The Rise of Freelance Finance Consultants: Disrupting Traditional Consulting Firms/

As the professional services industry continues to evolve, freelance finance consultants are becoming an increasingly popular option for companies seeking specialized expertise at lower costs. Having worked as an investment banker, venture capitalist, board director, and freelancer, the author has observed firsthand the growing trend of clients favoring freelance consultants over traditional consulting firms.

Historically, freelance finance consultants have been hired mainly for projects such as investor presentation creation and modeling, but they are now being sought after for more multi-disciplinary projects like cash management and post-merger integration. In addition to being less expensive than traditional consulting firms, freelance consultants offer a personal touch and higher accountability at an individual level.

The Rise of Freelance Finance Consultants

Corporate consulting rates are under pressure due to the steep increase in the number of freelance financial consultants in the market. Experienced freelance consultants offer top-tier experience at realistic rates, given their considerably lower cost base. Remote freelance financial consultants, in particular, are more cost-effective as they have lower training costs and virtually no overhead expenses.

Multiple secular trends have contributed to the growing popularity of freelance financial consultants, including the talent gap created by permanent employees leaving full-time jobs and increased demand for specialized skill sets. Companies are finding it easier to hire specialized freelancers as high-grade freelancing platforms manage everything from sourcing quality projects to managing payments, client communication, and timesheets.

Why Companies Prefer Freelance Finance Consultants

Companies prefer to hire freelance finance consultants for various reasons. One of the most significant is that experienced freelance consultants have deep, specialized skill sets that are highly sought after, resulting in better quality delivered results. Additionally, hiring freelance finance consultants is cost-effective as they typically charge lower rates and have fewer overhead expenses.

Another advantage is that freelance consultants can be hired for specific projects, whereas traditional consulting firms are usually hired for more extended periods. Freelance finance consultants are also more open to working virtually, making it easier for companies to hire consultants from anywhere in the world.

Personal Experience as a Remote Freelance Finance Consultant

As a freelance financial consultant, the author shares their personal experience working on a traditionally on-site engagement, cash management, remotely. Despite the initial skepticism from the client, the project was completed successfully and on time. The author notes that effective communication is key when working remotely, and having the right technology and tools in place can make all the difference.

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

A leading European retail operator had a major cash conversion and net working capital issue which resulted in low levels of growth-oriented spending throughout the company. As a freelancer with the required experience, I was able to easily integrate with the internal team and resolve the issue in less than a year, resulting in a negative cash conversion cycle (CCC) business with a 5x ROI.

Reducing the Cash Conversion Cycle

The company had a CCC of 41 days, with suboptimal metrics across days inventory outstanding (DIO), days sales outstanding (DSO), and days payables outstanding (DPO). Their cash management systems were characterized by an assortment of inventory that was not properly calibrated to market demand, business customers who were not paying on time, and an accounts department that was paying invoices too quickly.

To resolve the issue, I collaborated with the team and spearheaded several bespoke revenue and cost initiatives to boost cash conversion and reduce the working capital crunch:

1. Reworked supply contracts to extend payment terms and introduced a newly designed accounts payable policy to accommodate multiple jurisdictions. This resulted in an upward adjustment to DPO of 19 days.
2. Revamped inventory management and stock selection procedures to optimize the number of products offered to customers while increasing the efficiency of the client’s distribution network. This drove a 13-day reduction in DIO.
3. Introduced measures to encourage business customers to pay on time, including halting the delivery of products and services in a risk-managed and staged manner. This led to an 11-day reduction in DSO.

Cash Conversion Improvement

Initiatives With the company’s evolution into a negative CCC business, working capital became a source of cash, with growth effectively cross-financed between its suppliers. Considering the cost of the freelancing services, the company realized an ROI of more than 5x. When incremental revenue activities made possible by the freed-up cash are considered, along with the sustainable policies implemented during the project to safeguard against slippage going forward, the ROI increases to more than 10x.

Other Use Cases for Freelance Finance Consultants

Mature companies are increasingly engaging with freelance finance consultants for organizational and cost transformation, operations review and optimization, procurement and supply chain overhauls, business strategy and plan creation, and integration of acquired M&A targets.

Conclusion

In conclusion, the trend of companies hiring freelance finance consultants is on the rise, as they offer a more cost-effective solution compared to traditional consulting firms. Freelancers are also increasingly sought after for their specialized skill sets, and the growing freelance talent pool makes it easier for companies to find the right person for the job. Moreover, the rise of freelancing platforms has made it more convenient for freelancers to find work, and for companies to hire them for projects. A cash management case study showed how a freelancer was able to improve a company’s cash conversion cycle and reduce working capital crunch, resulting in a positive ROI for the company. Overall, the benefits of hiring a freelance finance consultant include cost savings, specialized expertise, and easy integration with the internal team