96.5 F
San Fernando
Thursday, Mar 28, 2024

Businesses Lean on Outsourced CFOs During Down Times

For years the owners of Brent’s Deli were unable to benchmark the performance of their two locations in the Valley against each other, in a way that would help the restaurateurs set a strategy for growth. This all changed about a year ago when the company decided to outsource a Chief Financial Officer. “For a company our size we didn’t really need a full-time CFO, but [an outsourced CFO] has been invaluable to us,” said Marc Hernandez, co-owner of Brent’s Deli. “He’s helped keep our numbers in line, focusing on key performance indicators, looking at trends, looking at gross margins, he’s really become a strong ally, and we’re using the data he presents us to help set our growth plan.” Especially in the current financial climate, small and medium-sized businesses in need of accounting help can benefit from renting CFOs rather than hiring them, said Randy Wheeler, who founded Pathfinder Metrics, a certified management accounting firm based in Moorpark. As a part-time CFO for hire Wheeler helps clients by analyzing financial and non-financial data, developing strategies to improve performance, and implementing processes to achieve greater cash flow. “Companies with 10 to 100 employees typically don’t have the resources to hire a six figure CFO and often have a big gap in their senior level management accounting processes,” he said. “We’re working to bridge that gap.” At Brent’s Deli, Wheeler extracts data from the two restaurant accounts into a consolidated report complete with multiple colorful graphs and presents it to Hernandez once a month as part of ongoing financial guidance. Wheeler also provides CFO services to about a dozen companies and has consulted to hundreds of business owners over the past six years all with the goal of helping clients graduate from his services and onto a full-time CFO. Among his accomplishments, Wheeler says he’s helped the engineering and IT firm Saalex Solutions in Oxnard grow from a $200,000 business in 2003 to a $7 million enterprise by helping the company access lines of credit and therefore increase its financial capacity to handle large contracts with the Department of Defense. Avoiding pitfalls Contract CFOs sell their time by the hour or for a monthly fee making it more affordable for companies to receive the right expertise that can help avoid the many pitfalls that lead to failure in the initial growing stages. Many times, business owners who take on the role of the CFO themselves don’t see costly mistakes early enough, said Ravi Patel, President and CFO of Patel CFO Services based in Stevenson Ranch. “The horse has already left the barn by the time they see they have to close the door,” said Patel, who is currently the acting CFO for two companies in the San Fernando and Santa Clarita Valleys, and also works with companies on a project basis. Patel, who brings 30 years of financial expertise including experience as a full time CFO and CEO, said someone like him can help businesses at the macro level, providing strategic analysis, planning for growth and reviewing key alternatives that can determine where the company is headed. His services go beyond the day to day operations handled by a company accountant or controller, and are more strategic. For instance, Patel recently helped a healthcare company expand into a new potential market of consumers. He is also assisting a clinical company in the hiring process for a science officer. Short-term problems In the down economy, the focus of contract CFO services has shifted more towards helping businesses survive the recession as opposed to helping them thrive, said Wheeler, who estimates currently 3/4 of small businesses are undercapitalized and could use the help of outside experts to find access to financing. “We’re seeing that outsourcing CFO’s is even more important in this economy than it has been in years past,” said Peter Iannone a director with CBIZ Accounting Tax & Advisory Services, managing the Los Angles corporate consulting practice. His group provides outsourced services for companies needing CFO and Controllership services, as well as business and strategic plan development. “We’re finding a lot of new activity where companies have had to downsize to a point where they can’t keep a full-time CFO but still need the benefit of the services and the expertise,” he said. Lisa Richards, Regional Vice President at Ajilon, a specialized staffing and recruiting firm in Los Angeles, said her firm has seen a slight growth in demand for contract CFO’s and extremely senior level positions, particularly in finance. She attributed that trend partly to the fact that, “given the current economic climate, many small to mid-sized firms are exploring a multitude of creative hiring models for their “C-level” executives”, feeling apprehensive about committing to full-time hires. But whether it be on an interim basis while a company engages in the hiring a full time CFO; or as an ongoing basis for start-ups or small and mid-sized companies that can’t afford and/or don’t require a full time CFO, Patel said outsourcing financial experts can yield great benefits for business owners.

Featured Articles

Related Articles