Should you Outsource the CFO Role?

At some point in the journey of a growing business, there comes a time when the owner will need to hire an expert to look after the financial side. However, outsourcing this role can also be a great option.

Businesses that already employ a Chief Financial Officer (CFO) – or a finance chief under a more modest title – will already know that people with the requisite skills and drive are in short supply. So, those who find themselves in need of a new CFO should also consider the possibilities of outsourcing.

Why have a CFO?

For even the smallest business, finance and funding can be complex matters. For trading businesses which employ several or even dozens of people; have multiple large contracts and clients to service; and rely on a detailed supply chain; just keeping track of cashflow can become a major task. If the owner is to be free to pursue entrepreneurial opportunities while staying on top of operational matters and client relations, he or she will need a reliable person behind them to look after their finances.

We have already covered the dangers of poor cashflow management [LINK TO PREVIOUS BLOG] which can sink even profitable and otherwise healthy businesses. Business funding is another complicated area which can sap a lot of time and energy from entrepreneurs, and may be best left to a dedicated expert. But a really good CFO should also be able to pay for themselves by finding small savings and areas for easy improvement in the company figures.

Can crucial savings be made by ditching the business overdraft? What if financing enabled the firm to access generous early payment discounts from suppliers? Can an alternative be found to locking the firm into an expensive business loan?

A good CFO will be ideally qualified to answer those questions; they will be able to identify growth options and weigh the pros and cons of each; and they may be able to make crucial adjustments to the business which ultimately transform the bottom line, as we saw when we looked at the power of the 1% change. 

Advantages of Outsourcing a CFO

  • Qualified CFOs are not the easiest thing to find, even for a business able to pay top dollar. For a small business looking to make their first appointment to the role, the costs of recruiting and employing a financial expert will be considerable. However, by choosing to bring in an outside consultant on a contract, they can get the best of all worlds:You can get a senior expert on a contracted, part-time basis for less than the cost of employing a less experienced candidate. This is especially advantageous if you are a relatively small company that needs quality advice rather than a full-time finance manager.
  • Consulting CFOs see a lot of businesses, tend to have a lot of contacts and have experience of many situations and stages of business. They are therefore well placed to solve your financing challenges and help your business grow.
  • By outsourcing, you will have someone look at your company with a fresh set of eyes. They will have all kinds of ideas that you never thought of, both to save you money and to accelerate your growth.For start-ups and fast-growing smaller businesses, outsourcing is a way of getting a senior finance expert on-board long before that would otherwise be possible. Medium sized firms will have to consider whether they can manage without a CFO on permanent call, and this may depend on the amount of managing their financing and cash flow situations require.

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