Should You Outsource CFO Services?

10 minute read

Every business needs a runway, but managing your financial performance might be tough on a day-to-day basis. Most bookkeepers and accountants already manage your incoming revenues, accounts receivables, and outgoing payments. However, you might not have time to review your financial performance and business goals as there are so many other urgent business priorities to handle as an SME owner.

This is why Chief Financial Officer (CFO) services are quickly becoming popular amongst many businesses. Outsourcing these services helps business owners to have access to expert financial specialists, well-equipped with the best skills, industry practices, and financial acumen.

Still considering outsourcing a CFO? Let’s go through the pros and cons of outsourcing your CFO services and how your business can grow from it.

Overview:

What does a CFO do?

A CFO is responsible for managing the financial compliance, analysis, and performance of a company. By putting current, previous, and expected financial results into context, a CFO provides the integral link between a company’s strategic and financial management. They are also responsible for managing cash flow and financial planning, as well as recommending strategic initiatives based on the company’s financial strengths and weaknesses.

A virtual CFO can work with your business remotely and at a frequency that suits your business’ needs. This flexibility keeps the cost of their service low and their relevance to a large array of businesses high. Meeting sales and earnings targets, as well as preserving cash flow stability, are among their responsibilities too.

If they serve in a revenue-generating capacity, finance chiefs also advise department heads across the organization, supporting them in both boosting revenues and decreasing expenses.

The CFO could also work with departments to allocate funds for human capital management and assist in the recruiting of qualified employees for the finance team.

Key duties of a CFO

The major responsibilities of a CFO can vary. However, they generally fall into three functions.

Controllers

Controllers manage the day-to-day accounting and financial operations. They are in charge of producing reports on a company’s financial situation, such as their accounts receivable, payable, inventory, and payroll.

Treasurers

The treasurer is in charge of the company’s cash, debts, and assets. This covers all of the company’s investments, whether they are tangible assets like buildings and equipment, or financial investments like stocks and bonds.

Strategists

This includes advice on areas like product development, market expansion, human capital management, mergers and acquisitions (M&A), and capital investments utilizing both internal and external data and reports. Structured planning and forecasting exercises are also part of this category.

Why you may need a CFO

As you might already know, CFOs lead the finance and accounting team and have a broad view of an organization’s financial health. This helps the CEO as well as peers such as the CMO, COO, and VPs of HR and sales, to focus on their own goals and operational challenges.

While a CEO or COO may have a background in accounting or finance, they often lack the technical understanding and experience that a CFO brings to the table. A CFO is likely to have experience in accounting, financial analysis, budgeting, forecasting, financial strategic planning, and management reporting, among other areas.

So, whether you’re looking to test the efficacy of your business growth ideas, implement a sustainable financial growth strategy, or simply work with someone who can support you in understanding and optimizing your performance, you’re likely to find that in a CFO.

Do all businesses need a CFO?

While it’s not a business requirement, there are instances where you may want to consider hiring one.

Rapid growth

If you find your business going through constant rapid expansion, this is a strong indicator that a CFO is required.

As your business operations become more complex, CFOs can help to handle your rapid development. They’ll decipher the investment, technology as well as terms of capital acquisition needed to sustain your growth.

CFOs will help to assess the company’s present financial status and market developments to implement the best plan needed for increased cash flow and earnings.

Product and market development

The future is more uncertain than it has ever been. Change, as well as the ability to adapt, is required by disruptive technology, evolving market dynamics, and new leadership paradigms.

CFOs help with the identification of new prospects and the transformation of the company’s goods and markets, as well as capitalization for future growth.

There is a steady march toward globalization. To ensure that there’s a business case for expansion, CFOs will assess a variety of crucial factors, which may include the worldwide marketplace.

Debt facilitation, investors, M&A

A team is needed to examine a possible acquisition when a company is preparing for a merger or acquisition (M&A). This will be outsourced in many situations, and the firm will also handle the financial and regulatory due diligence.

The CFO will assess the due diligence team’s reports in order to customize the terms to the results. A CFO should be able to explain these findings to a prospective investor or lender. To speed up the process, a CFO will be well-prepared and anticipate queries.

Improving profitability

You may find your business at a crossroads for improving profitability. CFOs can help assist in this by controlling expenses, increasing efficiency, and reviewing pricing tactics.

Better decisions may be made across the firm if profitability is more visible. The CFO can keep the CEO, board, and investors up-to-date on historical and current financial reports by overseeing and managing the financial divisions.

If you feel like you might need a CFO after reading this, chances are you probably do. If so, consider outsourcing to Sleek! Receive full strategic financial support from our expert CFOs.

Why should you outsource your CFO services?

Outsourcing your CFO services exposes your business to numerous benefits that will have an impact on your business performance, at a fraction of the cost of doing it in-house.

Additionally, the modern CFO is equipped with all further resources and knowledge to help you take your business to the next level. Now. let’s summarize why you should outsource CFO services:

  1. Financial planning and analysis (budgeting, forecasting, assessing long-term and short-term financing needs)
  2. Financial strengths and weaknesses analysis with suggestions for improvement
  3. Assessment of new product concepts’ financial viability, including estimates and NPVs, as well as IRR calculations
  4. Improved margins by analyzing price and cost structures
  5. Financial data collection and reporting systems assessed, and recommendations for changes
  6. Assistance with capital raising and debt/equity mix advice
  7. Putting together financial presentations for the Board of Directors or investors (e.g. pitch decks)
  8. Quarterly financial reporting assistance
  9. Negotiations with banks
  10. Financial predictions for BAU and post-acquisition operations in the analysis of M&A opportunities

5 skills to look for in an outsourced CFO

Here are the key skills to look out for when outsourcing your CFO.

Reliability

The finance officer’s judgment and input, as you may know, have a considerable impact on the business’s actions.

Since the CFO will review the books of accounts and assist in the payment of taxes, they must be trustworthy. Additionally, the timeliness of tasks is important too. After all, you don’t want to be penalized for filing a crucial document late.

Skills and knowledge

To be successful, one must be completely aware of what they are doing. This is true not just in the financial sphere, but in practically every facet of life.

Your ideal CFO must be experienced and have a thorough understanding of the business world, particularly the finance department. They need to be able to determine where problems develop and what may be done to fix them.

Patience

A good CFO should be patient. It is critical to disseminate knowledge that has the potential to impact key organizational decisions. A successful tax-saving strategy takes time and precision, therefore the CFO must be patient.

Trust

The CFO should earn everyone’s trust in the company. They should be an objective source of judgment and information within the company while honestly answering all of your business tax questions.

Leadership

A good CFO should lead others. This allows them to easily manage and assign financial processes within the company. Empathy, social skills, self-regulation, self-awareness, and motivation are some of the characteristics that indicate leadership ability.

Let Sleek help

Hiring a finance expert might just be the next crucial step to taking your business to the next level. Through this, your company can benefit from higher financial efficiency and better financing techniques which will help to reach, or even surpass, its goals.

If this sounds right up your alley, consider placing your trust in Sleek. We help our clients to put a plan in place for the year ahead, give them that extra confidence in liaising with and producing forecasts for investors. We also offer them peace of mind that someone is looking out for their business’s financial performance when they just can’t find the time to.

Our CFO services will help you achieve all of that, and more, so that you can make the best decisions possible. If you’d like to learn more or sign up, contact us today and talk to one of our experts about your finances.

 

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