Why You Should Hire an Outsourced CFO

January 08, 2020 By Dave Chase

The CFO is a key influencer on a business’s success. From startup to enterprise, every business benefits from a strategic CFO. Though different companies have different needs, a good CFO can help make the difference between a successful year and an unsuccessful one. 

However, contrary to tradition and popular belief, not every business needs a full-time CFO. Here’s why you should consider an outsourced CFO for your company.

What is an Outsourced CFO?

An outsourced CFO is financial expert who steps into the role of CFO at a business in a variety of capacities. Outsourced CFOs can be hired in the interim, acting as Full Time CFO until the business is able to hire one. CFOs can also be outsourced on a project, part time, or full time basis, hired to perform one specific task, or to fully command the finance and accounting functions of the business. They can consult, create financial strategies, and effect positive change just as well as a full time CFO, but on a pay for play basis.

In short, an outsourced CFO is you business’ financial expert — on your terms. Outsourced CFOs usually work on an hourly basis, meaning that you only pay for what you use. Fixed fees are also a great option for businesses needing assistance with specific projects. An outsourced CFO adapts and changes depending on the needs of the client.

Outsourced CFO

What Skills Should a CFO Have?

CFOs provide a valuable service, so let’s look at what their skillset should look like.

  • Problem Solving and Decision Making. CFOs are faced with big decisions that can drastically affect the trajectory and success of a company. They are faced with unique problems and situations for which there is no easy solution. CFOs are responsible for analyzing the information they have and then creating a solution. 
  • Data Analysis and Expertise with Big Data. CFOs have to understand what is and isn’t working within their company and their industry. The best place for them to gain that knowledge is through analytics from within and without the company. CFOs should be able to interpret and find meaning in the data they gather. By better understanding what is happening around them, they will be able to provide a better direction for the company and better manage risk. 
  • Management and Leadership. CFO responsibilities consist of much more than those of an accountant. They are a key part of the leadership in a company and have to be skilled at managing the numbers and managing people. This will help them make better decisions and help their company become more profitable. 
  • Innovation with Technology. What worked a few years ago can be outdated and useless, and a good CFO should know that. They should have the skills to find, understand, and see the value of new technology. They should feel comfortable being the champion for a digital transformation and drive digitization. 
  • Flexibility. A good CFO should be comfortable wearing many hats and helping throughout the entire organization of a company. While they don’t have to be an expert in every field, they should feel comfortable working alongside the rest of the leadership team and providing valuable perspectives based on analytics and research. 
  • Finance and Accounting. While CFO duties and responsibilities are numerous, CFOs are still expected to be skilled at a business’s finance and accounting functions.

What Do CFOs Care About?

The responsibilities of a CFO are to minimize risk, ensure compliance, and protect assets. Therefore, it’s up to a CFO to:

  • Hire and retain a strong financial team.
  • Manage costs.
  • Use big data to guide decisions.

They drive financial intelligence, which makes them responsible for championing more efficient processes and adopting advancements that will directly benefit their company. 

CFOs have become more than number crunchers and are more than promoted controllers. While they are still connected to figures and research, CFOs interpret and use that data to drive the direction and success of their company. They care about basic accounting aspects like the annual budget and cash flow, but they also focus on dynamic strategic decisions and investments. A good CFO cares about influencing operational decisions in marketing and strategy with high-quality information to back their decisions. 

How Does a CFO Add Value to a Company?

In the past, a CFO was one step above an accountant. However, times have changed, and a CFO’s role has grown. Now they are still responsible for overseeing accounting and the bottom line, but they are also expected to keep an eye toward the future. They are responsible for preparing the organization for what is coming (both the good and the bad) while improving cash flow and profitability. 

Cash is the lifeblood of any company, and CFOs are responsible for helping the company get the most out of every dollar. CFOs can:

  • Drive financial strategy.
  • Create financial forecasting.
  • Be a strategic partner for each department.
  • Improve cash flow.
  • Establish financial visibility.
  • Optimize and analyze product lines.
  • Increase profit margins.
  • Implement an effective cash management system.
  • Prepare for a transition of ownership.
  • Direct changes in operations to increase productivity.
  • Communicate with all stakeholders.
  • Facilitate analytics.

