6 reasons tech founders need CFO services to excel their growth

Tech businesses create some of the most complicated operations in the business world. From a CFO's perspective, there are two reasons:

• Pre-revenue time lag before product launch. The pre-revenue stage of starting a tech company uses capital and R&D to create a product. The selling begins later on. This time lag affects not only the founders but also the investors, who invest cash upfront but may not see a return until later. As a result, the CFO needs to bring a highly strategic approach to a role that cannot be performed simply by the numbers.
• International business. Leaders of Canadian tech companies face a slew of business challenges that don't commonly arise in other companies of the same size and stage. An example: tech companies often look beyond Canada's borders to not only find clients but also to find talent. With teams and clients in multiple locations, a tech company's CFO needs to properly handle tax and compliance in many jurisdictions.

Many tech companies first try to source high-quality CFO talent by using an independent contractor. When they realize the breadth of experience and knowledge required for their industry, they look to an organization that specializes in CFO services, where the CFO seeks input from the right tax experts, as needed by the business.

By now, you've likely heard of “the great resignation”. Because of the pandemic, workers are quitting at historic rates and are reconsidering where and how they want to work. Labour shortages and high turnover rates are impacting everyone, and the CFO role is not exempt. But turnover in the CFO role can post serious risks for an organization—it can disrupt audit cycles, audit quality, financial reporting, and governance and compliance requirements.

Utilizing a CFO services partner solves this problem before it starts by providing continuity. But if your CFO quits, BDO will place CFOs who are the right fit for your organization, they can hit the ground running and provide a positive impact in short-order.

While many tech companies need the quality of a seasoned CFO, they don't require them on a full-time basis—or can't afford to hire them full-time. As a result, they often keep the CFO position vacant or over-rely on a day-to-day controller who doesn't bring senior level financial leadership experience to support a founder in making higher quality business decisions.

A better solution is to use CFO services. This allows founders to customize the amount of time spent on their business needs—and therefore also the cost to the business. A great CFO services partner will be able to adjust their services as you grow. As your needs change over time, you can rely on your service provider to offer the right level of expertise at a cost that makes sense for your business.

Capital is the lifeblood of a growing tech company, but founders sometimes fail at fundraising because they don't speak the same financial language as their investors. This is where the CFO and their financial fluency can play a key role. Venture capitalist's need to ensure a ROI and will want to review the financial past, present, and projected future of the company, presented in accordance with a specific reporting framework.

If the founder is successful in securing capital, some investors will require regular financial reporting going forward. Enlisting CFO services can ensure they receive accurate reporting in a timely manner.

A tech founder doesn't have time to train a CFO. They need the CFO to know the role without significant onboarding. Most of all, they need the new CFO to take those responsibilities off the founder's hands quickly—items such as financing, strategy, financial reporting and forecasting, and be a trusted partner in navigating board and investor relations. And they need the CFO to perform the role better than the founder could.

Partnering with a CFO service provider eliminates the onboarding time crunch. A top-quality CFO knows the questions to ask and the possible answers. They join the organization as a partner for the founder or founding team, not as a standard employee. From the start, they offer strategic advice to help the founder make decisions.

The complexity of a tech company means that even the most talented CFO needs to consult with other advisors in their network. By engaging a CFO from a full-service organization, a tech founder has access to specialists on topics from domestic sales tax to tax credits for R&D to the latest payroll compliance standards. The connected CFO service partner can quickly and easily access a massive network of seasoned specialists able to help your business grow.