Does your business need an outsourced CFO in 2024?
The pros and cons of external CFO services for your business
Top-tier CFO expertise doesn’t have to cost the earth. Consider outsourcing to grow your business for less.
An outsourced CFO for the modern age
Effective business management requires thorough financial oversight to maintain profitability and compliance, encompassing strategy, bookkeeping, accounting, regulatory governance and risk management.
Typically, this remit falls to the Chief Financial Officer (CFO), making it one of the most crucial C-suite roles that can come with a hefty price tag. For growing companies battling tough economic conditions, large salary expectations can make an in-house CFO out of reach.
There is an alternative, with outsourced CFO services enabling businesses to maximise strategic financial leadership at a significantly lower price.
Key benefits of outsourced CFO services
1. Broad financial expertise and perspectives
Outsourced CFO services will typically be provided by a team of experienced CFOs and other financial professionals with a vast range of combined expertise. This means you get the knowledge, experience and fresh perspective of a whole team – for less than the cost of a single, in-house CFO. Outsourced CFO services also give you access to technologies and other resources that might be cost-prohibitive for an SME.
2. Assurance of regulatory compliance
When it comes to compliance, especially taxation, the expertise and experience of an outsourced CFO raises internal governance standards and protects against the steep penalties that come with non-compliance.
3. Cost savings
With outsourced CFO services, you only pay for the services you need – significantly reducing spend versus the salary of a well-paid, in-house CFO. You also eliminate costs like recruiting, onboarding, sick days and holidays.
4. Flexibility and scalability
Outsourcing enables you to scale your level of support as your business needs change. This can be especially advantageous if your business is experiencing rapid growth or needs to manage costs.
5. Business growth
Access to top-tier CFO services enables you to plan better, make smarter decisions, develop better products, optimise operations and track financial performance against KPIs to unlock more business growth.
Is outsourcing a good fit for your business?
There are pros and cons to outsourcing, and the best choice for your business will depend on your turnover, budget, industry and aspirations.
Start by first identifying your business needs across daily Accounting, Tax and Audit tasks plus the more strategic financial analysis and planning covered by Business & HR Advisory.
Then consider:
- The health of your current financial management. Are there any issues impacting your effectiveness, profitability or compliance? Are you outgrowing the procedures, tools and advice you’ve followed until now?
- The cost of an in-house CFO versus outsourced CFO services. Is the cost of a full-time CFO becoming prohibitive? Would funds freed up by outsourcing enable you to make a bigger impact elsewhere?
- Your goals for the future. Do outsourced CFO services align with your business’s financial needs, growth plans and budget considerations?
If you do decide to outsource, planning the role and responsibilities of your outsourced CFO is key to maximising ROI. With your CFO on the clock rather than available full time, it will likely make sense to direct their focus beyond traditional accounting tasks to strategic financial planning and decision-making.
Businesses that might suit outsourced CFO services
- Startups and small businesses that can’t afford a full-time CFO but need strategic advice
- Medium and large businesses that need to keep costs down or lack the in-house expertise to manage growing financial complexity
- Businesses that need financial leadership during periods of high growth, economic uncertainty or a strategic transition like a merger or acquisition
- Family-owned businesses facing unique financial and familial challenges
- Non-profit organisations that need to carefully maximise their funding.
Complex sectors that benefit from industry-specific CFO services
|
Technology – known for rapid scalability and financial complexity, an outsourced CFO can optimise financial systems,
secure funding and make smart investments. |
Manufacturing – needing to carefully manage costs and inventory, an outsourced CFO can improve cash flow, plan demand
and optimise supply. |
Professional Services – with lean staff and limited in-house financial expertise, an outsourced CFO can improve forecasting accuracy and manage cash flows for long-term profitability. |
Comparing the costs of outsourcing versus in-house
|
The risks of outsourcing – and how to manage them
| The risk |
How to mitigate |
| Sharing data with an external party |
Implement robust security measures including encryption, secure file sharing platforms and confidentiality agreements |
| Loss of visibility and control over day-to-day financial operations |
Establish clear reporting and communication channels as part of CFO deliverables |
| Potential conflict of interest if serving multiple clients in the same industry |
Complete due diligence during the selection process and put agreements in place with non-disclosure and non-compete clauses |
| Not building internal IP and financial knowledge |
Ensure IP and financial processes are clearly documented and accessible beyond the terms of the agreement |
| Continuity of service if an individual CFO becomes unavailable |
Build a relationship with a trusted accounting services partner who provides a team of experts to ensure continuity |
| Unexpected costs |
Know exactly what your service package includes and fees for additional services. Start with a good understanding of your business’s needs to ensure you allocate budget for biggest impact |
Outsource and optimise
With ballooning costs, evolving business needs and increasing competition, outsourced CFO services can benefit businesses looking to achieve better results for less.
Make the right choice for your business by considering your unique needs and conducting thorough selection due diligence.
Invest in outsourced CFO services to grow your business.
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