How Can A Finance Contractor Help Your Business To Scale Up?

Whether you’re a pre-rev start-up or a fast-growth business looking to scale, getting your internal finances in order is crucial for success.

A well-structured and efficient financial system will allow you to prepare for future growth. Finance professionals can help your business to create accurate forecasts, allocate resources effectively, and attract investment.

However, hiring a permanent finance professional can be difficult for smaller businesses. A full-time hire is a major commitment that can also lead to unnecessary long-term costs.

This is where a finance contractor can be invaluable.

Contractors offer financial expertise and flexibility, which are both hugely important for businesses hoping to scale up. A contractor can enable your company to achieve its financial goals without the need for a permanent hire, and this can be a game-changer for start-ups navigating a critical growth stage.

Let’s examine how finance contractors can support businesses in accelerating growth and ensuring long-term success.

What is a contractor, and what can they offer my start-up?

A contractor is a self-employed professional that offers their services through a limited company or an umbrella company, depending on the IR35 status of a role.

IR35 regulations (which were updated in April 2021) are designed to ensure that workers are paying the correct tax rates - for example, while ‘inside IR35’ workers are classed as formal employees, ‘outside IR35’ workers are seen as self-employed.

Clients are now responsible for determining the IR35 status of workers. There’s plenty of legislation associated with IR35 regulations, but in simple terms, a day-rate contractor will usually work for a company through an intermediary.

So what value can a contractor offer a growing business?

Contractors tend to bring a lot of experience to a start-up and can offer a unique perspective on financial structures that permanent employees can’t. That’s because contractors will often work in 3-12 month placements across multiple companies, meaning they’ve seen the inner workings of many finance departments and can adapt quickly to different systems.

They may also be able to spot issues or opportunities within your finance department that they’ve encountered previously, and can usually hit the ground running in a new business.

A contractor will often specialise in a specific area of finance, whether that’s leading audit processes, launching fundraising efforts, managing regulatory reporting, or overseeing month-end close.

Whatever area of finance you need support in, there’ll be a contractor that can deliver the relevant expertise and skill set.

What are the main differences between contractors and full-time employees?

There are several key differences between contractors and full-time hires that are very important to recognise as an employer.

For one thing, contractors are often available on short notice, meaning they can take on new roles much faster than permanent hires or fixed-term contractors. Contractors usually operate with very short notice periods, which can benefit start-ups that don’t want to take on the burden of full-time hires with lengthy notice periods.

Contractors can also be very cost-effective for businesses in the right circumstances.

Many start-ups assume that hiring contractors will be extremely expensive, but this isn’t always the case. Contractors don’t incur expenses such as pension payments and paid sick days/holidays, meaning they can be much cheaper than full-time workers - although a contractor may charge a premium day rate, this needs to be weighed up against the long-term costs of a permanent counterpart.

A contractor will also need to manage their own tax and national insurance contributions, which is another expense (and responsibility) that start-ups can avoid.

Experienced contract workers can command a high price for their services, but if you’re a smaller business in urgent need of financial support, you should always consider the skills, flexibility, and convenience that a contractor provides.

The value a contractor can offer at each level of a finance team

There are a huge number of finance contractors available for start-ups to hire, each with their own unique specialisms and experience. That means you can find the right talent to support your business, at whatever level you require.

Let’s take a look at the value contractors can offer at each level of a finance department.

Senior finance positions (e.g. CFO/FD/Head Of Finance)

Veteran contractors can bring a lot to the table in senior positions, utilising all of their knowledge and experience to enhance your finance department.

If you’re looking to fundraise, contractors can help you to establish the building blocks necessary to attract investors and grow confidence in your business. A capable contractor will understand which materials (e.g. revenue forecasts, pitch decks, growth charts) are needed to draw investment, and can lead the fundraising process from start to finish.

In addition, contractors will be able to manage audits, handle regulatory reporting, and implement controls that improve the efficiency of your finance department.

An experienced contractor can also help to up-skill the rest of your finance team and set up processes that can be maintained after their placement is complete.

If you’re lacking senior leadership experience in your finance department, a skilled contractor can plug the gap and drive your start-up in the right direction to achieve sustained growth.

Mid-senior finance positions (e.g. Controller/Finance Manager)

Contractors can also be hugely valuable in mid-senior finance roles, helping your business to maintain effective processes and avoid making critical errors.

Finance contractors can assist with audit processes, monitor cash flow and transactions, handle regular reporting tasks, and complete any necessary reconciliations. These tasks are all fundamental for financial management, and a proficient contractor will ensure that everything runs smoothly.

A contractor will also be able to coordinate teams for month-end close, making sure that everything is fully reconciled, reviewed, and prepared for a successful procedure.

Commercial finance positions (e.g. FP&A/Business Partner/Accountant)

An experienced contractor will be able to put your commercial finances in a good place for development and expansion.

Contractors can be incredibly useful for start-ups looking to build a road map for future growth. For example, contractors can assist with accurate revenue forecasting and data-driven budgeting, helping you to understand the financial health (and potential) of your company.

A contractor can also work closely alongside senior business management to establish clear KPIs and financial objectives. If you’re keen to propel your start-up in the right direction, a good finance contractor will help you to understand where you need to go - and how you can get there.

Junior finance positions (e.g. Finance Assistant/APAR)

Contractors aren’t just valuable in senior positions, however - they can also contribute a huge amount of value in more junior roles.

Junior finance workers often handle a lot of smaller tasks that are vital for the financial health of a start-up, but you may find yourself stretched in terms of resources and staffing. This is where a contractor can help to steady the ship and plug the gaps.

Contractors can effectively take on responsibilities such as chasing old debt, allocating cash, managing purchase/sales ledgers and handling invoices. These are small tasks that are often fairly manual and time-consuming, but they’re also massively important for the day-to-day success of your business.

If the work is piling up at the junior end of your finance department, hiring a contractor can be a brilliant way to maintain seamless processes and avoid overwhelming your staff.

A skilled finance contractor can play a pivotal role in the growth of your start-up.

Contractors can provide your business with the financial expertise necessary for scaling while maintaining a level of flexibility and adaptability that can be massively appealing.

Whether you need help with high-level business strategy or day-to-day finance tasks, you’ll be able to find a contractor that fits the bill. If you’re interested in learning more about the benefits or costs of hiring a finance contractor, don’t hesitate to get in touch ([email protected]) for expert guidance and recruitment support.