Attracting and retaining talent remains a huge challenge for businesses as the nation begins to emerge from the upheaval of the pandemic. According to the 21st edition of the EY Global Capital Confidence Barometer, six out of 10 middle-market companies say they face difficulty when it comes to finding and keeping skilled employees.

“The much-mooted threat to jobs from technology is not playing out as many had predicted,” states the EY report. “Indeed, as more jobs are automated in routine tasks, companies are finding it more difficult to attract and retain talent with the right technical and digital skills to benefit from these efficiencies.”

Pervasive Throughout All Industries

Talent acquisition and retention is the top concern among business leaders in 2022, according to a survey conducted by Protiviti and NC State University. “Most if not all of the organizations that we’re speaking with are struggling with things like attracting, retention, engagement, upskilling,” Protiviti Managing Director Fran Maxwell said during a recent webcast. “It’s pervasive throughout all industries, throughout all organizations now.”

Some employers are trying to attract and retain talent by boosting compensation. In November, hourly private sector wages rose 4.8%, according to the Department of Labor. And companies have budgeted 3.9% wage increases for this year, which is the biggest bump since 2008, according to the Conference Board. Unfortunately, these increases aren’t keeping pace with soaring inflation, which reached 7.9% in February, a four-decade high.

However, Maxwell notes that raising pay isn’t the only way to attract and retain talent. He recommends that businesses also make efforts to improve the employee experience — for example, by offering flexible or hybrid work arrangements, access to learning and development programs and creating a work atmosphere of well-being.

“Organizations that will win the talent war will focus on differentiating an employee experience, making it different for each employee,” said Maxwell.

Competing with Big Businesses for Talent

Large corporations have historically held the edge when it comes to brand marketing and employee recruiting. In the current environment, however, some middle-market firms are finding that they can compete with their bigger brethren by positioning themselves as an attractive alternative to large organizations.

One way to do this is to focus on the “power of purpose.” In the 2019 Mission and Culture Survey conducted by Glassdoor, eight out of 10 respondents said they consider a company’s mission and purpose before applying for a job there.

Purpose answers the questions: Why does your company do what you do? And for whom do you seek to create value? It’s often easier for middle-market companies to clearly articulate their purpose to employees and live it out authentically than it is for large corporations. Doing so

enhances the employer value proposition for employees, including highly skilled candidates looking for the right employer.

Another way middle-market companies are successfully competing for talent against large corporations is by offering employees accelerated career advancement opportunities. These companies often have more flexibility when it comes to things like giving employees earlier and more frequent client interaction, greater job responsibility and autonomy, more supervisory responsibility, and participation in strategic decision making.

More Middle-Market Advantages

With their agility, middle-market companies can also usually create flatter management structures. These tend to give employees more opportunities to interact with upper managers and move more freely between management layers throughout the company.

Embracing technology and creating a culture of innovation is yet another strategy middle-market companies can adopt to attract and retain talent. Large organizations are often slow to adopt the latest and greatest technologies, but nimble middle-market companies can usually implement technology and innovation more easily.

In the EY Global Capital Confidence Barometer survey, half of the respondents said they are leveraging technology and automation to improve workforce productivity. After watching so many innovation-driven startups quickly transform themselves into some of the world’s most valuable companies, many talented young employees now view organizations like this as attractive places to advance their careers.

Finance as a Service, or FaaS, can be a solution to finance department staffing challenges faced by many middle-market companies today. With FaaS, finance and accounting software and technology is managed by a third-party service provider. This includes recruiting, hiring, training, retaining and developing all finance and accounting team members. FaaS is a fully managed solution which gives executives more time to focus on strategic planning, analysis and forward-looking initiatives.

Questions to Ask

As you consider how your company can scale and compete successfully with large corporations for the best and brightest employees, ask yourself whether you’re really thinking about the mindset of the employees you want to attract. Also, do you know what factors give you a hiring edge over large organizations and are you capitalizing on them?

And perhaps most importantly, are you creating an exciting, dynamic corporate culture that embraces technology and innovation? These are the kinds of organizations most of the high-demand young employees today are looking for.

Could You Benefit from FaaS?

Could you be leveraging a third-party service provider to handle hiring and retention of your finance and accounting staff for you? Doing so could reduce the amount of time and resources you spend on tasks that take your focus away from growing the business.

To discuss the potential benefits of FaaS for your business in more detail, please request your complimentary consultation here.

Owners and CEOs often don’t think about due diligence and audit preparedness during the early stages of the business startup. But maybe they should.

