The CFO'S Perspective

Invoice factoring, also known as accounts receivable financing, improves cash flow by selling your company's outstanding invoices to a factoring company for a fee. As with any financial strategy, it's crucial to understand these risks and weigh them against the potential benefits. Invoice factoring can be a powerful tool for improving cash flow, but it needs to be used wisely as part of a well-considered overall financial strategy.

In this article, we review and answer the following questions:
(Each links to your question/answer of interest.)

1. Factors to consider when deciding whether to use invoice factoring?
2. What are the risks when using invoice factoring?
3. What is the average cost of invoice factoring?
4. What types of businesses use invoice factoring?
5. When should a company use factoring?
6. Do factoring companies check credit?
7. How do you get your company approved for factoring?
8. Why is factoring so expensive?
9. How do I get out of a factoring company agreement?
10. Do you need a CFO to get invoice factoring?

Hiring a fractional (part-time) CFO is becoming increasingly popular because this type of employment engagement offers significant cost benefits. Outsourcing their CFO role allows an organization to bring someone in for a fraction of the cost because they do not incur expenses related to benefits, bonuses, payroll taxes, etc. As Michael Newsome explains when talking about utilizing fractional service providers,

“Searching for ways to optimize human capital, while fighting the inefficiencies of talent markets, is an ever-present challenge for businesses in the middle market. The human capital corollary to the engineer’s triangle (fast, cheap, reliable – pick two) seems to be availability, relevant experience, and compensation expectation... An increasingly popular way for businesses to address this issue is using fractional service providers, which have proliferated significantly in their breadth and depth of service offerings in the middle market... A fractional solution can offer a way for a business to access additional capability at a lower total cost than bringing on a full-time hire.”

And while the cost savings are clear, many companies remain resistant to hiring a fractional CFO. Their biggest fear is that doing so requires that they sacrifice on quality in a role that requires the utmost proficiency. Leadership with these types of reservations will typically ask questions like, “Is a part-time CFO as good as a full-time CFO?” or “Can you really trust a fractional CFO to perform at a high level?”

Organizations that question whether a fractional CFO can truly get the job done well for less should consider how a fractional CFO can:

A Chief Financial Officer(CFO) is a senior executive role that manages the financial actions of a company. The CFO's duties include tracking cash flow and financial planning as well as analyzing the company's financial strengths and weaknesses and proposing corrective actions.

When a company asks CFO Selections to engage in a search for a CFO, we walk through each company’s specific needs to create a customized job description. The job description for a CFO can vary somewhat depending on the size and industry of the organization, but here is a typical example:

There is a misconception that business services companies do not need to prioritize cash flow management in the same way that retail businesses do because they do not have the same kind of inventory demands. However, cash flow planning is just as important for service providers as it is for retailers because cash is the lifeblood of both!

People are asking, “How much office space do service providers need these days?” But perhaps it is more appropriate to ask, do service providers really need office space at all anymore?

Since the shift to remote work, it seems everything from making introductions and generating quotes to signing contracts and conducting client meetings can be done virtually now. With that in mind, many services companies are left wondering if they even need their office space these days. As a result, they are leaning on their CFOs (Chief Financial Officers) to do the cost analysis required to determine if they should keep their existing office space, downgrade to a smaller space, or forgo having a centralized office entirely. Where service providers do retain their office space, a CFO’s job is not done. In these cases, service companies are relying on their CFOs to re-negotiate office leases and make leasehold improvements to help improve their cost efficiency in today’s tight economy.

To keep the office or not keep the office – that is the question. What should your business do?

Creating authentic connections with customers can help companies to attract new customers, retain existing customers, and develop brand advocates to increase customer lifetime value across the organization. It can also benefit employees, strengthening the company from within. Having a meaningful connection with the people they are serving allows employees to find meaning in the work that they do, simultaneously increasing employee retention and making it easier to attract top talent for new roles. The net effect of these internal and external shifts is greater, more sustainable revenue.

As companies continue to battle unexpectedly high inflation and economic uncertainty, understanding this year’s prevailing trends across financial forecasting, fintech stacks, procurement, and customer attribution can help them to increase revenue and market share. Our ongoing research and conversations with other c-suite professionals in the industry have revealed several key shifts in these areas that can affect not only how a CFO does their job but also how their organizations develop and execute on strategic plans.

With the US inflation rate still over 6% it continues to dominate business news headlines. And after a recent press release in which the Fed announced they were raising their longstanding inflation rate target from 2% to a range of 4.5-4.75% speculation continues to ensue over what may be coming next. US monetary policy is likely poised to shape these inflationary trends, but the timing and success of such efforts are yet to be determined.

What we do know is that the effects of inflation are being widely felt – both by consumers and by businesses. And while high inflation has affected every industry to some degree, data shows that it is taking a disproportionately heavy toll on the tech sector. Public and private tech companies alike are bearing the burden of soaring inflation that does not show any signs of slowing in the near future.

So, what can the technology industry do to strategically combat high inflation? The following 7 actions are essential for tech companies to weather high inflation: