Numerous small to medium sized businesses (SMB) have outsourced their CFO function to a CFO Service company and for a number of good reasons:
- The costs of a full time Chief Financial Officer (CFO) are often prohibitive for a small or medium sized company (SMB).
- It is virtually impossible to find an in-house part time CFO, often because experienced CFO’s who want to work part time are working for CFO Service companies and not available for smaller organisations.
- Many business owners and management teams in small to medium sized companies (SMB) do not really understand the many benefits a CFO brings to a business, but they still need financial support and help. This often grows into the realisation that a CFO is an extremely important addition to their business and for the reasons above an outsourced CFO Service, is the best option.
For most SMBs, financial planning, and structured financial systems, are not part of the agenda as the business owner or management team are flat out on working on the business and trying to grow the business.
However, for businesses to realise their potential and to stay compliant and have a firm financial grasp on their real and expected performance, it won’t be long before they need expert financial help and using a outsourced CFO Service is an obvious choice over trying to recruit a full time or part time CFO for the business.
What does an outsourced CFO do?
An outsourced CFO can do anything a full time CFO does but offers the advantage of only charging for the actual tasks they carry out, rather than be in the business full time, with the salary, overheads, benefits and entitlements that go with their employment.
Essentially a CFO’s main areas of responsibility are:
- Strategy, planning and direction
A CFO will work with the business owner or management team to ensure that there is sound financial planning and budgeting to support the achievement of business goals and solid strategic planning to ensure that the business has a clear direction and realistic and measurable targets are set. A good, outsourced CFO will immerse themselves in the organisation and gain a full understanding of the business, so that they can formulate a financial strategy that will add real value. - Improving financial management processes
The growth of cloud-based accounting software has created huge opportunity for businesses to become more efficient and more effective at financial management, but there is also a great deal of confusion about the merits of each of the emerging cloud-based software products, amongst small and medium sized business (SMB) owners and management teams.The choice is significant and the number of small and medium companies (SMB) moving to cloud-based solutions is substantial. Choosing and using cloud-based financial software creates new challenges for business owners and managers as new skills and knowledge is needed to use and maximise the benefits of the various systems available. Many businesses need help using their cloud based financial software and even more help to gain the maximum benefit from the many features the software offers.An outsourced CFO service will have significant experience and expertise using all the cloud-based software available and will be able to advise businesses which software package will work best for them and will be able to work remotely or on site to maximise the benefits of the system and use the software to automate the businesses’ financial processes.The outsourced CFO will be a vital member of the team because of the financial system skills they bring and the ongoing use of the cloud-based software to maximise the effectiveness and efficiency of the financial processes.As financial reporting and compliance becomes more complex and the available financial software becomes wider and bigger in its scope and functionality, small to medium businesses (SMB) will need more help from experts able to maximise all the benefits the software provides. An outsourced CFO service will have the expertise in the cloud-based financial software to maximise its usefulness for the business straight away. Business owners and managers have so many other areas to concentrate on, using an outsourced CFO service, to manage an area of the business that owners and managers are likely to have very little experience or expertise in, makes a great deal of sense.
- Compliance
An outsourced CFO service can take responsibility for the increasing amount of reporting and compliance that all companies are being required to deliver. It is hard to imagine many businesses where the owner or management team want to spend their time and learn the expertise required, to deliver the necessary tax reporting, payroll reporting and business activity reporting, all required on a regular basis.Business owners are far too busy running their businesses and growing sales and profitability, rather than worrying about providing complicated retrospective reporting. An outsourced CFO service can take responsibility for all financial reporting and ensuring that the business is compliant in all areas and up to date with all reporting obligations. This means that the business owner has one less thing to worry about! - Budgeting and Financial Planning
Most businesses have a budget, whatever their size or turnover. It acts as a working document to help plan spending decisions and timings and to plan investment for growth. The budget will often be updated with forecasts, that allow the latest market analysis to be used to fine tune the assumptions and predictions in the budget.Financial budgeting and forecasting is a very time consuming process and requires both skill and experience to use the various forecasting and budgeting tools effectively. An outsources CFO service will have the necessary skills and experience to construct budgets and forecasts for a business that will help the business make better decisions and ensure that the financial resources of the business are maximised.When an outsourced CFO service builds accurate and considered budgets and forecasts, it gives the business confidence that all financial decisions will be made, will be based on solid and correct numbers and assumptions, which will give the business far more confidence going forward.
An outsourced CFO service offers businesses’ the opportunity to benefit from better strategy and direction. Improved financial management processes, risk free compliance, improved financial process management and accurate and comprehensive budgets and forecasts. All these services can be bought when needed or for agreed periods of time.
It is a highly cost-effective way of having a CFO in the business with a huge skill and knowledge base, likely to be far greater than any single individual, with a finite cost that can be budgeted for on an annual basis.
