Legal Archive



Oktober 2012



(b) Bankers, accountants, lawyers, consultants, fund raisers – how to deal with eCFO service providers

Written by , Posted in Strategie


Depending on your business you should consider building a junior legal presence in your business to avoid having to pay high hourly rates for all legal related questions. This is especially important if you deal with legal questions, contracts etc. on a regular basis.

If you do have to hire a lawyer always go for the best and somebody with specialized knowledge. If your counter party has to negotiate with a highly qualified lawyer it will save you more money in the long term compared to paying a slightly lower hourly rate. I would not engage one lawyer for everything but instead get an expert for each topic and use them as needed. That means a lot meetings and time spent on searching for various lawyers but it also means that you will get expert advice for each questions you might have. I would advice against large firms since work will usually be done by junior associates and you will only meet the partner for sales negotiations and billing purposes. Stick with small, specialized firms that know what they are talking about and do not have a deep hierarchy. Also note that lawyers will never tell you yes or no – they will always give you options so that you cannot blame them later on. If you know this, always make them spell out the costs, benefits and problems associated with each option so that you can make a well-informed decision.


I am not a huge fan. They will generally tell you what you already know and bill you without mercy. Often an outside perspective can be very valuable but try to get that initially from new employees or hire individuals for specific projects, if you feel you should have an outside perspective. I am very hesitant to believe that someone else knows your problem better than you, if you are truly honest with yourself. Consultants also have the tendency to give advice and to not stick around for the execution of their brilliant plan – they are also not accountable for any of it. Would you work with an unaccountable, extremely expensive employee who does not like to execute? Why should the same not apply to consultants?

Fund raisers and financing partners

As a start-up you will get a lot of requests from these generally well connected senior industry players. They are generally great contacts and very valuable. If you are asked to pay without performance e.g. a retainer or similar up-front payments, I would suggest that you do not work with them. Performance-based pay is the only way to go and it shows that they are confident that they will deliver real value (deals, financing, clients).

eCFO Tips: Remember your consultants/advisors will only be as good as the information you share with them. You should regularly update your advisors and MOST IMPORTANTLY the people who do the actual work on a daily basis (junior staff) at least once every quarter. Invite them over to your company and give them a general update on how things are going. This will ensure that they will provide you with sufficient advice. It will also save you money since advice will generally be better and you will not need as long to bring them up to speed if an urgent matter arises. Throw in some nice food and drinks and I am sure your work will always end up on the top of the pile 😉

Even if you have built a good network of advisors make sure that they can grow with you. From time to time you should review if they still have sufficient scope to giveyou good advice. Sometimes you will outgrow advisors very quickly – you should replace them if it becomes obvious that the relationship no longer works. If you have chosen your advisors carefully and maintained a strong and communicative culture, it is most likely that your advisors will grow with you and continue to be valuable assets throughout the growth cycle of your business.

eCFO Tips: Pricing – often it is going to sound like the hourly rates of your advisors are set in stone. This is not true – make sure that you negotiate not only the hourly rates but also yearly accumulated fees e.g. if you go above EUR50k you get an overall discount on all accumulates fees for next year. In addition, ALWAYS ask your advisors if they are willing to take some risks and enter into a performance agreement. Even if they do not end up doing it, you will find out how convinced they are with regards to actually being successful.



Oktober 2012



(a) Bankers, accountants, lawyers, consultants, fund raisers – how to deal with eCFO service providers

Written by , Posted in Strategie

As an eCFO you will have to deal with a range of different service providers. While making good decisions in this area help you to substantially improve your operations and allow you to run the business effectively, making bad decisions can be very costly to you and your new venture.

I would recommend that you first understand your business well and then look for advisors. You should strategically pick advisors who understand your business and can help you develop it further. As a start-up you should have a good combination of old, reputable wisdom and young, start-upish advisors who will help you to rapidly grow the business. I have selected a few categories of advisors and provided my personal opinion of each. It would be interesting to get some feedback regarding your experience and “best practice for working with start-up advisers!”

eCFO Tips: Always do a beauty contest when it comes to selecting advisors/service providers. No matter how small you are, always have at least 3 potential advisors compete for business. You will learn a lot through these interviews and it will be time well spent. Make sure you also invite people from various background e.g. individuals, small, medium and large firms


Find a bank that clearly shows you a road towards obtaining a rating that will allow you to take small steps towards bank financed leverage. Initially, that might mean a conversion of your rent deposit, credit card limit extension and eventually working capital lines. In the beginning you will have a lot of interaction with your banker so make sure you have a personal contact and a strong backup team for daily requests. Secondly, make sure that they understand what you do and offer sufficient support through customized banking software or (in my opinion much more preferable) solid internet banking functionality.

Fees and costs associated with your account should be minimal and waived for at least the first year. Remember you are giving them money and they will not extend any credit to you initially. You should not be paying for giving money to someone.


Find an accountant who knows your industry, is extremely reliable and detail-oriented. There should be absolutely no excitement. In addition, it is great if they are looking for new business and are willing to deal with all the additional work of a start-up. An additional great attribute would be a close connection to the regional tax authorities to handle any problems on a personal level. We checked out accountants ranging from one-man shops to the Big Five and eventually settled with a firm that is rapidly growing and has close ties with several start-ups.

From my personal experience I would strongly advice against one-man/woman shows or very small companies. You always need back-up in terms of systems and most importantly in regards to having multiple people who can work with your accounts.  I have seen a case where an accountant got sick and suddenly nothing got done anymore.  In addition, there is also nobody double-checking the work – as it turns out most of the work done by the sick accountant was either incomplete or wrong but this was only discovered after several months by the new accountancy firm and at additional cost. So overall I would recommend that you stay away from small firms and pay a little extra for some peace of mind.