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Do You Need an Outsourced CFO?


With the flexibility offered by an outsourced chief financial officer, you'll have access to expertise when you need it instead of committing to hiring a full-time in-house resource. That's why some businesses are turning to outsourced CFOs. When you do, you'll receive guidance pertaining to finance, business, accounting, and operations.

Let's consider some scenarios in which a contract-based CFO would come in handy!

  • Your business is expanding and growing quickly, so you want to hire someone who is skilled in the art of budgeting wisely, forecasting accurately, and analyzing financial data.
  • You realize that you haven't been prioritizing the most important details regarding your business's financial situation. As a result, you are making a myriad of decisions from an emotional place rather than basing your choices on logic or objective financial data. 
  • You recently received capital to put toward the expansion of your business, and now that you are scaling and expecting to see growth, you'll want to inform your investors about the profit margins, customer acquisition costs, and other performance indicators.
  • You only had one employee in charge of managing the entire financial side of your company, but that person recently put in his or her two-week notice. Now that you know your financial department requires more support, hiring an outsourced CFO may be the right call to handle financial planning and data analysis for your business.
  • You're interested in garnering more financial insight so that you can better comprehend the financial statements that you receive from your bookkeeper on a regular basis.
  • You would like to implement an objective third party who can help you understand the ways your business performs well in addition to where operations are falling short.

Outsourced CFOs provide value

The value of CFOs is undeniable. They make it possible to allocate expenses appropriately, both for critical metrics purposes and for the sake of understanding the profitability of your company. After all, managing a business with inadequate financial information is like trying to understand a customer who doesn't speak English, all without the help of an interpreter. 

The implications of faulty financial inputs surrounding the quantities, costs, margins, inventory, and cash flows of your company can be profound. In fact, these details can ultimately affect the market share and improve your access to capital. 

So, what can you expect a fractional CFO to add to your business?

  • Consistent financial planning assistance and analytical insight
  • Input regarding the budgets and forecasts of your business
  • The ability to better assess your company's long-term and short-term financing options
  • A detailed description of your company's overall financial strong points 
  • Honest input pertaining to company weaknesses alongside constructive criticism
  • An assessment of how financially profitable each new product will be
  • Suggestions about pricing models designed to improve profit margins
  • Financial data evaluations and reporting systems, with recommendations for improvements
  • Tips to apply to your business that will translate into greater capital when applied
  • Help with the design and flow of your financial presentations
  • Financial updates and compilations for submission as quarterly reports
  • Negotiation tactics to implement when speaking with bank representatives regarding the company
  • Business analytics that yield insight into potential opportunities and improvements

Another reason why you may be interested in seeking out a virtual CFO service could be that you don't have enough cash on hand currently to meet your business expenses. Additionally, you may have a specific event coming up that requires a more in-depth financial analysis.

As it stands today, you do not have an adequate resource to assist you in analyzing the information. All in all, if you need help from someone who knows how to interpret financial data yet you do not wish to hire a full-time or in-house CFO, then outsourcing is an amazing opportunity to pursue.

Why an outsourced CFO could be better than an accounting firm 

It is highly likely that the accounting side of your business is already taken care of by an accounting firm that you trust completely. If so, then you already understand how it can be incredibly helpful to have someone manage the financial side of your business for you. 

While accounting firms excel when it comes to managing audits and planning ahead for tax season, they are not as well positioned in terms of financial forecasting, increasing a company's profitability, or analyzing data in search of growth opportunities. 

As such, turning to a CFO can allow you to introduce the insights of a professional who will contribute to the financial and strategic sides of your business. In turn, your company will be more capable of achieving financial goals by way of managing income, planning ahead, understanding current forecasts, and managing the finance-related IT systems with growth as a focal point. 

Essentially, an outsourced CFO can bridge the gap between where you are now and where you would like to be in the future if having a permanent CFO is the end goal. It can be difficult to start the hiring process in search of a full-time CFO while taking care of all CFO-related duties yourself, which is where an outsourced CFO fits perfectly into the picture.

As you interview candidates and look for someone who will fit well with your firm in a permanent regard, keep an eye on the fees of an outsourced CFO — whether that is an hourly, daily, weekly, or monthly rate. Prioritize working with an outsourced CFO who has experience within your niche or the conditions of your company's situation. Finding the right fit is crucial, as the best CFO for your company will be capable of delivering top-tier insights in less time to catch your company up to speed.

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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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