graphite

Hiring a full-time CFO is a significant investment, and for many growing startups, it’s not financially feasible. However, your organization needs to have a strong grasp of its finances and savvy finance management techniques in order to establish itself as a contender in the market. 

Financial mistakes can be the downfall of many promising startups, making hiring the right talent a deciding factor in your growth and longevity. So it can be difficult to find the balance between top talent and tight budgets. 

Fractional CFOs present a unique solution to this problem. 

What is a Fractional CFO?

A fractional CFO is a reputable and experienced finance executive who works with your organization part-time on a contractual basis. Fractional CFO services give you access to the financial expertise you need, without compromising your budget. 

As your startup grows, you need financial experts to help you make data-driven decisions. Even the savviest and most adaptable startup founders typically don’t have the financial skills to handle their accounting. 

Considering hiring a fractional CFO? Here are some things to mull over before making the leap, so you know how to take full advantage of their financial expertise. 

What to Do Before Outsourcing Any CFO Services

Before you hire a fractional CFO, you need a top-notch accounting team. 

In order for a CFO to succeed, they need accurate, GAAP-compliant financials to work with. Hiring an entire full-time accounting team might be out of reach for your startup. Fortunately, it’s easy to outsource these tasks to a fractional accounting firm.

Your startup could have the best founder, the best CFO, and the best financial analysts in the world. But if your accounting team is producing inaccurate data, their work won’t have any value.

For example, inaccurate accounting data could cause you to misjudge the length of your cash runway and ultimately cause your startup to fail. An investment in strong accounting processes from the beginning of your journey as a startup helps prevent these crises from happening.

Once you’ve established a strong financial foundation through reliable accounting practices, you’re ready to start looking into bringing on a fractional CFO to take your financial strategy to the next level.

Need a financial model built? Need help fundraising?

Your Graphite CFO can help.

How a Fractional CFO Helps Your Organization Succeed

Significant investments in talent require a clear, strong strategy in order to make those investments worth it. 

On top of establishing the strong foundation mentioned above, using a fractional CFO in the following areas will help you make the most of this important hire and help your organization steadily and reliably grow.

Strategic Decision-Making

A fractional CFO provides essential support for big-picture financial decision-making. Sometimes, you need to consult a financial expert on an as-needed basis. This doesn’t require a full-time position, and the flexibility built into a fractional CFO role makes it an easy choice for many budding startups. 

Many founders, though they’re savvy decision-makers with the ability to bring ideas to life, are not financial experts themselves. So often, they need an outside opinion to guide them on important and strategic financial decisions. 

An expert consultant is there to help you:

  • Brainstorm ideas
  • Provide advice
  • Create long-term financial plans.

A fractional CFO helps you with decisions surrounding how to raise capital, understanding how new hires affect your economics, and processing new revenue streams—just to name a few. 

An outsourced financial expert helps you interpret the ups and downs of the current market and make data-driven decisions. 

Think of the founder as the captain of a boat. You could be the best boat captain in the world, but if you don’t know how to read a nautical map, you won’t be able to sail. Your CFO is the one who will help you navigate the rough waters of the startup world.


Financial Modeling and KPI Tracking

Financial modeling and KPI tracking are crucial to outsource as your startup grows. A robust financial model serves as a roadmap for the next several years of your business and helps you make important budgeting decisions. 

The modeling process takes time and requires specific expertise to be done correctly. While many founders can try to do this themselves, financial modeling and KPI tracking are not areas where you want to try to be scrappy.

When you outsource, expert financial analysts will help you build custom models, track your progress over time, and improve your operations. You’ll actualize your models each month to see if they’re accurate and use that information to fine-tune them. 

Financial models help your organization predict revenue and expenses. On top of giving you and investors a strong financial snapshot of your organization, this information guides key business decisions, such as hiring a new team member or investing in new technology. 

Find Financial Success With Graphite

For even the most promising startups to succeed, a strong network of financial experts is necessary. There’s no point in trying to do it all yourself…it usually ends up costing you more in the long run if you go the DIY route.

Graphite’s experienced CFOs, financial analysts, and accountants are here to help you take your startup to the next level, regardless of what CFO services you’re looking for. Get in touch so we can get you going in the right direction.