Research has indicated that between 90% and 95% of companies that receive seed funding don’t achieve a successful exit. This raises the question: What’s the difference between seed companies that achieve a successful exit — whether this is going public or some other type of exit — and those that don’t?

Of course, one of the biggest factors is achieving the right product-market fit. But another factor that isn’t talked about as much is an early focus and emphasis on due diligence and audit preparedness, especially as the company moves through the various stages of capital fundraising.

Growth Stages and Funding Milestones

Following are some of the key steps that should be taken from a due diligence and audit preparedness standpoint for each major growth stage and funding milestone. Note that there is more complexity at each milestone, requiring greater sophistication on the part of the financial management team.

Pre-seed to Seed:

• Build your financial system and organize financial files

• Implement financial controls

• Set up collections processes to maximize efficiency

Fundraising Series A:

• Financial modeling and long-range planning

• Fundraising project plan and investor presentation

• Series A fundraising overview, current trends and term sheets

Fundraising Series B:

• Financial metrics, benchmarking and data analytics

• Annual financial planning/forecasting and cash flow management

• Board financial reporting packages

• GAAP accounting and revenue recognition

Fundraising Series C:

• Financial guidance for strategic decisions

• Merger and acquisition assistance (if needed)

• Board/investor presentations

• Potential international expansion

“The key is to maintain funding readiness throughout each of these stages,” says Jason Burke with Consero. “This should always be top of mind for seed companies. For example, make sure compliance is up to date, financial records are maintained and documentation is prepared so when opportunity arises, you’re ready to take advantage of it,” he notes. 

Get Started Early

Jason stresses that due diligence and audit preparedness should begin on day one of the startup. “It’s never too early to get started,” he says. “You’re going to need a lot of supporting information to back the numbers in your financial statements.”

He lists the following due diligence and audit preparedness steps:

• Gather formation documents such as articles of incorporation, bylaws and shareholder agreements.

• Identify and build relationships with professional service providers including a CPA, banker, attorney, insurance broker and industry-specific consultants.

ª Gather such information as internal control narratives and a summary of related party transactions.

• Prepare revenue and gross profit projections by product offering.

• Obtain audited financial statements for the last two years, or three years for a public company buyer.

• Consult with an audit firm about complex accounting requirements.

“It’s important to maintain your own financial documents and not rely on your CPA firm for this,” says Jason. “If you switch firms, important data that substantiates a tax position could be lost.”

Jason also stresses the importance of keeping financial statements in good order and maintaining adequate internal controls at all times. “Failure to do so can lead to numerous problems when it’s time to exit the business, not to mention higher taxes,” he says.

Your Finance and Accounting Team

Building a strong finance and accounting team is critical to proper due diligence and audit preparedness. This can be done internally or on an outsourced basis, which tends to be more common among seed startups.

Consero can help you build the finance and accounting team you need to assure adequate due diligence and audit preparedness. Contact us today and schedule a complimentary consultation. 

As a CFO, your corporate board of directors is one of your most important constituencies. Therefore, it’s critical to manage board relations carefully and strategically and to make sure that you and your CEO are aligned on your approach and your respective roles.

This starts with understanding the unique interests of each of the individual members, knowing their data needs, and determining who should be communicating with which board member and on what cadence, says Consero’s CFO and COO, Mike Dansby. “This will enable board members to most effectively support and govern the company,” says Dansby. “And it will lessen the chance that there are unmet board member expectations on the part of your company.”

The Makeup of Your Board

Managing board relations effectively starts with achieving the right makeup for your board. In smaller organizations, the board might consist of just investors and the founders. But as businesses grow, the makeup of their board should evolve as well.  For instance, “independent” board members may be added to bring specific industry, product or functional expertise to the board.  Additionally, with growth the board will evolve and form committees.  Quite often, someone with deep financial expertise is added to chair the audit committee.

Over time, conflicts can sometimes arise based on how the board makeup is structured. Consider a venture capital-backed business with both early- and late-stage investors. The early-stage investors might not be as patient as time passes and might prefer a quick sale to generate liquidity whereas late-stage investors may be more willing to take a long-term view of the business.

“I have seen this scenario play out many times,” says Dansby. “It can be avoided by carefully managing the makeup of your board to achieve a balanced representation of shareholders, management and independent directors. Also, the company should pay close attention to the voting rights and preferences given to each series of shareholder to understand if decision making is balanced or loaded in favor of a particular shareholder class.”

