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So You Lost Your CFO: The Advantages of Outsourced CFO Services

| April 3, 2024 | By

Stuff happens. Change is hard.

Sometimes it's planned, sometimes it's not, but as a business owner you might find yourself without your Finance Director, your CFO, or the person you relied on to manage finances for your business.

This doesn't feel like losing just another employee, it's bigger than that. And yes, it is a big deal. But, we are here to tell you that while this is a challenging situation, there is reason to be hopeful and to view this an an opportunity to improve your organizational efficiency. 


Current State Assessment & Gap Analysis 

The first thing you need to to do is take a deliberate, thoughtful step back and evaluate where you are as a business and what your needs really are before you jump to posting for a replacement. Here are some things to consider.

Current State Assessment

Think about when you originally filled the role. What has changed in your company and how have the needs for the position changed? Are there systems and technology in place that can automate or simplify parts of the role? What are you plans for the future, do you plan to exit, make an acquisition or substantial capital or real estate investments? If so, are you looking for more of a strategic resource to fill the position? Ultimately, whether you hire or outsource, you need to find the right skills and expertise to achieve your goals and meet the needs of your business where your business is today - those are likely very different than when you brought this person on.

Gap Analysis

What skills did you have in the previous person, what skills were you lacking and perhaps what available skills do you already have in house that could pick up the slack? Often times, what you will find in this process is that the role had a taken on (or had been holding on to), numerous tasks and responsibilities that should ultimately be offloaded to other resources  You need this person focused on modeling, sophisticated budgeted or supporting potential M&A activity, not mired in more mundane work.


Benefits of Outsourcing CFO Services

Outsourcing CFO services offers numerous benefits to businesses of all sizes. One of the key advantages is cost savings. Hiring a full-time CFO can be expensive, especially for small and medium-sized enterprises. Outsourcing CFO services allow businesses to access top-level financial expertise at a fraction of the cost.

Additionally, outsourcing CFO services provide flexibility. Businesses can scale their CFO services based on their current needs and budget. This allows for greater financial agility and the ability to adapt quickly to changing market conditions.

Outsourced CFO services also bring a fresh perspective to a company's financial management. The outsourced CFO can provide objective insights and recommendations based on their experience working with various organizations. This outside perspective can help identify new growth opportunities and improve overall financial performance.


Cost Savings Through Outsourced CFO Services

One of the significant advantages of outsourcing CFO services is cost savings. Hiring a full-time CFO comes with significant expenses, including salary, benefits, and overhead costs. For SMEs and startups with limited resources, these costs can be prohibitive.

By outsourcing CFO services, businesses can eliminate the need for a full-time CFO and reduce their financial burden. Outsourced CFO services are typically offered on a flexible, pay-as-you-go basis, allowing businesses to only pay for the services they need. This cost-effective approach can result in substantial savings without compromising on the quality of financial management.

Furthermore, outsourcing CFO services can help businesses avoid the costs associated with recruiting, training, and retaining an in-house CFO. The outsourced CFO provider takes care of all the staffing and training requirements, saving businesses time and resources.


Enhanced Efficiency and Expertise

Outsourced CFO services bring enhanced efficiency and expertise to a business's financial management. The outsourced CFO is a specialist in their field, equipped with the knowledge and skills to optimize financial processes and systems.

By leveraging the expertise of an outsourced CFO, businesses can streamline their financial operations, improve financial reporting accuracy, and ensure compliance with regulatory requirements. This enhanced efficiency can result in time and cost savings for the business.

Additionally, the outsourced CFO can provide valuable insights and strategic financial guidance. They can analyze financial data, identify trends, and make recommendations to improve cash flow, profitability, and overall financial performance. This expertise can help businesses make informed decisions and drive growth.


Industry Trends

According to an outsourcing study from Deloitte:

  • 70% of business owners opted for outsourced accounting to reduce costs. The main benefit of outsourced accounting services lies in cutting down on labor expenses. However, outsourced accounting can also help your business by enhancing efficiency and productivity across the board.
  • 40% opted for the flexibility and scalability of outsourced accounting services. These services can be easily tailored and adjusted to align with your company's evolving needs as it grows and evolves.
  • 20% saw the advantage of speeding up their time to market with outsourced accounting. A well-organized back office promotes efficient operations and financial transparency, enabling startups to secure funding and bring their offerings to market swiftly.


Choosing the Right Outsourced CFO Provider

When choosing a provider, businesses should consider factors such as the provider's experience, expertise, and reputation.

Assess their track record in delivering CFO services to businesses in the same industry or with similar financial needs. Additionally, businesses should evaluate the provider's communication and collaboration capabilities to ensure a smooth working relationship.

Furthermore, businesses should consider the provider's pricing structure and flexibility. It is important to choose a provider that offers transparent pricing and allows businesses to scale their CFO services as needed.

By carefully selecting the right outsourced CFO provider, businesses can ensure they receive high-quality financial expertise and support that aligns with their specific needs and goals.

We have used our experience to helped hundreds of businesses fill gaps in their finance department. If you need support, set up a call with our team today.