diff --git a/lib/Serverless.js b/lib/Serverless.js
index fd25eab20..4b61b125a 100644
--- a/lib/Serverless.js
+++ b/lib/Serverless.js
@@ -84,6 +84,10 @@ class Serverless {
     // (https://github.com/serverless/serverless/issues/2041)
     this.variables.populateService(this.pluginManager.cliOptions);
 
+    // populate function names after variables are loaded in case functions were externalized
+    // (https://github.com/serverless/serverless/issues/2997)
+    this.service.setFunctionNames(this.processedInput.options);
+
     // validate the service configuration, now that variables are loaded
     this.service.validate();
 
diff --git a/lib/classes/Service.js b/lib/classes/Service.js
index fe5550d1e..1a1679e80 100644
--- a/lib/classes/Service.js
+++ b/lib/classes/Service.js
@@ -108,23 +108,30 @@ class Service {
           that.package.include = serverlessFile.package.include;
         }
 
-        // setup function.name property
-        const stageNameForFunction = options.stage || this.provider.stage;
-        _.forEach(that.functions, (functionObj, functionName) => {
-          if (!functionObj.events) {
-            that.functions[functionName].events = [];
-          }
-
-          if (!functionObj.name) {
-            that.functions[functionName].name =
-              `${that.service}-${stageNameForFunction}-${functionName}`;
-          }
-        });
-
         return this;
       });
   }
 
+  setFunctionNames(rawOptions) {
+    const that = this;
+    const options = rawOptions || {};
+    options.stage = options.stage || options.s;
+    options.region = options.region || options.r;
+
+    // setup function.name property
+    const stageNameForFunction = options.stage || this.provider.stage;
+    _.forEach(that.functions, (functionObj, functionName) => {
+      if (!functionObj.events) {
+        that.functions[functionName].events = [];
+      }
+
+      if (!functionObj.name) {
+        that.functions[functionName].name =
+          `${that.service}-${stageNameForFunction}-${functionName}`;
+      }
+    });
+  }
+
   validate() {
     _.forEach(this.functions, (functionObj, functionName) => {
       if (!_.isArray(functionObj.events)) {
diff --git a/lib/classes/Service.test.js b/lib/classes/Service.test.js
index 67d044e7e..74e56f741 100644
--- a/lib/classes/Service.test.js
+++ b/lib/classes/Service.test.js
@@ -199,47 +199,6 @@ describe('Service', () => {
       });
     });
 
-    it('should make sure function name contains the default stage', () => {
-      const SUtils = new Utils();
-      const serverlessYml = {
-        service: 'new-service',
-        provider: {
-          name: 'aws',
-          stage: 'dev',
-          region: 'us-east-1',
-          variableSyntax: '\\${{([\\s\\S]+?)}}',
-        },
-        plugins: ['testPlugin'],
-        functions: {
-          functionA: {},
-        },
-        resources: {
-          aws: {
-            resourcesProp: 'value',
-          },
-          azure: {},
-          google: {},
-        },
-        package: {
-          exclude: ['exclude-me'],
-          include: ['include-me'],
-          artifact: 'some/path/foo.zip',
-        },
-      };
-
-      SUtils.writeFileSync(path.join(tmpDirPath, 'serverless.yml'),
-        YAML.dump(serverlessYml));
-
-      const serverless = new Serverless();
-      serverless.init();
-      serverless.config.update({ servicePath: tmpDirPath });
-      serviceInstance = new Service(serverless);
-
-      return serviceInstance.load().then(() => {
-        expect(serviceInstance.functions.functionA.name).to.be.equal('new-service-dev-functionA');
-      });
-    });
-
     it('should support Serverless file with a non-aws provider', () => {
       const SUtils = new Utils();
       const serverlessYaml = {
@@ -259,6 +218,7 @@ describe('Service', () => {
       serviceInstance = new Service(serverless);
 
       return serviceInstance.load().then(() => {
+        serviceInstance.setFunctionNames();
         const expectedFunc = {
           functionA: {
             name: 'customFunctionName',
@@ -290,6 +250,7 @@ describe('Service', () => {
       serviceInstance = new Service(serverless);
 
       return serviceInstance.load().then(() => {
+        serviceInstance.setFunctionNames();
         const expectedFunc = {
           functionA: {
             name: 'customFunctionName',
@@ -319,6 +280,7 @@ describe('Service', () => {
       serviceInstance = new Service(serverless);
 
       return serviceInstance.load({ stage: 'dev' }).then(() => {
+        serviceInstance.setFunctionNames();
         const expectedFunc = {
           functionA: {
             name: 'my-service-dev-functionA',
@@ -503,6 +465,57 @@ describe('Service', () => {
     });
   });
 
+  describe('#setFunctionNames()', () => {
+    let serviceInstance;
+    let tmpDirPath;
+
+    beforeEach(() => {
+      tmpDirPath = testUtils.getTmpDirPath();
+    });
+
+    it('should make sure function name contains the default stage', () => {
+      const SUtils = new Utils();
+      const serverlessYml = {
+        service: 'new-service',
+        provider: {
+          name: 'aws',
+          stage: 'dev',
+          region: 'us-east-1',
+          variableSyntax: '\\${{([\\s\\S]+?)}}',
+        },
+        plugins: ['testPlugin'],
+        functions: {
+          functionA: {},
+        },
+        resources: {
+          aws: {
+            resourcesProp: 'value',
+          },
+          azure: {},
+          google: {},
+        },
+        package: {
+          exclude: ['exclude-me'],
+          include: ['include-me'],
+          artifact: 'some/path/foo.zip',
+        },
+      };
+
+      SUtils.writeFileSync(path.join(tmpDirPath, 'serverless.yml'),
+        YAML.dump(serverlessYml));
+
+      const serverless = new Serverless();
+      serverless.init();
+      serverless.config.update({ servicePath: tmpDirPath });
+      serviceInstance = new Service(serverless);
+
+      return serviceInstance.load().then(() => {
+        serviceInstance.setFunctionNames();
+        expect(serviceInstance.functions.functionA.name).to.be.equal('new-service-dev-functionA');
+      });
+    });
+  });
+
   describe('#update()', () => {
     it('should update service instance data', () => {
       const serverless = new Serverless();