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What's your opinion of outsourced CFO companies?

What's your opinion on the large national outsourced CFO companies like Patina, Tatum/Randstad, Hardesty, B2BCFO, etc.? Good and bad from reputation to rates paid and everything in between. which one would you join (assuming you had the proper due diligence). Thank you.

Answers

Jeff Durbin
Title: Chief Financial Officer
Company: F. Gavina and Sons, Inc.
(Chief Financial Officer, F. Gavina and Sons, Inc.) |

I was with Resources Global Professionals from December 2003 until December 2007. They are not just CFOs. I used them as a resource when I was CFO of LaPerla Lingerie in 2008. Top notch talent.

Robert Half Management Resources is also in this space.

One of my CFO networking buddies is with Tatum. He's a quality talent but I don't know the bill rates.

William Drinnon
Title: Controller
Company: AirDye Solutions LLC
(Controller, AirDye Solutions LLC) |

To piggyback off of Jeff's response, I would encourage you to explore Robert Half's Management Resource Division as often times you will find the caliber and niche you may need in your outsourced CFO. They are often able to deliver much more value for the comparable billable rate. For example, if you were to turn to your CPA firm to source this need, you might pay $250 / hr for a junior level consultant, whereas Robert Half may be able to offer you a much more experienced consultant to fit your need for $150 per hour which allows for lower cost with more effectiveness and efficiency in the role.

Alan Ehrlich
Title: Turnaround Specialist
Company: Self-employed
LinkedIn Profile
(Turnaround Specialist, Self-employed) |

I worked with a Tatum CFO for 3 years in a bankruptcy turnaround situation, the guy was top notch, had the right experience, skill set and personality for what needed to be done.

Some of the other pluses with Tatum, and I'm sure the others, the CFO had access to the entire Tatum network of CFOs and other C-level pros. If there was a question or situation where he was unsure, just like Proformative, he could put it out on Tatum's platform and get a dozen responses by the end of the day.

Sometimes you just need a highly capable captain to steer the ship while a search for a permanent hire is underway. Not every Controller or Accounting Manager is CFO material. If it is near the end of the year, you may want/need a CFO to help do the year end close and get you through audit season and tax preparation.

Another big plus is if your company needs a radical overhaul. Tatum's CFOs are all highly experienced change agents. The rates may seem high, but on a straight salary/hourly basis, you always pay more for a temp employee than a permanent hire. Where you might pay an in-house financial analyst $30 - 40/hr, temp agencies would likely charge you $60 - $75 for the same person.

Jaime Campbell
Title: Chief Financial Officer
Company: Tier One Services, LLC
(Chief Financial Officer, Tier One Services, LLC) |

I'm curious as to the reason for your question. You listed yourself as a founder. Are you planning to form an outsourced CFO organization?

I have been told that B2BCFO requires their CFOs to being in and develop their own books of business. Business development as a solo-practiioner-conencted-to-resources is an entirely separate skillset from being a CFO, and it's a real turnoff for many, but I've never met someone from any B2BCFO franchise who wasn't at the top of his game.

My firm, which provides fractional CFO services and outsourced accounting departments for $1-$20M for-profit and not-for-profit organizations, has no such requirement.

The major factors that attract professionals to our company are the rock-solid mix of professional mastery and outright laughter, as well as scheduling flexibility and the ability to work from anywhere (securely) at any time.

I agree with my Proformative colleague Alan in that access to a network of specialists can be attractive. Even CFOs at the top of their game often have niches, and others are generalists who sometimes need a specialist.

By way of example, our firm's specialities include financial modeling, Six Sigma process improvement, datamining, and not-for-profit grant management, plus software/app specialties including Xero, QuickBooks, Fathom, Crunchboards, QQube, and Booksguard.

Different firms have brought in different types of specialties, and different firms also have different cultures in place re: a collaborate vs. competitive approach.

Stephen Walters
Title: Contract CFO / COO -- Fractional Managem..
Company: Fraxional Management (http://www.fraxion..
(Contract CFO / COO -- Fractional Management, Fraxional Management (http://www.fraxional.com/)) |

Hello Jaime -- I have heard the same regarding B2BCFO and it comes directly from a couple on their team. I agree with your other comments and also wonder where the question is coming from. Seems Anonymous is fishing for something. My favorite comment of yours however is the bit about "outright laughter." Perfect!
Cheers,
Steve

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Stephen,

I read the question differently. There are "large" national CFO groups, regional groups and small local groups.

M/M Anonymous was asking opinions on/about the large groups. Sounds like due diligence to me...

Bruce Lynn
Title: Managing Partner
Company: The FECG LLC
(Managing Partner, The FECG LLC) |

First a disclosure - Our firm, The FECG LLC is in the recruiting business and we do find CFOs for companies on a short and long term basis.

More importantly - before making an outsourcing or "rent or buy" decision a company should understand their needs, short term and long term. On a short term basis it may make operational and economic sense to outsource CFO responsibilities.

Yet, long term a decision to outsource may not make sense. Economically, it is more expensive as the outsourcing firm adds its profit margin to the underlying personnel costs. Operationally, the individual involved may not feel the same sense of "career" if he / she knows that they will only be there for the short term.

On the other hand purchasing skills not normally available or only needed for short periods of time makes sense. Think the difference tween an architect and a contractor; both have important skills needed at different points in time and for different lengths of time

Another example: Many CFO decisions create future returns / risks; if the CFO who made that decision will no longer be present, then future risk and reward decisions can become skewed or result in "too much" risk.

Stephen Ambler
Title: Director of Service & Delivery
Company: RoseRyan
(Director of Service & Delivery, RoseRyan) |

Before joining any outsourced CFO firm, understand what your role within the firm will be, and make sure you are comfortable with it. Some firms require you to do Business Development for them, some not. If that's not your scene, and its not for many CFO's, don't join that type of firm. Outside of that, do your normal due diligence, understand the clientele and reputation of firm, how you would fit in and what you need to do to be successful, and then make your decision based on whether that works for you.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Anon
You've got a lot of good feedback here from folk about your due diligence on these firms. Here's my half-cent of comment:

What due diligence have you done on yourself?
I'm not being flippant (but you are welcome to express "outright laughter"):

Are you ready to work in a "project environment?" Are you really ready?
I run a Finance Leaders network in Chicago, lots of good folk. Some thrive in making the switch to project/engagement type of work. Others are phobic about it.

What can be risky for you?
1. Can you adapt to working on a 2 month project where, when it ends, your earnings stop until your next project starts up? Can you cope with that uncertainty? More importantly, how will your family cope with this uncertainty? A spouse's concern re your ability to succeed can be a tough situation to manage.
2. Can you work with people whom you do NOT control? They are your clients, even the lowly AP clerk. You are an outsider, you are not on the Org Chart. You may have short term control, not always-it depends on the engagement.
3. Can you maintain decent relationships with people so they want to keep you or call on you again?

I'm not trying to scare you off, merely draw some differences between being on a permanent payroll with a letter of appointment and being a consultant/outsider who can be let go anytime.

Hope this helps.
Len

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