The Outsourced CFO: What They Are and Why You Need One

When you run a small business, you’re often familiar with the idea of hiring an accountant to prepare your taxes or speaking with someone at your bank about financing needs. But to many small business owners, an outsourced CFO (chief financial officer) service may sound like overkill, especially when having a full-time CFO on board isn’t something you’d consider from a financial perspective.

In reality, an outsourced CFO can be one of the biggest assets to a small business, because without the need for additional headcount, you can still gain all the benefits of someone with that kind of financial expertise. Let’s look more deeply at the idea of an outsourced CFO and how having one could benefit your business.

What is an Outsourced CFO?

An outsourced CFO is a financial expert that you hire as a consultant for your business. They can come in and help you make big strategic decisions, they can provide financial strategy services, and they can work on your budget. This means they’re available as a part-time, ongoing resource based on your needs. An outsourced CFO has deep financial expertise and can offer a variety of different services, including systems analysis and design, operational optimizations within your organization, help identifying, anticipating, and resolving challenges such as cash flow issues, raising capital, developing a pricing strategy, implementing more efficient systems, and preparing for growth. For many small businesses working on a budget, these are not functions readily available within your current staff, but might be critical to your success.

An outsourced CFO may be an individual who is hired as a consultant, running their own financial services organization, or they can be from a company you hire to provide the same consulting services, like a small business advising firm.

How Do They Differ From a Bookkeeper?

A lot of small businesses have bookkeepers, and those people traditionally record transactions.  Accountants prepare taxes and complete other financial paperwork, but they don’t analyze the numbers. When you’re a small business, you typically can’t afford a full-time CFO for 40 hours a week, but you could absolutely benefit from the services they provide. An outsourced CFO goes far above and beyond the duties of a typical bookkeeper or accountant, looking at your entire financial picture, collecting data, and helping you to run your business based off of observations and planning supported by that data.

Outsourced CFO

3 Major Benefits of Hiring an Outsourced CFO Service

1. Deep Financial Expertise

A CFO is traditionally the leader of the finance department within a larger organization. When you have a small business, you don’t generally have a whole finance department, but you do still need somebody with traditional finance knowledge who is able to read and interpret financial statements to help you make decisions. This is where an outsourced CFO can be a huge asset. Not only are they able to provide accounting services to your organization, but they’re able to provide tactical support along with strategic financial support.

Hiring an outsourced CFO service enables small businesses to gain expertise from individuals or agencies that are experienced in multiple industries, including their own. Working with a small business advising firm for outsourced CFO services can provide you with more than just a person — they can support you with a whole team behind your next project or milestone. The level of analysis and strategy they can provide is something likely unparalleled within your business, and they can help you leverage what you’ve already built to move to the next phase.

2. They’re a fraction of the cost of a full-time finance hire

For many small businesses, hiring someone full time to manage finances might not make financial or operational sense. An outsourced CFO is flexible – you can engage them when you’re ready, work with when you need them, and define their responsibilities on your terms. There are no requirements around the ways that you engage them to support your business — they’re available when you need them to help your business learn and grow. Sometimes all you might need doesn’t fill a 40-hour work week to stay up to date on what’s going on in your industry or to understand how you can make the most of your current financial situation; an outsourced CFO is the perfect asset to help make those happen.

But there aren’t just in-the-moment benefits of working with an outsourced CFO — there are long-term benefits too. An outsourced CFO can help small businesses move from being reactive to being proactive with their financial data. This kind of shift in behavior and mentality can save you from potentially costly missteps or missed opportunities. Usually a small business owner won’t take the risk on a new idea without knowing with some level of certainty whether it will be successful, but with the aid of an outsourced CFO, some of the guesswork can be removed by analyzing the situation and getting an educated perspective that might make you rest easier when implementing any big changes.

3. They provide a significant time savings

Off-loading the financial work to someone else can free up your time to spend it where it counts the most. Hiring a financial consultant can also set you up for long-term success. A lot of business owners are spending way too much time at work and sacrificing other parts of their lives in the process. Often, these overtime hours are taken up with things like managing the books, because those aren’t responsibilities that you, as the business owner, are often most skilled at, or most interested in managing. They are, however, a necessary evil for anyone running their own business. An outsourced CFO can come take that work off your plate and help you to make your business the best it can be.

The Takeaway

Managing the financial side of your business is an absolute necessity for any small business, whether just starting out, or trying to grow and scale. Even if you’re happy with the status quo, you still need someone to keep the financial side of things flowing, compliant, and working as an asset to your business. If you’re looking to free up some time in your busy schedule or would like to remove the stress of bookkeeping and financial planning from your to-do list, this could be the time for you to hire an outsourced CFO.

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