Why Do So Many Businesses Use Outsourced CFO?
There are many benefits to outsourcing the Chief Financial Officer (CFO) role, especially if you own a small business. An outsourced CFO ensures you are getting the same expertise from a CFO even if you may not have the financial resources to retain or support a full-time CFO.
By outsourcing the CFO role, your business will be able to benefit in the following ways:
1. An outsourced CFO will have experience performing valuable functions for other companies, and they will be able to apply this experience to your business.
2. A CFO usually has many relationships with funding sources, generally with commercial lenders. The prior relationships between lenders and a CFO creates confidence that may extend to the CFO’s clients and could make things easier when trying to procure a loan.
3. If a conflict arises within your business in regard to negative performance results, a CFO can help relieve the tension and create a plan to help management and staff by accountable to your business’ goals.
4. The CFO will handle all of the technical problems of forecasting, budgeting, and analyzing performance shortcomings so that you and your management team can focus on things that will bring greater performance and value to your business.
A common question that we receive when discussing CFO services is: what are the most relevant functions of a CFO to my business? Here a several highlights:
- Strategic Planning: A CFO can help you with the process of developing a strategic plan. These types of plans include your business vision, mission statement, and company goals. The CFO usually invites your staff to provide their opinions on the proposed strategic plan that can help you and your management team make your final decisions.
- Forecasting: The CFO can prepare the forecasting (taking this off your and your management team’s plate), which quantifies the company’s goals outlined in the strategic plan.
- Budgeting: One of the most helpful functions of a CFO is preparing a budget. The budget can help show how the decisions of you and your management team can impact your business before those decisions are acted on. This can help you and your management team makes the best decisions for your business.
- Accountability: A CFO helps you and your management team hold everyone within your business accountable to achieve their goals and objectives, which all contribute to your business’ success. A CFO will analyze the difference between the desired and actual results and ask pointed questions. As previously mentioned, this helps relieve potential conflicts within the company when a CFO handles this.
- Bonus Determination: CFOs can also help with the process of determining performance-based bonuses according to your forecasts and budget.
All of these functions help everyone in your business get on the same page and work towards the same goals and objectives in tandem. A misconception about the CFO role is that CFOs work to predict the future of the business. This is not the case. A CFO works with you to create and set goals for your business that allows for flexibility. The whole process makes sure that goals are being met, and, if they’re not, to change the goals themselves or the way to arrive at the set goal.
If you have any questions about what a CFO does or how to bring an outsourced CFO on board, contact us.