As a business grows, responsibilities within a company increase, adding to the owner’s workload. Regardless of size and type, every business finds several opportunities to grow and meets different complexities that affect the usual business processes. Owners need an expert on board to bridge the gap between business processes, and outsourcing CFO services is the best solution.
It may not be possible for companies to hire a full-time CFO if you are on a tight budget, a new startup, or not interested in spending on them. Therefore, outsource your CFO services and avoid compromising your business bottom line.
We’ll cover the following points in this blog post:
- Who is an outsourced CFO?
- Why do you need to outsource CFO services?
- When should you outsource CFO support services?
- Is there any risk of outsourcing your CFO?
- Wrapping up
Who is an outsourced CFO?
An outsourced CFO is a finance professional who serves the role of treasurer, controller, strategist, and analyst of a company. They are responsible for reporting financial data to manage the company’s growth and evolute them from time to time. These analyses are essential in raising funds, understanding the company’s financial health, fraud detection, cash-flow management, oversea projections, budgeting, maximising profits, creating revenue models, and designing necessary business strategies.
They work with different companies and have diverse expertise. Therefore, they can understand you better and find the best solutions that suit your business needs. Moreover, outsourcing a CFO saves you time and money without letting you compromise on the level of expertise and work quality.
Why do you need to outsource CFO services?
Here are a few reasons why you need to outsource CFO services,
The average salary of a full-time UK CFO is between £191,856 and £397,695, which may be far more from your budget. You can accumulate the same expertise and knowledge by outsourcing the CFO and paying a fraction of the full-time CFO costs. A good outsourcing company has experienced and well-trained candidates that suit your financial needs.
2. Strategic Planning
Business owners often set their goals but are unsure about the steps they need to meet them. A CFO helps them understand financial data, point out the weaknesses, and suggest ways to improve and maximise their strength.
3. Objective insights
An outsourcing company is a third-party firm with no personal interest in your business. Therefore, they offer valuable unbiased advice for the smooth functioning of your business. A full-time CFO may have some personal agenda that limits their objective views.
4. Better business decisions
An outsourcing company knows your business and can help you make important decisions by considering relevant financial information. As business starts expanding, transactions increase, and finance becomes complicated. An expert expedites the decision making pocess.
5. Risk management
A company can suffer from several kinds of fraudulent activities within the organisation or outside. When you outsource your CFO to a third party, they will help you dig into the finance, detect risks or any other signs of fraud, and offer preventive measures.
6. Accurate financial reports
Accuracy in financial reports is essential for business operations and maintaining stable financial health. Financial analysis, tax filing, and creating financial statements require accurate data. Outsourcing this task to another company prevents internal biases affecting your organisation’s financial records.
An outsourced CFO has prior experience in your industry and has connections with several investors to help you network with them. Moreover, no investors or banks will lend you capital with incomplete financial information, and a CFO is responsible for presenting your company’s compelling and substantive financial image. An accurate financial data of your company can bring in capital for business growth and expansion.
8. Saves time
Hiring a full-time CFO is time-consuming as you need to find candidates and interview them to get the right one. We know the job hiring process is not an easy task. However, outsourcing a CFO reduces your effort in finding the best candidate. The outsourcing CFO firms work with the best candidates who will efficiently manage your financial activities.
9. Tackle financial challenges
A struggling company can hire an outsourced CFO to bring in expert advice and get stable financial health. A CFO helps you deal with poor cash flow and profitability, high business overhead, high client loss, inability to raise funds, and debt management.
10. Manage cash flow
Managing cash flow is the most prevalent difficulty in business sectors. A CFO helps you prepare a cash flow statement and identify where your money went. They reduce your expenses, streamline business operations, find opportunities to maximise profits, manage your assets and liabilities, and track any changes in your net income.
Interim CFO services
You may need CFO services while searching for a full-time CFO for your organisation. An outsourced company can provide interim CFO services so that you don’t face disruption in your business operations during the hiring process.
When should you outsource CFO support services?
If you are giving your best but still cannot reach your financial goals, you need a CFO.
When a business starts expanding, the financial scenario in the organisation becomes complex. It is difficult for an owner to manage admin tasks, deploy good assets, manage cash flow, take crucial business decisions, raise capital, financial report accuracy, and perform other financial activities. You can outsource financial tasks to a CFO.
You have large projects, and your in-house CFO has a strict schedule managing them which degrades the quality of work. You outsource a few tasks to a third-party company to complete the projects efficiently.
You are looking for a full-time CFO, but your business requires an immediate service when an outsourced CFO can help you.
You are an owner of a small business, and hiring a CFO is expensive, but you need expert advice to help your business multiply and perform well.
Other reasons can be:
- The company is not growing according to your expectations.
- You are looking for funds, and investors want a clear financial image with performance indicators and risk possibilities.
- There are no accurate financial data records.
- You require a proper financial analysis to develop a revenue model.
Is there any risk of outsourcing your CFO?
Yes, there are certain risks of outsourcing your CFO services; these are:
1. No direct control
You don’t understand how the CFO manages your finance, as you cannot ask about finance or accounting related problems anytime you find one. To avoid such issues, look into the terms and conditions before commitment and make necessary changes if needed.
2. Choosing a wrong company
If you don’t have much experience hiring the right company, you may hand your financial data into the wrong hands. Therefore, you need to carefully select an outsourcing company and ask for client references to gather feedback about the company.
3. Additional costs
Though outsourcing CFO services is more cost-effective than hiring in-house CFOs, there can be hidden charges that you are bound to pay after availing of their services. Ask the company about any hidden charges before hiring them.
Outsourcing your CFO is not mandatory for businesses and is entirely dependent on the owners whether they need one or not. You can have peace of mind during tax filing, submitting financial information to investors, or at board meetings.
If you work with an efficient financial and accounting team, you may not look for a Chief Financial Officer. However, their contributions to an organisation can bring outstanding performance and business operations changes.