Do You Need an Outsourced CFO?
With the flexibility offered by an outsourced chief financial officer, you'll have access to expertise when you need it instead of committing to hiring a full-time in-house resource. That's why some businesses are turning to outsourced CFOs. When you do, you'll receive guidance pertaining to finance, business, accounting, and operations.
Let's consider some scenarios in which a contract-based CFO would come in handy!
Outsourced CFOs provide value
The value of CFOs is undeniable. They make it possible to allocate expenses appropriately, both for critical metrics purposes and for the sake of understanding the profitability of your company. After all, managing a business with inadequate financial information is like trying to understand a customer who doesn't speak English, all without the help of an interpreter.
The implications of faulty financial inputs surrounding the quantities, costs, margins, inventory, and cash flows of your company can be profound. In fact, these details can ultimately affect the market share and improve your access to capital.
So, what can you expect a fractional CFO to add to your business?
Another reason why you may be interested in seeking out a virtual CFO service could be that you don't have enough cash on hand currently to meet your business expenses. Additionally, you may have a specific event coming up that requires a more in-depth financial analysis.
As it stands today, you do not have an adequate resource to assist you in analyzing the information. All in all, if you need help from someone who knows how to interpret financial data yet you do not wish to hire a full-time or in-house CFO, then outsourcing is an amazing opportunity to pursue.
Why an outsourced CFO could be better than an accounting firm
It is highly likely that the accounting side of your business is already taken care of by an accounting firm that you trust completely. If so, then you already understand how it can be incredibly helpful to have someone manage the financial side of your business for you.
While accounting firms excel when it comes to managing audits and planning ahead for tax season, they are not as well positioned in terms of financial forecasting, increasing a company's profitability, or analyzing data in search of growth opportunities.
As such, turning to a CFO can allow you to introduce the insights of a professional who will contribute to the financial and strategic sides of your business. In turn, your company will be more capable of achieving financial goals by way of managing income, planning ahead, understanding current forecasts, and managing the finance-related IT systems with growth as a focal point.
Essentially, an outsourced CFO can bridge the gap between where you are now and where you would like to be in the future if having a permanent CFO is the end goal. It can be difficult to start the hiring process in search of a full-time CFO while taking care of all CFO-related duties yourself, which is where an outsourced CFO fits perfectly into the picture.
As you interview candidates and look for someone who will fit well with your firm in a permanent regard, keep an eye on the fees of an outsourced CFO — whether that is an hourly, daily, weekly, or monthly rate. Prioritize working with an outsourced CFO who has experience within your niche or the conditions of your company's situation. Finding the right fit is crucial, as the best CFO for your company will be capable of delivering top-tier insights in less time to catch your company up to speed.
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