Most founders don’t have the time or skills to effectively manage their startup's finances. As your startup grows, it becomes increasingly apparent that you need a financial leader to step in.
There are many options to invest in, such as a bookkeeper, accountant, controller, and chief financial officer (CFO). While all have pros and cons, a CFO is an excellent option to support growing startups.
But finding a CFO to help you handle your finances brings up another challenge. The average CFO in the United States earns $431,864 per year. This figure doesn't include the cost of the finance team your CFO will need for support.
As a startup, you might not have the resources to retain high-income earners and their support staff.
However, you can benefit from all of a CFO's expertise without putting one on salary. Keep reading to learn how a SaaS fractional CFO will support strategic finance functions, help drive value where possible by pointing out opportunities to optimize your finances and assist with other areas of your workflow.
What Is A Fractional CFO For SaaS Startups?
Fractional CFOs, or outsourced CFOs, are strategic financial consultants that work on an hourly, part-time, or otherwise contracted basis.
They have experience in high-level financial roles within both private and public companies of all sizes. Their services include strategic planning, scenario modeling, unit economics, financial projections, and more.
Startups are drawn to fractional CFOs because they offer many benefits you expect from an in-house CFO, but on an as-needed basis and without the hefty price tag.
How SaaS Startups Can Benefit From Fractional CFO Services
SaaS startups benefit from fractional CFO services in several ways. For example, they provide on-demand expertise in fundraising and strategic planning. They also give you access to financial advice and forecasting models.
Below are some of the key perks of fractional CFO services.
1. On-Demand Expertise In Startup Fundraising
As a SaaS startup, it’s not unusual to need additional capital.
Your fractional CFO service provider can support you with everything from financial reporting and forecasting to updating your business plan and helping position your pitch deck. You’ll have a higher probability of success by providing investors and regulators with the documents they request.
2. Strategic Planning To Hit Financial Goals And Drive Business Growth
As an entrepreneur, you’re working to grow your company. Still, you may not understand the subtle nuances of the growth stage you’re experiencing or have the foresight to handle budgeting for the future.
An experienced CFO will help you determine the key performance indicators to track and how they relate to budgeting for the future.
3.Identify And Track Relevant KPIs
It’s important to measure the success and growth of your startup. There are a few key performance indicators (KPIs) that you should keep an eye on, such as monthly recurring revenue (MRR), Customer lifetime value (CLTV), churn rate, net promoter score (NPS), and sales qualified leads (SQL).
A SaaS fractional CFO will help you understand your financial data and connect it to your KPIs.
4. Better Cash Flow Forecasting And Management
Knowing what your financial health will look like in the future is huge for startups.
A fractional CFO can analyze your historical data, identify trends, and create forecasting models. This will improve your cash flow management and lead you to long-term financial stability.
When Is It Time To Hire A SaaS Fractional CFO?
If your startup’s just getting started, chances are you don’t need a fractional CFO yet.
So, when’s the best time to start looking for one? Consider the following three scenarios:
- Fundraising – You need to raise capital to grow your business.
- Financial Challenges – As your startup grows, you’re dealing with more and more financial challenges.
- Growth – You want to make the most of the revenue and profitability you’re generating
Keep Your Startup Moving Forward With SaaS Fractional CFO Services
Leveraging a fractional CFO can unlock a world of possibilities for your startup.
It’s a low-risk option, both financially and strategically, and can help build a strong foundation for your company.
Sustainable growth doesn’t need to be out of reach. Consider hiring a fractional CFO to maximize your financial potential.
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