What Is an Outsourced CFO & How Will One Help Your Business?

An outsourced CFO can help businesses identify, assess, and mitigate financial risks, such as currency fluctuations, interest rate changes, and credit risks. They can also develop risk management strategies and policies to ensure the company’s financial stability. A Deloitte survey further emphasizes this issue, indicating fewer experienced candidates for the role every year. This scarcity has prompted companies to explore alternative solutions, such as outsourcing, to ensure their financial management remains in capable hands. Turnover is unavoidable in any industry, but at the C-level, it becomes even more time consuming and costly to fill empty seats. If your hired executive doesn’t perform, you can work with the agency to discuss the issues, come up with solutions, and if necessary, get a replacement.

• It’s time for businesses to embrace the potential of outsourced CFOs and consider this strategic partnership as a vital component of their overall success strategy.
• When looking for an outsourced CFO, you can use a recruiting firm or job board to make your search easier.
• As this post from Cadence Bank discusses, a CFO can provide a much higher degree of strategic and analytic skill than a staff accountant, bookkeeper or controller.
• A SaaS business is different from traditional businesses that require a one-time purchase or otherwise brief relationship transaction as a SaaS company…
• The key strategy is to make sure you have a picture in your mind upfront of what success looks like so you can make the scoping session as accurate as possible.

Effective cash flow management is critical for business survival and growth. An outsourced CFO helps businesses monitor cash flow, identify potential issues, and develop effective strategies to address cash crunches or surpluses. They also provide cash flow forecasting to help companies plan for future cash needs and make informed decisions about investments, financing, and operational expenses. It’s time for businesses to embrace the potential of outsourced CFOs and consider this strategic partnership as a vital component of their overall success strategy. A technology startup company struggled to manage their rapid growth and required financial planning and strategy guidance.

Advantages of outsourcing CFO services

For many small and mid-sized companies, it makes sense to use outsourced CFO services because they can’t afford a full-time CFO on staff. For these companies, it might not be quite enough to have a staff accountant, controller or bookkeeper — but it’s not financially viable to What Is An Outsourced CFO pay the minimum $360,000 that a CFO will typically demand. These companies are in something of a quandary because they need the expertise of a CFO in order to grow, but they can’t afford to pay for that expertise on a daily basis — and that’s where an outsourced CFO can help.

• Outsourced accounting firms have a dedicated staff of qualified CPAs, controllers, bookkeepers, and more.
• While outsourced CFO services can be used for short-term projects or interim needs, they are not limited to short-term solutions.
• He also served as the President and CFO for Interactive Donor, a New York-based Benefit Corporation which incentivizes charity through rewards.
• Another common misconception about what is an outsourced CFO is that they are primarily responsible for financial reporting and compliance.

The reality for many businesses in the $5-$50 million in revenue range is that when it comes to their accounting needs, most of them only need strategic financial insight 10% of the time. What they need the rest of time is someone to look after the weekly accounting needs and the financial reporting. An outsourced CFO is an experienced financial expert, outside of your own company structure, who provides strategic, fiscal & operational guidance. An outsourced CFO should exhibit both a strong financial background and leadership skills. To learn more about working with our outsourced accounting team, contact an advisor today. Securities and Advisory services offered through LPL Financial LLC (“LPL Financial”), a registered investment advisor.

What to Look for When Hiring an Outsourced CFO

Then develop a great list of CFO interview questions to help you gain deeper insight into each candidate’s experience. It can help to know that an outsourced CFO is not the same as an interim CFO. An interim CFO is a temporary hire who fills in for someone on leave or bridges the gap while you look for a permanent replacement. That is different from an outsourced CFO who becomes an integral part of your team and could potentially work with your company for years. The dynamic nature of today’s business environment demands the flexibility and scalability inherent in the outsourced CFO model. Companies can engage an outsourced CFO as needed, allowing them to scale their financial leadership up or down depending on their current requirements.

• An outsourced CFO is an experienced financial expert, outside of your own company structure, who provides strategic, fiscal & operational guidance.
• Making changes that directly improve KPIs can help build the future value of the company.
• For businesses that are growing quickly or who need CFO-level guidance at a part-time capacity, an outsourced CFO can make the most sense.
• If your company is headed for a merger, or acquisition, or struggling to find investors, you may need a high-level financial person to help you.
• That means you could see up to a 90% savings depending on how complex your financial requirements are.
• Improve the financial health of your business with tips from our free guide.

It is essential to identify your business needs, set clear expectations, and establish open communication channels to maximize your partnership with an outsourced CFO. Doing so can foster a productive working relationship that drives your business’s financial performance and long-term success. Technology can play a vital role in facilitating collaboration between your in-house team and your outsourced CFO. Utilize tools such as video conferencing, project management software, and secure file-sharing platforms to enable seamless communication and collaboration. Regular performance reviews can help you track the progress of your outsourced CFO and ensure they are meeting your expectations.

Team-Building Tips for Your Remote Team

This allows businesses access to expert accounting and finance talent, knowledge in specialized areas, and valuable expertise without being too costly. Thus making it possible for these establishments to obtain quality resources that would otherwise be financially out of reach if not done through fractional CFOS. Outsourced CFOs provide a cost-effective and flexible solution for businesses needing high-level financial expertise without hiring a full-time executive. As the demand for outsourced CFO services grows, businesses that effectively leverage these services will be better equipped to navigate the complex financial landscape and achieve their strategic objectives. An outsourced CFO is a financial expert or firm that provides part-time or project-based CFO services to businesses.

On the other hand, outsourced CFOs are employees of their hiring agencies—not your company. This means you get all of the benefits of their experience without the administrative hassle of hiring new workers. Aside from the hours you invest in their training, you’ll have to worry about setting them up in payroll, allocating benefits, insurance, and all of the accompanying tax concerns.

Reduced Administrative Costs

The average CFO makes over $300,000 in annual salary, plus additional compensation in bonuses, equity, and perks. Even if the company can absorb the expense, the opportunity cost can be prohibitively high – that’s money that isn’t going into the rest of your business. When you hire ORBA Cloud CFO’s fractional CFO services the monthly fees start at $4,000 per month.

Effective cash flow management is crucial for maintaining a healthy financial position. Outsourced CFOs can help businesses optimize their cash flow by analyzing receivables, payables, and inventory and implementing cash flow projections and strategies. This is a lesser-discussed https://www.bookstime.com/articles/accounting-for-obsolete-inventory benefit of outsourcing that you just can’t find through an in-house hire. They come into your company with no knowledge of past decisions, ongoing debates, or company politics. As in-house workers gain experience, these issues inevitably bleed into their decision-making.

What is An Outsourced CFO – Everything You Want to Know

In smaller businesses, owners themselves might handle all accounting and bookkeeping tasks by themselves. With the right approach, working with an outsourced accounting service can deliver all kinds of benefits for business leaders. Enlisting the help of a professional outsourced CFO can make it easier for companies to achieve their goals and resolve accounting and financial issues for a wide range of businesses. But how much should you expect to pay an outsourced CFO—and can you actually get what you need from the outsourced position? To answer these questions, you need to identify why you believe you require CFO-level guidance and strategy and what you expect from that position. You should then consider the capability of outsourced CFO services vs hiring a full-time, C-suite level position to help your company.