From time to time business owners need more financial leadership and guidance than members of their in-house accounting staff can provide. While the team may be excellent at maintaining day-to-day accounting tasks, oftentimes it is necessary to find a temporary resource to identify and execute on a new business strategy or support complex financial challenges.
Whether a company needs help with a buy-out, succession plan, selecting a new accounting software, reassessing its budgeting process, benchmarking, or defining operational improvement plans, an outsourced CFO, who brings additional skills and experience working in multiple industries on a variety of situations can provide the necessary insight. Here we have outlined likely the top four benefits of hiring an outsourced CFO.
Most small business owners rely on a member of their executive team if not themselves to manage the tasks traditionally reserved for the CFO. In many cases, this approach works for a while, but as needs become more complex, the time demands and level of sophistication increases. Since they are responsible for many facets of the business certain aspects can be sacrificed, including the financial needs often at times of growth when the accounting function is of utmost importance. An outsourced CFO can quickly assume responsibility for the most complex tasks, ensuring compliance, and “giving back” needed time to others to focus on their core responsibilities.
Hiring an in-house CFO is an expensive proposition that should be carefully considered. First, it’s important to determine whether a full-time professional is needed in the long term. If the company concludes that it will have an ongoing demand for a high level financial expert, the costs and time involved to recruit the right individual can be prohibitive. Hiring an outsourced CFO even on a short-term basis provides access to the expertise needed when it’s needed and at an economical cost.
One of the ways an outsourced CFO adds value to a company is the ability to review and improve processes. Drawing on their vast experience, they can quickly identify areas for improvement and implement changes that will not only address existing issues but also create new efficiencies going forward. This can include changing the billing and collection process to incentivizing customers to pay in a more timely fashion or streamlining reporting. The result of these changes is often additional cash flow to help fund operations, investments, or other essential projects for continued growth.
In addition to typical time, cost, and efficiency improvements, an outsourced CFO can help guide the executive team through tough decisions about the direction of the company. Key milestones such as a potential merger, acquisition, or other transitions requiring expert financial guidance. Other common situations that would benefit from the advice of a CFO include lease versus buy decisions, acquiring a new office or production space, and even evaluating secondary investments. An outsourced CFO can apply their experience with various businesses to provide the right advice for the company’s financial situation and future growth goals.
There are many reasons to consider hiring an outsourced CFO. Knowing the right questions to ask and qualities to search for will depend on your unique needs and situation. The guidance of an expert can help you uncover the best resource for your company. If you are thinking about hiring an outsourced CFO, Selden Fox can help, contact us.