Being privileged enough to work for the more significant portion of the past decade in investment banking as well as a board of directors, venture capitalist, and freelancer, I’ve observed the changes in professional services on my own. There have been many changes in the last decade, including the introduction of operating models that are flexible and successful fee structures. However, one thing is evident: Regularly, customers are happy with the price and the results of the freelancer’s work.

Working with just one person to handle everything associated with the project was highly beneficial. This allowed us to adapt as the project progressed more efficiently and to execute more effectively. Former client and CFO of the most prominent European retailer operating in the food and drink sector

I’ve witnessed this from the customer’s perspective as a board member and from an advisor’s perspective as a consultant on a freelance basis. Increasingly, it’s becoming apparent to my colleagues in the industry. This is not surprising due to the more personalization offered by freelancers and the greater accountability on an individual level for each project.

While freelance finance consultants initially only served younger firms with projects such as creating investor presentations or modeling, today, we have them handle multi-disciplinary projects. Historically, tasks like cash management or post-merger integration have been entrusted to conventional, on-site consultants. However, nowadays, clients recognize the benefits of hiring a multi-disciplined freelancer with the same capabilities and a higher level of responsibility.

This article will discuss what attracts companies to hire finance consultants on a freelance basis, my freelance experience of a typically site-based involvement (cash management), and the main factors leading to a higher ROI for clients with more experience hiring freelancers for finance-related projects.

Why Companies Are Shifting to Freelance Finance Consultants

Management and finance consulting became famous following the Great Depression when large corporations sought the advice of experts with ever-growing amounts. In the years since, this field has grown and widened its services to businesses of all sizes, solving the most critical challenges facing businesses today. Despite the significance of their work and the history of providing services to corporations of all sizes, charges for consultants at the top of the line (senior partnership level) can be up to $6,000 per month (paywall).

However, corporate consulting fees are increasing in the spotlight due to the soaring number of freelance finance consultants who usually leave traditional consulting firms to pursue a more manageable work-life balance. However, they must provide top-quality services at reasonable prices (given their much less expensive cost base).

Consultants working as freelancers are typically cheaper than traditional consulting companies and incredibly remote freelance consultants in finance. Expert freelance consultants are less expensive in the cost of training and almost none of the overhead expenses (e.g., costly offices to host clients). Furthermore, they are more open to working from home and are less likely to include any travel expenses as part of their compensation.

Cash Management Case Study: Easy Integration and the ROI of Hiring a Freelancer

A few years ago, I was contacted by a major European retail company with an enormous cash-to-cash in addition to a net working capital problem, and it was getting more complex in terms of dollars as its operations continued to expand. This led to a lack of growth-oriented expenditure throughout the organization.

The cash conversion rate (CCC) was 41 days, and they had suboptimal measurements in the Days Inventory Outstanding (DIO) and Days Sales Outstanding (DSO), as well as the days of outstanding payables (DPO). Their cash management systems were characterized by various inventories incorrectly calibrated to the market, business customers who weren’t paying on time, and an accounting department that was paying invoices too rapidly.

In less than a year after that, we reduced their cash conversion time to just -2 days. How did we do it?

As a freelancer with the knowledge required to address the cash management problem, I could avoid the usual red tape and bureaucracy associated with being an employee permanently instead of effortlessly connecting with the company’s team to discover the root of every problem.

My team and I led various customized initiatives for cost and revenue to increase cash conversion and decrease working capital costs. Working capital pressure:

Supply contracts were revised to include the payment terms. This better indicated the growing importance (and magnitude) of the client’s relationship with their preferred suppliers. A new, corporate-wide policy on accounts payable was also implemented and crafted to handle different regions. A rise in the procedure of DPO that was 19 days could be attributable to these modifications.

Redesigned inventory management and selection procedures that are carefully designed to optimize the range of goods offered to customers (while keeping their value proposition) and boost the effectiveness of the customer’s distribution network. This led to the reduction of DIO by 13 days.

Introduced measures to help businesses with accounts pay on time. This included stopping the delivery of goods and services in a prudently managed and staged manner, specifically those with ample liquidity or receivables with a history of more than 60 days. DSO dropped by 11 days during the months following.

Cash Conversion Improvement Initiatives

Ifuld grew into an unprofitable CCC company, and working capital became an important source of cash that could be used by its suppliers. When you consider the costs of freelancing and the total cost of working capital, the company earned an ROI more significant than 5x if you think only the cost of financing for working capital they’d previously employed. Suppose the incremental revenue opportunities that are facilitated by cash that was freed up are taken into consideration as a part of the sustainable practices that were implemented to protect against slippage to come and to prevent slippage. In that case, the ROI is increased to more than 10x.

What Freelancers Have to Offer

The common threads in these projects are a variety of essential factors that are consistently a source of an ROI to the customer. More accountability is a result of fortnightly billing, regular updates for clients, and rolling extensions to contracts. One-to-one communication facilitates quicker and more effective execution, and extensive sector expertise provides the client with the tools and knowledge to produce superior outcomes. In addition, since freelancers are typically open to re-engagement and re-engagement, clients can get more continuity if the scope of a project is later extended.