Benefits of an Outsourced CFO

July 20th, 2012

Over the past few years, the world’s economies have been like a roller coaster ride. The same may be said for your company—one minute you’re up, the next you’re down. Between cost concerns, the U.S. economy’s instability, and internal staffing issues, preparing yourself to meet those challenges head on is the best way to plan for your company’s future growth, profit, and security.

Implementing an outsourced Chief Financial Officer (CFO) strategy makes sense when considering your internal team’s workload, expertise, and ability to meet the ever-changing needs of your business. Below are some of the benefits of having an outsourced CFO on your team, as well as when to consider using such a service.

What Is an Outsourced CFO?

Outsourcing, in the basic sense, is extracting a company or organization’s internal process to an independent, external company or individual. Specifically, CFO services, such as analyzing and crafting financial statements, balance sheets, income statement and cash flow reports are common services conducted by independent professionals. Additional services may include analyzing and interpreting a company’s financial history or helping with future growth models, profit increases, planning for retirement, and more.

Benefits of an Outsourced CFO

  • Independent and Objective viewpoint: Unlike internal staff, an external consultant has no pre-conceptions or agendas in relation to the business agenda.
  • Creative solutions: Since many consultants have a breadth of experience in a variety of industries, they often bring a new perspective to operations that could be beneficial in the long run.
  • Networks: In many cases, an external CFO has connections in a variety of fields and industries that may benefit you, particularly for business growth.
  • Efficiency: Leveraging an external resource liberates internal staff’s time from annual planning meetings, rolling forecasts, monthly budgeting, etc., giving them the time needed to complete day-to-day activities.

When do you need an Outsourced CFO?

  • Start Up: Utilizing the knowledge of an experienced CFO to help you build the proper financial structure initially will pay off in the long run.
  • Business Growth: As the bookkeeping function starts to morph into something more than payroll, accounts payable, collections, billing, etc. a CFO is necessary to help the company with more advanced activities, such as financial statements and compliance.
  • Full-timer Is Unnecessary: There comes a time in every business when the financial portion of the company becomes more complex and begins to take up more and more time. However, there is also a gap between this period and the need for a full-time CFO. It’s during that gap when outsourcing CFO services makes the most sense.
  • Preparing Business Plans: Unless you have experience in this area, it’s best to work with a professional who knows how to prepare the documentation needed by funding sources.
  • Sounding Board: When a business owner seeks an objective, independent review of his/her business, having a dependable consultant to speak with may be invaluable, especially if it helps you to avoid a costly mistake later.

In the end, to determine if this model is right for your business, weigh the benefits against potential risks. Do your homework. Be diligent about keeping your finger on the pulse of your business and engaging with the chosen CFO through open and frequent communication.

What tips would you share about outsourcing CFO services?

Need Help?

Are you looking for a remote CFO or do you have questions about working with one? Contact us to learn more about this business strategy.

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