Interim CFO Services: Concept, Need, solutions and Benefits

Prabhat Nigam

10 Sep, 2022

Small businesses and start-ups often face the problem of maintaining a competent CFO due to their low budgets and small scale of their businesses. Interim CFO services come across as a tailor-made solution for these businesses who want to avail of best-in-the-business CFO services without the need to maintain a full-blown team for the same.  

This piece of writing discusses the concept of Interim Services and why your organisation should avail of these services.

What is the concept of Interim CFO Services?

Interim CFO Services are nothing but availing the services of a CFO on an ad hoc basis or temporarily for a one-off event or a specific period till a permanent CFO is not appointed. A person or a full-blown firm can undertake such services. Another reason for availing of interim CFO services is when the management wants professional help to change the financial fundamentals of the business.         

When does a business need interim CFO services?

For the following purposes, a business may need interim CFO services:

1. Non-availability of current CFO: the existing may not be available for the business due to various reasons such as illness, maternity leave etc. An interim CFO can be appointed during the non-availability of the existing CFO.  
2. For a specific event: there may be certain events where the expertise of an experienced CFO is required, such during times of monetary crisis, due diligence or financial review, to give effect to mergers and acquisitions, to prevent bankruptcy, for training purposes of a new CFO.
3. Before the appointment of a full-time CFO: when an organisation is looking for a permanent CFO, it takes a sufficient time and even extends to several months to choose the right candidate. During this time, the crucial decisions related to the finances of the organisation are taken by an interim CFO.  

Reasons why a company requires Interim CFO Services  

For the following problems, an organisation may need to avail of interim CFO services:

1. Management of Cash flow crisis: inability to manage cash flows^[1] in the business has resulted in the decline of such businesses which had good business fundamentals. There are many problems, such as negative publicity, penalties etc., with which a business can cope and ultimately resolve. Still, the inability to maintain cash flows in the business can be fatal for your business. An interim CFO can solve the problem of cash flows in your business.
2. Assistance in making informed financial decisions: with their vast knowledge and experience, an interim CFO can help the management make informed financial decisions and prevent the company from falling into pitfalls.
3. Rectification of financial reports: Every business must have an accurate record in the financial reports not just for reporting purposes but also for maintaining credibility and the proper functioning of the business. An interim CFO assists in the preparation of such reports.
4. Assistance in raising investments: An interim CFO can assist the management in raising investments for your business, having the requisite know-how where an entrepreneur may not be well-versed with fundraising.
5. Protection from susceptible to frauds: without a qualified CFO at the helm of affairs, your business could be susceptible to frauds, errors and security issues. Therefore, an interim CFO must be appointed.
6. Unburdens the responsibilities of the CEO: without the presence of a dedicated CFO, a CEO is burdened with the extra responsibilities of a CFO. Having an interim CFO unburdens the CEO of such responsibilities and allows him to concentrate on more productive tasks.

Benefits of Interim CFO Services    

In addition to being a solution for the abovementioned problems, the following are some of the benefits that an organisation can enjoy by engaging the services of an interim CFO:

Increases the valuation at the time of selling the company: while selling your business, you can add the cost of the services of hiring a CFO to the bottom line for valuation purposes. This increases the overall valuation of your business, and you can significantly benefit from it.    

Plug and play at the time of acquisition of new business: CFO services come in handy when you have acquired a new business and require a plug and play solution at the beginning to set the ball rolling for the new business.      

For fresh insights: the same set of people usually have the same outlooks toward similar situations and provide the same feedback. Hiring interim CFO services can give a business fresh insights into a problem and possibly better solutions.  

Option to try multiple options: interim CFOs generally work on a part-time and remote basis, providing the management with an option to try the CFO’s services and the ample flexibility to terminate their services in case they do not work as per their expectations.      

Conclusion 

The above mentioned aspects of interim CFO services do not mean that they offer only CFO-level services. There are some CFO services providers which, along with providing CFO services, take care of the whole financial aspects of the business and allow the founders and management to direct their attention to productive tasks rather than spend it on administrative tasks. You can take avail the CFO services offered by Enterslice.    

Read our Article: An Overview on CFO Support Services in India