As anyone who owns or operates a business knows, being on top of your finances is imperative, but also difficult. Many founders did not start their businesses because of their love for finances. Rather, they started them because of their love and acumen for their specific field. As a result, business owners often find themselves in a situation where they are overwhelmed by the financial side of their businesses. And this is where CFO services come in.
We have written about CFOs on this blog before, so we’ll just give a quick refresher into what it is that CFOs do and why they are so important to successful businesses. Then we’ll be discussing what it looks like to outsource CFO services.
What Does a CFO Do?
Or perhaps a better question is what does a good CFO do? The job of the Chief Financial Officer is, broadly, to direct and oversee a company’s accounting and finances.
Ideally, this should encompass every aspect of the company’s financial planning:
Another way to define the position of CFO is acting as a company’s lead financial strategist. Their financial data and recommendations will play a large role in informing the company’s strategic plans.
What Are Some Services of a CFO?
There are several main categories of responsibilities that can consistently be expected of a CFO:
- creating and reviewing regular financial reports
- ensuring that a company’s operations are as efficient as possible
- conducting long term financial planning.
Let’s take a brief look at what each of these categories encompasses.
Reviewing financial reports
The first service is creating regular financial reports, and then sharing them with the CEO. By doing so, the CFO is conducting the important process of balancing debt, revenue, and expenses in order to meet the company’s financial goals.
These financial reports are important not only to ensure that your business is operating in the black, but also to build systems and keep track of performance over time. Regular financial reporting can help to answer questions such as, “Why was this quarter so much more successful than the other three?” Or, “Was the money we spent on that consultant worth it?”
Ensuring efficient operations
Efficiency is so important, especially in situations where there may not be much budgetary wiggle room. However, efficiency can also be difficult to track, especially for someone with no experience doing so.
Luckily, trained CFOs are quite adept at reviewing a company’s processes and operations through an efficiency lens. Through budgetary management and an examination of key performance indicators, CFOs are able to advise the CEO and COO (Chief Operating Officer) on ways to streamline processes for efficiency and financial growth.
Conducting long-term planning
The last area of responsibility for a CFO we will touch on is long term financial planning. We have brought up long term financial planning before, and that is because it truly is critical to your business’ long term sustainability and success.
It also tends to fall into the category of things that CEOs are too busy to prioritize, and/or are not trained to undertake. Once again, this is where the CFO comes in.
This is exactly what CFOs are trained to do. Through an examination of the financial data they have collected, CFOs will come up with a proposal for a strategy for your business’ long term success. This includes an analysis of what the future may hold and how your business will respond to it.
Clearly, the CFO has very important responsibilities, and a lot of weight is given to their opinions and plans. Hence, hiring a full-time CFO is no easy feat.
Next we will discuss the best way to seek out CFO services for your company. We highly recommend looking into outsourcing as a viable and effective option for CFO services.
Below, we will review:
- why companies might want to outsource their CFO
- the advantages that can come with outsourcing your CFO
- what exactly it is that an outsourced CFO can do.
Why Should You Outsource CFO Services for Your Company?
First, why outsource your CFO services?
Why not just hire a CFO onto your payroll?
There are a few reasons, all of which boil down to one thing. Outsourced CFOs can be more efficient, because they focus on their services in a given time. Hiring a CFO onto your payroll typically means you will be hiring on another full time, permanent employee. This comes with its own expenses outside of payroll – insurance coverage, office space, etc.
The services offered by CFOs are incredibly important, but a CFO does not always have to be working full time year-round to provide those services. This is especially relevant to businesses who need CFO services, but don’t necessarily have the capital to hire on a full time CFO.
Therefore, outsourcing your CFO gives you the flexibility to find someone who can work within your budget as efficiently as possible. Maybe your main need for a CFO is to help you create a long term, strategic financial plan.
So, think about hiring a CFO consultant from an outside advisory firm for the time period you need. You will receive excellent services, yet not have to worry about having an extra member on your payroll.
CFO consulting services offer choices
Outsourcing your CFO services gives you more than just financial flexibility. It gives you flexibility in who you can hire, and even in the services you can get from your CFO.
Companies that provide outsourced CFOs often offer virtual CFO services. This can make sense especially if you are only looking to hire a CFO for a short period of time, or if you are not looking to hire someone on full time. Being open to having a virtual CFO widens your hiring pool immensely. You are no longer geographically confining your hiring process, but instead can truly find the best possible fit for you business.
With CFOs you are generally looking for efficiency and expertise, and – especially if you only need a CFO for a short period of time. This is because you probably don’t have time to train someone on everything.
Outsourced CFOs have worked with many businesses, and have a considerable amount of industry experience. Hiring a high level professional like this means that not only will they perform well while working for you, but they will set your business up for success for years to come. CFO professionals are highly skilled at organizing and streamlining systems such as financial reporting and other financial management processes.
Seeking out CFO services from a trusted and established advisory firm also means that you also have others in the firm available to troubleshoot if any issues come up. This provides your business with the most complete skill set attainable. If your outsourced CFO does not know the answer to something, chances are one of his or her colleagues does.
What to Expect When You Outsource CFO Services
Lastly, we will review what you can expect by hiring an outsourced CFO.
These professionals are equipped with all of the skills that you would expect from a Chief Financial Officer.
- financial analysis and reporting
- analyzing metrics and data points to find trends
- reviewing contracts
- managing cash flow and the treasury
- supporting mergers and acquisitions
- preparing, monitoring, and reporting on the budget
- guidance with financial software
- managing a company’s overall accounting, financial, and treasury infrastructure
- forecasting cash flow
- communicating with financial stakeholders
There are also some inherent benefits that come from hiring someone outside of your organization: an outsider is often able to see a clear and objective picture of a company’s internal financial infrastructure.
And additionally, there is no danger of time and productivity leakage due to internal office politics or other dynamics with an outsourced CFO.
At Saddock Advisory, we have years of experience in the financial field. If you are considering outsourcing your CFO services, we would be happy to speak with you.
Get the Support You Need
Finances are a part of life, and how they are managed can make all the difference. From helping your business make the necessary changes that come with growth to experiencing great changes in your personal life, the right expertise can make everything so much easier.
Be sure to consider CFO consulting for your business, as well as the benefits of having a personal CFO. The extra energy you can spend on non-financial pursuits will make your life more enjoyable and the peace of mind from knowing you are making the best decisions is invaluable.
At Saddock Advisory, we don’t have clients, we have partners in success. Schedule a meeting with us here to see how we can help your business grow.