- Business

Benefits of Outsourcing a CFO

Outsourcing certain aspects of a business can always have financial and performance benefits. This frequently happens with things like statement writing, human resources, and IT support. It might seem a little less orthodox to outsource a position as big as the CFO. The fact is that outsourcing this position can increase profitability, reduce time to make decisions, and result in better CFO advisory. To understand how this is possible, it’s first important to understand exactly what the CFO does. Put simply, the CFO is responsible for managing the financial activities of a business. This boils down to a few key points.

CFO responsibilities

Arguably the biggest responsibility of the CFO is to manage all financial risks of the company. This means assessing the company’s financial strengths and weaknesses, as well as monitoring cash flow and ensuring a desirable balance between debt and profit.

The CFO also monitors the overall efficiency of all aspects of the company to maximize revenue and minimize loss. This is done primarily through budgeting, strategizing maximum revenue possibilities, and constantly monitoring performance.

The CFO also has a significant hand in developing the company’s future and its long term financial strategies. It’s a high demand position requiring a great amount of experience and skill. Even with knowing all of this, there are some concrete benefits for outsourcing the position.

Cost reduction

Requiring less time for financial functions within your business can cut costs and allow employees to focus on the core tasks of your business. A skilled CFO can often be outsourced for a relatively low hourly rate compared to the annual salary a business would normally pay for the service. Outsourcing in general can eliminate unneeded overhead and let you grow your business by focusing exclusively on the essentials.

Low risk

Particularly for new or growing companies, the relatively low risk of outsourcing a CFO can make it a good option. An outsourced CFO can be brought in as needed rather than kept aboard year round, and there is little risk in switching between CFOs to find the perfect fit for your needs. Through outsourcing, you can get the expertise you need for a price you can handle.

Better decisions

Outsourced CFOs have worked with all kinds of businesses under all kinds of conditions. When you outsource a CFO, you’re getting the same kind of expertise you would get from hiring a full time one within the business. This is the case whether it’s an hourly contract or a per-project basis.

Their variety of experiences will serve them to make good decisions for your business in a timely manner. It’s no secret that tax laws and other regulations are constantly changing. Outsourcing a CFO each year can allow your team to avoid having to dig through all the new regulations and focus on building your advantage in the coming year.

Additionally, if your company grows to the point that you wish to hire a full time CFO, an interim CFO you outsourced can train the permanent one in your company’s operations and get them up to speed on current projects.

Permanent improvements

Finally, it’s important to keep in mind that even a very temporary outsourced CFO will provide ongoing benefits. Even if you aren’t planning to hire a full time CFO or keep an interim, the improvements they make while they are involved in your business are permanent. Within an extremely temporary payback period, you can reap new financial systems, better strategies, and greater profitability for the long haul.

With comparatively little cost or risk, even a new business can receive better advisement and results than they would ever get with a bookkeeper or other financial service by outsourcing a CFO.