Why and When Outsourcing a CFO Makes Sense
When it comes to managing you business’s finances you have several options: do it all yourself, hire someone or outsource. And if you run a fairly large business, combining the roles of a CEO and a CFO is likely not in your best interest. You already do an important job of choosing the right direction for your business and inspiring your employees—picking up a load of financial responsibilities on top of that can ruin your productivity. Your main decision is between hiring and outsourcing. From our experience with Maryland CFO services, both of these scenarios can work for certain situations and certain businesses.
Let’s talk about why and when outsourcing makes sense, but first, let’s figure out what an outsourced CFO can do for you.
An Outsourced CFO Can:
- Provide budget guidance
- Prepare and analyze financial statements
- Forecast cash flow
- Provide strategic financial planning
- Advise on financial decisions
- Evaluate and improve current bookkeeping systems
- Help negotiate new contracts and agreements
- Help obtain financing
This is certainly not a complete list and you don’t have to utilize your CFO for all of these tasks. You can have them work on a project basis, helping you solve one problem at a time. And below are the reasons why outsourcing can prove more beneficial than hiring an in-house professional who is able to perform all of the above.
It Costs Less
According to Payscale, a median annual salary of a CFO with five to ten years of experience is $117,841. That’s almost $10K per month! It’s great if you have enough financial work for a 40-hour week, but, if not, you’ll end up paying a premium CFO salary for administrative tasks.
When you outsource CFO, you are paying only for the services you need and hours worked. Besides, you don’t have to pay bonuses, benefits, commission or profit sharing. Depending on your consulting agreement, you may be able to decrease and increase CFO’s hours as you deem fit. This offers you plenty of flexibility to use financial help only when you need it.
Get a Fresh Perspective
Do you feel like you are beating a dead horse trying to solve this budget issue? Sometimes, the problem is that your experience and intimate knowledge of your business work against you. Weighed down by your problem solving routine and traditional way of thinking, you get tunnel vision that prevents you from seeing a solution. An outsourced CFO, on the other hand, comes in with fresh ideas and a new point of view, able to find quick and efficient solutions that could have been right in front of you all this time.
Your CFO Team
When you hire a local CFO firm, you get a financial planning expert that will serve as a CFO for your business. However, behind this one expert there is often an entire team of accountants, partners, consultants and bookkeeping veterans that provide their input, as well as help get things done faster. There is always a second pair of eyes to look through a financial statement and a second pair of hands to help sort through all the receipts. You might be hiring one person, but what you end up with is your own financial department.
New Banking Contacts
CFO companies are often well-connected in the financial world. They have relationships with banks and creditors and may help you obtain necessary financing to grow your business. It’s also a good opportunity to get your own foot in the door and start building your own network of banking connections.
When it Makes Sense to Outsource
- When managing your own finances becomes overwhelming.
- When your business is too small to justify a full-time in-house CFO.
- When you could use expert advice on financial matters.
- When there are holes in your bookkeeping or financial strategy.
Many businesses, both large and small, could use the help of an outsourced CFO. However, sometimes in-depth knowledge of a business is required to make an accurate prediction or a certain business decision. When you are dealing with mergers or taking your company public, you might get better advice from an in-house CFO. But while your company is growing, outsourcing could be the most sensible thing to do. And when the time comes to transition, your outsourced CFO can train and smoothly pass along all the information to your new full-time hire.
Are you looking for a CFO that could help your business get its finances in order? Contact CFO Source for Maryland CFO services and let’s discuss how we can work together to improve your business’s financial health.