Why Hire an Outsourced CFO?

Hiring a CFO is a monstrous task. The implications of choosing the right candidate that fits within budget constraints and company culture can mean lots of time and energy spent reviewing resumes and interviewing. Choosing an outsourced CFO may be right for your business if:

You want to hire an expert, but can’t afford the salary. Outsourced CFOs are experts with proven success at many different companies. You’ll get access to their tried-and-true ideas, without having to pay salary or benefits. Just pay for the time you need, when you need it.

You only need a few hours a month. Outsourced CFOs can work on a part time or project basis, which means no more paying for unused hours. Even better, outsourced CFOs are experts and have worked as CFO on several different companies, so they’ll likely be able to get the job done in even less time than someone with less experience. 

You’re looking to hire a full time CFO, but need help in the meantime. Outsourced CFOs can pinch hit for a short period of time, keeping the financials up to date, assisting with planning and modeling, and managing the financial function so you’re free to focus on choosing the right candidate. Even better, they’ll help make the transition even smoother once you’ve found the right person for the job.

You’re worried about choosing the wrong candidate. A good hire means more than finding the right expertise to get the job done. Often times cultural fit and personality can make or break an employee relationship, especially at the executive level. Outsourced CFOs work differently than internal hires and mitigate the risk of hiring the wrong person. Take an outsourced CFO for a test drive on a project or two before bringing them in full time. If it doesn’t work out, no harm, no foul.

Outsourced CFO

Outsourced CFO for Every Stage of Business

Because of the flexible nature of outsourced CFOs, businesses of all sizes can benefit from their services.

Startup

Startups often don’t need a full time CFO, so paying a $300,000/year+ plus benefits is unnecessary. Budget constraints can also limit companies from hiring an experienced CFO, so many startups hire connections that may not actually have the experience they need. An outsourced CFO is ideal for startups to stay under budget and get the strategy and expertise they need to grow.

Growth Stage

As a company grows, its needs can change dramatically. Accurate financial modeling and planning is paramount to the successful growth. Because needs may differ from month to month, an outsourced CFO is a good option, taking on projects and tasks as needed. It’s a win-win — the company saves money on unused hours and gets an experienced professional to get the job done.

Enterprise

Large businesses usually have more full time needs than smaller businesses. In this dynamic, outsourced CFOs can plug into organizations as consultants on a short term basis, or can even fill CFO needs on a fixed term basis. For example, if a company loses their CFO, their need for strategic analysis and planning doesn’t go away during the hiring process. Yet, hiring a good CFO can take time. Outsourced CFOs can step in during the interim and help make the transition easier on both the company and the new CFO.

When to Bring a CFO On

One of the benefits of outsourcing the CFO position is that you don’t have to wait until your organization is large enough to require full-time CFO responsibilities. Outsourced CFOs are scalable in a way that a full-time hire isn’t. That being said, there are certain times when the input of a CFO becomes particularly valuable, such as:

  • Preparing for Growth. CFOs provide a big-picture perspective that can be extremely helpful when your organization is preparing to expand. Since one of the responsibilities of a CFO is to plan for the future, they can help you avoid pitfalls and better plan for success. 
  • Raising Capital. The very presence of a CFO can help provide credibility to potential vendors and lenders. In addition, a CFO can help you determine how much capital you need and what sort of debt you can afford to take on. 
  • During Audits. Nobody likes an audit—but no one knows the books and your financial situation like your CFO. Although they provide value daily, a quality CFO is particularly essential during audits. 
  • When Fine-Tuning Strategy. Any accountant can tell you what the ledgers say, but a CFO is a member of the leadership team that can help guide the direction of any company. They’re likely to provide a valuable perspective distinct from the other executives at your organization.

Outsource Your CFO Through Amplēo

As your business looks to hire a CFO, consider hiring an Outsourced CFO, instead of a full time CFO. You’ll get best-of-breed financial expertise and see the same results for a fraction of the cost of a full time CFO.

Not sure what your business needs? Amplēo offers highly skilled CFOs ready to tackle your business’ unique challenges. Contact us for a free consultation.

Are you ready to make finance

a competitive advantage?