Managing Growth: The Real Reason You Need Outsourced CFO Services

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Is your business growth beyond your ability to keep up? Are your financial numbers not lining up?

An outsourced CFO (Chief Financial Officer) may be the answer to your problem. If you don’t have a CFO on your staff, you can outsource financial services that will help answer your questions. This can happen without having to bring an executive onto your team.

Let’s learn about the ways your business could enjoy outsourcing when your company starts to grow.

How to Get an Outsourced Service

If you’re a smaller organization, you may not have enough resources or consistent work to justify hiring a CFO on to your team. Outsourcing a CFO is like renting one to do your services, without the hefty price tag.

When you hire them, you don’t get the CFO only, you get access to their network too. CFOs have spent time building their professional career along with networking. The relationships that they have made along the way could be of value to your company.

Taking Care of Your Money

CFOs are in charge of your finances. They are responsible for analyzing and understanding financial trends in your business. They determine whether your company is making a profit.

They make sure that all the numbers are lining up with checks and balances. Also, they put together strategic plans and know when to put preventative measures in place.

An outsourced CFO makes sure your company has enough money on hand so it’s never sparse. You want your company to have a great ROI and their job is to ensure that happens.

Hiring an outsourced CFO will help you focus on what matters most for your business. You won’t have to think about whether your financials are being done without error. It takes the ownness off of you.

Making Profit Is Important

Being a small business, making profit is the main goal. When profitability continues to grow, it’s necessary to have someone on staff that knows how to foster more growth. They should be able to offer valuable insight and advice. They should know how to get the company where it needs to go. They also provide expertise that keeps your company out of a lawsuit.

If you are a smaller business, all these things are important for your success. Yet, having to pay someone a large salary to manage it full-time may not be in your best interest. An outsourced CFO could provide this for you on an as-needed basis.

Years ago, having a CFO on your payroll was necessary and made your company reputable. Now, this is a thing of the past. Hiring someone on an on-project basis is effective because you’re saving your company money.

How Does Outsourcing Work?

Your company can find a vendor that supplies employees for outsourcing projects or you can look for one on your own. You recruit someone who is willing to perform on a temporary or project basis.

It could be, that in the long run, you find that this outsourced CFO is exactly what your company needs and decide to hire them on full time. If that’s not the case, they already understand they are on a contract basis and it gives you flexibility if you need them to take a break every so often.

What Does An Outsourced CFO Do?

The CFO manages the financials and accounting for the entire company. These responsibilities could include, but are not limited to, evaluation of internal practices and functions, providing staff training for best practices, reducing tax liability and creating and reporting on finances in a meaningful way.

Making sure accounting is following compliance regulations is one of the most important jobs the outsourced CFO can do for you. If you feel you don’t need all of the things a CFO can offer, you have the option of hiring outsourced financial advisers.

If CFO is too high-level for the stage your company is in, hiring an outsourced financial manager or adviser can help relieve your staff of some of their duties. A financial manager could assist and perform payroll, invoices, inventory administration and optimization of capital allocations.

These outsourced CFO services are customizable for your company’s needs. Whether you’re looking for a CFO or an adviser, you have options for either.

CFO Outsourcing Firms

You get to rent your CFO of choosing. A lot of companies have it set up where you can receive a contract for a month-to-month basis for 12-24 months. They believe that to be successful, you must partner with the financial expert for at least a year. Any less than that and you may not see valuable ROI.

They work to develop a strategic plan for your company and seek to provide value up-front by offering staff training in best practices. It may make sense to pay your CFO on an hourly basis if they won’t be with you for the longer term. If they will be with you for longer, paying a flat rate may be more beneficial.

Working with a CFO outsourcing firm will provide you with a contract and all the details. The scope of the contract can vary depending on the CFO’s professional skills and experience. The price may also vary dependant on the local demand for these services.

Growing Your Business

There has been an increase in accounting software innovation over the last few years. These are cloud-based solutions and have replaced the need for many financial services staff. If your business is already using a cloud-based solution that performs some accounting services for you, hiring an outsourced CFO is not much different.

There are many phases that you can outsource services to help your company maximize its growth.

Start-Ups or Small Companies

If your company is small or you are still in your start-up phase, hiring advisers or staff can be costly. More often than not, in this stage, you don’t need to outsource services. There is enough time in your schedule to play the role of an accountant or find someone already on your team who can take that on.

When the Money Starts to Roll In

After you’ve won several contracts and after a few sales, your workload starts to get a lot larger than it was before. You no longer have the bandwidth to do accounting services on your own or pawn favors off on the people around you.

You have to give all the work to your accountant, in hopes they can keep up. You may have to outsource to a bookkeeper to help your accountant stay afloat and get all the work accomplished. This is a great stage for your company because there is evidence it’s growing.

Lean Team

At this stage of growth, your company is fruitful. You’ve sold a lot of product and written many contracts. You have the hired staff to perform jobs so you don’t have so much on your plate. You’re no longer dabbling in bookkeeping or accounting. Or you have a special project coming up that results in all hands on deck.

You’re finally looking forward towards the future, which means you will have enough to hire the staff you want in a few years. Long-term investment decisions are on the forefront.

It could be that at this stage you want to put together partnership agreements or company options. You can’t do it though. You don’t know enough about financials to make good decisions. You ask your accountant. The success of your conversation amounts to whether your accountant has the knowledge and can provide guidance.

You can utilize the innovative accounting technology you’ve implemented, but it’s only a question that it will get you where you need to go.

Outgrowing Your Staff

Your company has now reached the point that it’s too big to monitor finances with just you and your accountant. You may find your company expanding and more staff hired. You explore the option of a CFO but realize that you don’t want to make that big of a commitment.

Yet, you can’t live without the financial expertise. What do you do?

This is where you would bring in the outsourced CFO. They fit your budget without you having to expand your business staff any further.

They understand your business growth and can offer valuable advice and expertise to help you grow further. They provide excellent financial reports and help to teach your accountant how to keep improving their skills.

Is It Right For You?

An outsourced CFO could be the right answer if your business has reached a point in its growth. If you’re a small business without the resources, you may want to wait. If you’re a small business with a lot of funding and no staff to track and provide guidance, hiring an outsourced CFO may be your best bet.

Companies committed to their vision and goals do their research. It depends on your unique situation, but CFOs can provide spectacular value when they are used in the right way. The options you have for hiring someone today are vast.

Want to know more about your options for scaling up your business? Read our blog!

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