The advantages of Outsourced CFO Services

April 19, 2022by CFO Australia0

Looking around for the most concise definition of the advantages an outsourced CFO service offers, the Green Group has come up with what looks like the shortest and most descriptive definition around. They say that the reason why a business should have an outsourced CFO is that they offer ‘strategic financial insight and manoeuvring that leads to increased revenue, without the need to pay a full-time CFO salary.’  That pretty much hits the nail on the head for concise definitions and without the detail, sums up why an outsourced CFO service is such a big advantage for small to medium sized businesses (SMB).

For start-ups or SMBs that are experiencing rapid growth and need senior CFO level financial advice and direction, or start-up businesses who have limited access to cash, and money is tight, there is a tendency to think that they can’t afford to invest in an outsourced CFO service. Yet for businesses that fit either of these scenarios and actually, for many small and medium sized businesses, this is when they are at their most vulnerable and even a small financial setback can have a dramatic negative effect on the business, even sending them under.

The reality is that it is possible to hire an outsourced CFO service for as little as one day a week, which is unlikely to have a dramatic impact on the businesses’ bottom line and will more than likely be the best investment the organisation can make. Even this level of involvement by an outsourced CFO service can have a dramatic impact on the profitability of an organisation and can help dramatically transform a business.

An outsourced CFO service can hugely improve the financial performance of a business by:

  • Preparing new, or reviewing existing budgets and financial plans, to ensure business goals are achieved.
  • Identify problems and issues in the current business strategy and find solutions and remedies to bring the business back on financial track.
  • Implementation of financial reporting systems and financial functions that provide invaluable insight into the businesses’ performance
  • Ensure that organisations are compliant and that systems are developed to avoid cyber-crime, fraud, and errors. Ensure that the business has an effective data protection strategy and is adequately insured against all risks.
  • Provide strategic insight into the company’s target market, the organisation’s product performance, its’ customer demographics, and the businesses’ competitors, etc.

An outsourced CFO service will build a business model for a business, that looks at various factors:

  • Market conditions
  • Competitor performance and products
  • Market predictions
  • Review internal and external resources
  • Current and likely future customer behaviour
  • Competitive positioning and trends
  • Build a detailed financial plan for the business

As well as building a financial plan, an outsourced CFO service will respond to the fast-changing market that now exists globally and build in key metrics to the financial plan that measure the performance of the business against a fast-changing market. This will provide up to date information that will allow a business to make decisions based on the latest accurate information.

An outsourced CFO service can install accounting and reporting systems including real time accounting software that allows the outsourced CFO to view the businesses’ financial transactions and activity in real time and simultaneously. They can also build systems that include audit tracking and financial oversight, which will reduce errors and improve the accuracy of accounting data. They can take information from the businesses’ operational areas to help the business make informed decisions on borrowing, restructuring, investment decisions and staff investment. Finally, the outsourced CFO can install existing software to ensure that all tax compliance happens on time and without errors.

The cost of recruiting a CFO is prohibitively expensive for most small to medium sized businesses but having an outsourced CFO service allows a business to save money needed to hire a full time CFO but still enjoy all the benefits of having a CFO on board. The great advantage is that a business can scale up or down depending how much an outsourced CFO service is used, depending on what is happening in the business at a given time.

The outsourced CFO service can also help a business save time by taking over financial functions that would have to be handled internally. For example, Budgeting, payment of bills, processing the payroll and handling financial correspondence and paperwork.

An outsourced CFO service can also take over the following functions within a business:

1. Financial management and forecasting

An outsourced CFO service can oversee all the financial functions for a business. They can build internal accounting systems, controls and structures, provide regular and accurate reporting and make sure that there are rigorous systems in place across all accounting tasks. Companies that are growing fast will benefit most from regular financial forecasting and projections. An outsourced CFO service will develop reporting structures and rolling forecast that project forward for a year or more and that information can be used to allocate resources and finances, to achieve goals.

2. Cash Flow Management

An outsourced CFO service will create cash flow statements that incorporate net income, long term assets, shareholder’s equity, and liabilities. As well as using cash flow analysis to help cash improvement and management. An outsourced CFO service will also put together presentations and attend business meetings to help with the acquisition of funds from investors, lenders, and other financial institutions.

3. Tackle Financial Challenges

When a business is struggling, it can be very helpful to bring in an outsourced CFO service to provide expert advice and expertise to help get the business back on track. If this is done quickly when problems emerge the easier it is to return to financial health. An outsourced CFO service can help with:

  • Poor cash flow and profitability
  • High business overheads
  • Losing clients
  • Failure to raise capital

4. Grow the business

An outsourced CFO service can develop all the financial tools needed when a business decides to scale up. They can specifically:

  • Ensure that the financial infrastructure is robust and fit for purpose
  • Determine the most costs-effective tax structure
  • Apply for multi-state registrations and even multi-country.
  • Lead the process for obtaining equity or investment
  • Help obtain financing and apply for loans
  • Carry out financial forecasting and risk assessment.

by CFO Australia

CFO Australia is an Advisory firm located in Sydney offering CFO and Management Consulting Services for fast growth and entrepreneurial businesses. CFO Australia deliver strategies that empower our clients success and have witnessed our clients grow year-on-year by an average 23%+ and know our hands on approach contributes to this success

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