Most Common Outsourced CFO Services

outsourced CFO

What is an outsourced CFO?

An outsourced CFO or Chief Financial Officer is a Financial expert who offers a greater level of leadership and expertise to your company but is not a permanent employee. That is where they are different from in-house CFOs and are brought into the company as a consultant to fill the knowledge gap.

In-house CFOs ask for higher salaries and employee benefits similar to the company’s senior management team. For growing businesses, it becomes difficult to afford their salaries and find time to hire the right candidate. Outsourced CFO services uk is a solution to the problem.

What are the most common outsourced CFO services?

Outsourced CFO companies provide services as per the need of a business. Here are a few of the most common outsourced CFO services:

1.  Providing financial strategy

Currently, your company may have an employee in the accounting department. It is one of the reasons why people hesitate to hire a CFO.

Although, a bookkeeper, accountant, and controller are responsible for maintaining your current financial transactions records. But keeping books accurate and organised is not sufficient to take your business to the next level.

A CFO focuses on detailed short and long term financial strategies of your organisation and helps you figure out a strategy that is precisely similar to what your company needs to reach your financial goals.

2.  Forecasting

CFOs are the experts in financial forecasting, which helps you to plan a road map for reaching your goals. They’re highly knowledgeable on a variety of industries they work in and therefore can understand the current scenario of your company and your future opportunities.

Their step-by-step guide comprises short and long-term forecasting, which requires in-depth analysis, strategy, and practicality.

3.  Budgeting and cash flow management

Once you understand the current scenario of your business and your financial health, your next step is to find ways to extend it. On top of everything, you need to focus on where the money comes in and goes out.

A CFO can help you understand where your cash is leaking out of business and offer suggestions to resolve the issue. Therefore, they allow you to create a budget, manage your cash flow, and ensure your business brings in money. Without a proper budget, you cannot expect your business to succeed.

4.  Cost-cutting

Small businesses and fast-growing startups face difficulty in reducing business expenses. A CFO will track the unnecessary business expenses and help you save money.

Outsourcing these services to an organisation ensures you receive unbiased advice from CFO that help you make critical financial decisions.

5.  Analysing and interpreting financial reports

A CFO is not responsible for preparing your balance sheets and income statements when you have a controller to generate these reports. However, the Chief Financial Officer interprets your records, analyses your current business landscape, and forecasts your company’s future.

These experts know the current market trends and have years of experience drafting financial strategies according to the market changes. They can identify if your business strategy will work in the future or stand shoulder to shoulder with your competitors.

6.  Fundraising

Fundraising is one of the complex tasks for organisations, but if you have an outsourced CFO services London, this process doesn’t seem tedious or challenging. Why? Because they have connections with financiers and can introduce you to them.

Additionally, they can help you figure out the type of finance you need and prepare necessary financial documents to present in front of lenders or investors. If all the information or company data are in the correct order and authentic, you will receive funds from them.

7.  Acquisitions and mergers

Small businesses may not require acquisition and mergers immediately but in the future.

A CFO can help you during the sale or merger of your business and prepare all the relevant documents you may need during the acquisition and merger procedure.

8. Statutory compliances

CFOs have extensive experience in the financial industry and can handle statutory compliances that help you safeguard a startup and a small business from regulatory actions.

Why should businesses hire an outsourced CFO?

Smaller companies usually have fewer financial statements or strategic management burdens. However, further growth in the company necessitates business owners to focus on the operations and administrative tasks while leaving the financial responsibilities to experienced professionals or CFOs.

Here are a few reasons why you need to outsource CFO:

1.  Cost-effective

The cost of hiring and training a new CFO is exceptionally high. Eventually, you need to pay them higher salaries, employee benefits, keep them up-to-date, and other onboarding costs. Outsourcing CFO services is cost-effective, as the fee you pay covers the labour, technology, and system costs.

2.  Access to expertise

Outsourced CFOs have years of experience and keep updating themselves with the current trends. Hiring them means you get exposure to their expertise that brings fruitful outcomes to your business performance.

3.  No permanent commitment

Small companies on new startups don’t require a full-time CFO as they don’t face more significant financial complexities. However, they may need a financial expert at one point in time to resolve a financial issue. An outsourcing CFO company can help them provide part-time or interim CFO services to manage your immediate needs.

When do businesses need to hire a CFO?

1.  During rapid growth

Rapid growth is a vital indicator of hiring a CFO. While your business grows, there is an expansion of automated systems, additional capital and financing to handle the potentially increased complexity in the company; you need a financial expert, CFO.

A business may reach a level where it wants to:

  • Raise funds for investors
  • Attract more customers, employees or vendors
  • Request better business planning
  • Undergo a merger or acquisition, etc.

2.  Developing new products

A CFO understands the current Trend and changes in market demands for your company’s products. They help you find new opportunities to bring new products or services to the market, business capitalisation and plan for future growth.

3.  Highly specialised projects

A business may require unique expertise to resolve challenging situations that involve projects like:

  • Merger and acquisition activity
  • Issue of equity
  • Develop clean financial statements before the audit
  • Matters related to revenue recognition, etc.

4.  Transition issues

Hiring a full-time CFO is time-consuming, and growing business owners find it difficult to leave their admin tasks and search for CFOs. Therefore, to fill the immediate gap in the company, you can outsource CFO services.

Wrapping up

Outsourcing CFOs can increase your business values and take you to the global marketplace. You get the same knowledge and expertise from outsourced CFO at a lower price than in-house CFOs.

Businesses may find it unnecessary to hire CFO immediately in their company, but they will help you improve the functionality of the accounting department and ensure financial growth.

Therefore, take your time to think if you need to outsource the service or hire a full-time CFO in your company.