She hadn't seen her company's financial statements in five months, she couldn't tell if bills had been paid, and more than half of her customers had not paid her in three months. Chocolate and toffee were piling up in her Kirkland warehouse, and she couldn't find enough buyers for it all.
"It was absolute chaos in the financial area," said Davis, owner of Elegant Gourmet, a seasonal cookie and chocolate maker in Woodinville. "I knew we had problems but I couldn't fix it myself."
Enter CFO Selections, a Bellevue company that rents part-time chief financial officers to small companies. Davis hired it in May to help save her business after a consultant she hired to manage her finances and generate a new business plan cratered her company.
Within six months, CFO Selections secured a $1 million loan to cover her seasonal profits, hired a full-time CFO to manage daily tasks and negotiated a new lease at a bigger warehouse in Woodinville.
Temporary CFOs were once rare outside of high-tech, where startups and venture capitalists relied on them to vet a company's finances and strategy. But things have changed.
The sluggish economy and corporate downsizing are forcing companies to pare expenses, put off new hires and rely on cheaper outside contractors, such as financial officers.
Many CFOs have taken notice and started more than 20 rent-a-CFO companies across the country. CFOs parachute into companies for projects and long-term assignments.
Companies count on part-time CFOs, who often have years of experience heading finance departments, to help them put together annual reports, manage shareholder meetings, review contracts, set up employee stock plans and run background checks on new hires.
Renting a CFO for $100 to $200 an hour gives companies access to experienced CFOs, who normally command salaries of $100,000 to $150,000 a year. An average assignment lasts 18 to 20 months.
Companies hire part-time financial officers instead of using SCORE, a national nonprofit organization that provides free counseling to small businesses, because they either are too large for SCORE or need someone with corporate CFO experience who can be on call and can work part time. CFO outsourcing firms carry liability insurance and sign contracts detailing each side's responsibilities.
Interim CFOs do more than manage a company's finances. They sometimes help a company through a crisis.
Three years ago, Thomas Gobeille, president and chief executive officer of Network Computing Architects, called CFO Selections to say that a fire had burned his Bellevue office to the ground and he needed help.
Gobeille's offices were destroyed, his one controller was on maternity leave, and none of his other 50 employees could handle the company's finances.
Tom Varga, the founder of CFO Selections, quickly rounded up several CFOs to resurrect Gobeille's office.
Varga's Suburban turned into a roving command center as his "swat team" of employees negotiated a $250,000 insurance payment, got the phones working and found new office space in a warehouse.
A day after the fire, the company moved into its new office.
"Working with Tom allowed us to focus on our customers and employees and assure them we would continue to operate," Gobeille said. "Without Tom and his skills, I don't know if we would have survived."
Many temporary CFOs left lucrative corporate jobs to start companies or become consultants, and spend more time with their children and spouses.
Alvin Morrow resigned from his finance job at a high-tech company 10 years ago when weekly business trips kept him away from his wife and kids.
"It sucks a lot of energy without any feeling of accomplishment," said Morrow, who now works for CFO Selections. He said he enjoys helping small companies shape their business plans without worrying about whether he gets a promotion or a raise.
Temporary CFOs have given Elegant Gourmet's Davis a lot of new ideas. She's thinking of expanding her Web site and selling cookies at supermarket bakeries so that she'll have income year-round.
Elegant Gourmet is projected to make $3.5 million in 2004 sales -- enough to break even. In 2003, she had lost money on sales of $2.9 million and was afraid she would lose her business.
Davis is thrilled that Elegant Gourmet is growing again.
"The biggest thing Tom gave me was hope," Davis said.
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Text by Kristina Shevory, Seattle Times Eastside business reporter. Truncated and used with permission. Full story here.