Communicating with Your Board

Another key to effective board relations is knowing how to communicate with board members in the language they want to hear. For example, a business that’s backed by venture capitalists most often operates at a loss. In this scenario, the VC board members will be primarily interested in the progress of bookings growth and how to use cash flow to help drive growth, not in things like marketing and expense management. 

“There’s no need to go over a detailed P&L statement with them or talk about expense reduction,” says Dansby. “Instead, spend your time with them focusing on sales, revenue and cash flow.”

On the other hand, a business that’s owned by private equity investors is probably more established. The PE board members will likely be most interested in ways to boost efficiency and cash flow in order to service debt, as well as adherence to loan covenants. If debt is minimal, they will probably be interested in expense management and what types of investments are needed to grow the business. 

“Private equity owners tend to demand more data and perhaps be more hands-on with the business,” says Dansby. “Sometimes this requires a little more patience on the part of CFOs.”

Organizing and Facilitating the Meeting

According to Dansby, it’s important to choose a consistent format and agenda for your board meetings so members know what to expect. “Have a consistent flow to your meetings and a consistent set of metrics so they have a similar experience and get the same view every time,” he says.

For example, you might get routine business matters out of the way up front, like approving stock options. Next, you could cover the executive summary and key strategic initiatives. Then you can spend the rest of the time focusing on the things that are important to your board members, as discussed above.

Dansby recommends preparing the board deck and distributing it to board members several days in advance so they can review it and be better prepared. Get consensus early on as to key metrics and analytics for the business and stick to those.  Relegate the GAAP financials to the appendix as most boards prefer to look at some version of an adjusted EBITDA analysis.

The hardest aspect of keeping board members up to speed might involve translating complex financial data into actionable insights. “Board members might be unfamiliar with financial concepts that CFOs analyze regularly and confused by accounting jargon,” says Dansby. “Therefore, it’s important to keep reports simple and make sure they’re timely, consistent and concise.”

The CFO’s Role in the Meeting

At times CFOs might feel like a stick in the mud when they have to follow the CEO at a board meeting. The CEO is the optimist who talks about big-picture strategy and headline numbers, and then the CFO has to explain what the numbers mean, how the company can achieve them, and perhaps a dose of reality to the discussion. 

“Sometimes CFOs even need to reign CEOs in a little bit,” says Dansby. “But a board meeting isn’t the right time or place for open disagreements or to challenge the CEO. Instead, be adaptable and explain to the board what assumptions need to be met for the company to achieve the CEO’s vision and goals.”

If you have more questions about managing your corporate board more effectively, request a complimentary consultation.

The phrase “war for talent” was coined by McKinsey & Co. in the late 1990s to describe an environment where competition among employers for skilled workers was becoming more intense as the workforce began aging and employees exhibited less loyalty to the companies they worked for. 

This so-called war has only intensified since then. The demographic and societal trends that started more than two decades ago have continued with baby boomers starting to retire in droves and highly skilled employees hopping from job to job as new opportunities arise. COVID-19 has also played a large role in the upheaval of the workforce as both businesses and employees adjust to new ways of working due to the pandemic.

In fact, one out of every four employees say they plan to change jobs once the pandemic subsides, according to the Pulse of the American Worker Survey conducted last spring by Prudential. 

Challenges in Accounting and Finance

The war for talent can be even more intense in the finance and accounting industry. Highly skilled finance and accounting employees can often pick and choose from among the best jobs, which makes it hard for corporations and CFOs to build and maintain a stable finance and accounting staff.

The good news is that building such a staff isn’t always necessary anymore. Instead, businesses can utilize Finance as a Service, or FaaS, to meet their finance and accounting requirements. With FaaS, the finance and accounting back-office duties are outsourced to a third-party service provider. This relieves the CEO or CFO of the difficult, expensive and time-consuming job of hiring and retaining a full-time finance and accounting staff.

FaaS: A Comprehensive Approach to the Finance Function

Finance as a Service is sometimes confused with the services provided by outsourced accounting firms. However, FaaS offers a much more comprehensive approach to financial and accounting management than simple outsourced accounting, along with greater transparency and rigor.

First, FaaS provides a full suite of staff, services and software that’s capable of managing a corporation’s entire finance and accounting operations. This includes processing transactions and customer payments, paying vendors and producing monthly financials. In other words, FaaS is a one-stop financial and accounting services shop. 

