The Rise of Outsourced CFO Services
Hiring a full-time CFO is quickly becoming a thing of the past for many companies across the nation. There are numerous benefits associated with utilizing a fractional or interim CFO, and many business owners are unaware that this is an option for their business.
In addition to the obvious cost savings, there are numerous factors that all point to the same conclusion—hiring an outsourced CFO is an enticing, advantageous option for businesses.
The question at hand is often, “When is the right time to hire an outsourced or fractional CFO?” The answer is simple—when a company needs the financial and strategic expertise, but does not have the resources or cash to hire a full-time CFO. Further down the line, the company may decide that a full-time CFO is necessary, but presently does not need one. Read on to see 5 reasons not to hire a full-time CFO:
1. Cost Effectiveness: Hiring a Full-Time CFO is Expensive
Between hiring costs, salary, and benefit costs, hiring a full time CFO can be costly. If the business does not have the resources to source, recruit, and hire, it is more efficient and cost-effective to outsource. Contract workers are considered self-employed, so they make contributions to federal and state governments individually, not the company, saving thousands upon thousands of dollars in benefits.
If the company makes the mistake of hiring a full-time CFO when it does not have the workload or capital to do so, this can end up causing a vast financial stressor on the company. With an outsourced CFO, you benefit from all their knowledge and expertise, but pay only for the portion of their time that you need.
2. Financial Visibility: Got Cash?
A successful business has full-scale financial visibility. Having full financial visibility opens the door for many opportunities in the present and future. You will know where you can make your company more profitable, where your weak spots are, and where you can save money.
An outsourced CFO will provide in-depth operational and strategic advice to give the upmost financial insight into the company. Achieving valuable financial insight will in return help the company to achieve their long-term goals, such as raising capital, or preparing for a sale, merger, or acquisition.
3. Project Type: Try Before You Buy
There are several scenarios where outsourcing a CFO may be the best option for you and your business. Outsourcing can replace a full-time, salaried position to help relieve the company until they find a long-term role if necessary. Typically, finding the right fit for such a high-level role such as a CFO can take months. Not to mention, during this recruiting time, a business can easily get behind on their books.
An interim CFO consultant can help the company to maintain visibility through timely financials while the role is being filled. Outsourced CFOs are also particularly popular among small businesses, as they are more affordable and can also help them make their next business move and take them to that next level of growth successfully.
If the job is project-oriented, such as preparing for an audit, selling the business, or approaching investors for a round of funding, outsourcing is the most effective option. Many companies, especially start-ups, will need executive assistance for these sorts of projects, but will not have enough work to keep a full-time CFO busy year-round.
4. Efficiency and Productivity: Money Unaccounted For=Money Lost
Whether it is setting up day-to-day accounting operations, establishing streamlined processes, or implementing new systems, an outsourced CFO can help to implement new, efficient processes and data results that your existing staff can rely on.
Additionally, fractional CFOs can aid in training and developing the skillset of current accounting staff. If necessary, they can also help in the recruiting process to bring on new hires in the finance department. A CFO consultant will work to uncover current troubles and difficulties within the accounting department as a whole and work to optimize it completely.
5. Industry Expertise: Guaranteed to be Experienced
An outsourced CFO will have years of specialized knowledge in a wide range of industries, as they have served as a consultant for multiple organizations. Typically, full-time CFOs have not had the same opportunity to gain a similar widespread industry experience.
An outsourced accounting firm will take the time to get to know your company and conduct a specific needs analysis. This allows the firm to appropriately and accurately match the level of resource to the task at hand. This allows you to make the best use of their specific knowledge, without having to pay for a full-time CFO.
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