Considering outsourced CFO services?
Did you know that in 2017 alone, over $88.9 billion worth of services were outsourced worldwide? The trend has doubled in size since the year 2000. Why?
A few reasons. The most pertinent of which is that competition has grown more competitive in the digital age. Businesses must rapidly scale up or down to survive.
That means fewer full-time employees. Businesses instead rent staff members to fill crucial positions on their roster. Many of these positions require an expert that would be too expensive to hire in-house.
CFOs are the perfect example. Their jobs require a unique skill set, one hard-wrought by years of education and field experience. Inexperienced replacements simply can’t do the job.
Take the short survey below to find out whether outsourcing a CFO would be in your best interest. Read on.
Do You Need an Outsourced CFO?
Part-time CFOs may be the right choice for your business. Take a moment to answer the following questions and find out whether they’re a good choice for you.
- Is your company leaking cashflow, but you’re unsure where from?
- Are your business’s financial questions difficult to answer?
- Are you raising capital?
- Have you found gaps in your accounts payable or accounts receivable?
- Is your business lacking financial checks and balances?
- Are owners asking tough financial questions that are too difficult to answer?
- Have you avoided creating a long-term financial strategy?
If you answered “yes” to any of the above questions, outsourcing CFO services might be just what you need. Each of the above questions matches with the corresponding section below. Take a moment to read each that applies to you.
1. Leaking Cashflow
If your company’s spending is out of control, can you figure out which costs to cut and how to make those cuts? If not, it may be time to hire out a CFO. The key to a successful business is strategic spending.
Strategic spending takes into consideration such aspects as:
- Financial projections
- Financial analysis
- Financial checks and balances
Unfortunately, most executives don’t have time to evaluate these metrics. The position requires someone who has time and expertise. It’s not a job that another staff member can substitute in for.
2. Difficult Financial Questions
Do you lack the resources to make strategic financial decisions? Is your current financial team unable to outline the detailed numbers you need to make important decisions? Then, it’s time to look elsewhere. A business lives or dies by its books.
A CFO’s primary purpose is to ensure your company has a high-level, financial strategy. The strategy must be flexible and sustainable. The approach must be transparent, so your executives have the information to make educated decisions.
3. Raising Capital
CFOs have extensive experience in raising capital. It’s their bread-and-butter, especially with burgeoning companies. If you’re raising money but aren’t familiar with the lifecycle stages in your industry, get the advice of an expert.
It’s impossible to navigate the pitfalls alone. Here are some other signs a CFO may be the right choice for you:
- You don’t know how much capital to raise
- You don’t have a strategy for debt-to-equity ration
CFOs have already developed the credibility and relationships necessary to achieve your goals. They can help you answer the tough questions about due-diligence, analysis, and negotiation.
4. Gaps in AP and AR
Are you fumbling with significant gaps in your accounts receivable and accounts payable? That’s because you have errors or design flaws in your current system. Here are some examples:
- Cash flow issues
- Ineffective payment processes
- Inefficient collections process
- Improper billing process
It’s a CFO’s job to pinpoint these problems and develop strategies to resolve them.
5. Checks and Balances
When your departments begin to feel segmented, or each is acting autonomously, then it’s a sign something’s wrong. In a healthy company, each department is integrated into the whole. Sure, they can operate independently, but they shouldn’t ever feel like foreign countries.
If your system is broken, a CFO can help. They do more than simple money-crunching. Like every executive, their role is to focus on the big picture. In particular, they focus on how systems fit together.
A CFO can help you optimize your purchasing, manufacturing, sales, and marketing. In doing so, they build bridges between departments and develop lines of communication. The result is a more functional, cohesive whole.
6. Tough Financial Questions
That reason is you haven’t had the right people tracking down those answers. Here are some of the questions best left for a CFO:
- Identifying a financial problem
- Addressing a financial problem
- Analyzing a financial opportunity
- Validating a financial decision
A CFO is responsible for discovering answers to these questions. They have the skills to answer tough questions. They provide the high-level financial wisdom you need to make difficult decisions.
7. Long-Term Strategy
Do you recall the financial forecast you developed during your company’s inception? How often have you looked at it since? Have you kept it up to date or revised it? No? We thought not.
A CFO’s position revolves around making educated financial projections. They base those projections on industry trends, historical data, and competitors’ data. In other words, reliable evidence.
If your long-term financial strategy needs work, it’s time to hire out a CFO to get you back on track. They can create a realistic fiscal blueprint for your future.
Hiring an outsourced CFO is a boon to modern small businesses. It allows you to scale up or down without the responsibility of another full-time staff member. It also gives you unfettered access to a financial expert who can answer all your niggling questions.
If you found this article helpful, take five minutes to peruse our library of all things financial.
So long and good luck!
P.S. if you want to learn more about this subject, take a look at our article on “How Your Company can Meet its Financial Goals with an Outsourced CFO.”