FaaS also offers a single, self-serve software interface instead of multiple programs that corporations have to manage themselves. This interface should provide clarity and transparency with regard to financial and accounting information. With FaaS, knowledge isn’t concentrated with a single individual who is the only one who can access relevant financial and accounting data. Instead, this data can be easily accessed by anyone on the team when needed. With a single, self-service interface, more than one person can get that system to meet their needs on any given day.

In addition, FaaS features flexible and transparent pricing which makes it easy to forecast what costs will be as the company’s needs change in the future. Practically speaking, this means that a FaaS provider charges based on the service offered, not by the hour or based on the level of staff assigned to the client. This way, corporations know exactly what they’re paying for and how their costs will rise or fall as they scale up or down

Finally, FaaS offers access to skilled finance and accounting professionals who have the appropriate level of expertise for the corporation’s specific needs. While much of financial operations is fairly straightforward, sometimes corporations need a higher level of strategic thinking and expertise, like when performing acquisitions and onboarding new entities, for example. With FaaS, corporations only pay for this higher level of service when it’s needed. 

FaaS Service Brings Everything Together

In the end, Finance as a Service comes down to one word: service. This is what brings together the comprehensive offering, single self-serve interface, pricing transparency and customized level of expertise. A true FaaS provider will offer this kind of comprehensive approach to managing the finance and accounting function.

As a CEO, now would be a good time to think about how adopting Finance as a Service could help you win the war for talent. To discuss the potential benefits of FaaS for your business in more detail, please connect with us here. 

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The Situation

PE-backed SaaS company generating $48M in revenue with 300 employees quickly outgrew finance and accounting systems after three acquisitions. The goal was to have one streamlined process to quickly onboard and manage all entities.

• Finance function was stretched after initial acquisitions
• Internal processes could not scale as the company grew
• No holistic visibility into all entities
• CFO was buried with time-consuming daily financial operations

The Consero Solution

Consero Finance as a Service (FaaS) provides:

• Efficient finance & accounting software and workflows that include one GL for all entities with multidimensional views
• Experienced and on-demand finance team to address fluctuating needs
• Accurate, timely audit-ready financial reporting
• Consistent and reliable back-office services including, transaction processing, closing and reporting, to scale as needed

“The relationship with Consero has allowed me to move quickly with our private equity investors and evaluate potential acquisitions.
If we were to swiftly execute on an opportunity, I’m confident that they would fold it in quickly and seamlessly.” – Mike Dionne (CFO)

The Client’s Results

• On-Demand Finance Team: Consero’s skilled finance professionals tackle the back-office transactional work and can also scale as the company experiences a spike.
• New Systems: Updated with best-in-breed systems and proven processes mapped to the business within 30-90 days improves the quality, efficiency, and cost structure of financial operations.
• Accurate and Real-Time Business Insight: SIMPL’s standardized and accurate financial reporting provides a clear financial picture of all entities and enables sharp decision making.
• Repeatable Results: An acquisition-ready finance function that can easily onboard and manage new acquisitions onto one General Ledger.
• Time for Strategy: CFO went from spending 5% of his time on strategy to 95% so he could focus on acquisitions and value-add initiatives.

The Situation

Read Full Case Study

Sound financials are essential to exits, and with a $400 million transaction at stake, mobile banking company Hyperwallet needed to streamline its financials to attract and hold investor attention to close the deal. Before Consero, Hyperwallet suffered from:

• Frequent turnover in finance function
• Strategy sidelined for time-consuming daily financial operations
• Manual financial reports in Excel that demand more analytics

The Consero Solution

Consero’s Finance as a Service (FaaS) enables:

• Experienced and on-demand finance team
• Accurate, timely audit-ready financial reporting
• Efficient finance & accounting software and workflows
• On-demand back-office services including, transaction processing, closing and reporting, to scale as needed

The Client’s Results

Greater Business Continuity:

Optimized accounting policies, procedures and process flows boost investor confidence in routine hard closes, freeing executive’s time to focus on the impending transaction. This solution can be kept in place after an exit transaction – and at significant cost savings over an in-house solution.

Timely Financials: Accurate and more-informed due diligence reporting means investor confidence and lightning-fast LOI responses.

Successful Exit: Consero seamlessly supported the sale process of Hyperwallet to PayPal.

Savings: 31% over Hyperwallet’s in-house solution

“With Consero, I was able to focus on the transaction and not worry about getting the financials in order. Their professional finance team and processes inspired confidence for everyone involved in the due diligence process.”

– Christian Fadel, CFO