How Does An Outsourced CFO Work?

The 3 biggest challenges for small and medium-sized businesses (SME’s) today are time management, cash flow and growth. What if we told you we can tackle all 3 at once?

There is one strategic option that many businesses are unaware of: outsourcing at the management level. In particular, outsourcing the chief financial officer (CFO) role.

Outsourcing is not a new concept in business, it’s just more commonplace for functions such as legal, marketing or web design. With the introduction of expert software, such as Employment Hero and Dext, and financial systems like Xero operating in the cloud, what used to be a ‘face to face’ role can now be outsourced and based entirely online.

When it comes to considering an outsourced CFO, here’s what you need to know.

Quick Onboarding

Outsourced CFOs can be integrated into the team far more quickly than an in-house role. They typically don’t need extensive onboarding or training, aside from a basic introduction to your company. Their experience brings efficiency.

Broad Experience

A full time CFO might have long-term experience with several companies, but outsourced CFOs offer a different approach: broader experience across a wider range of industries.

Outsourced CFOs bring their skills to work in whatever companies need their help, exposing them to different strategies, investment approaches, and technology tools. This wealth of knowledge can be great for inexperienced business owners and businesses unfamiliar with the market.

A good outsourced or ‘virtual’ CFO will play a pivotal role in shaping the overall direction of your business, question conventional thinking and challenge the entire business to perform better.

Objective Insight

This is a less obvious, yet important benefit of outsourcing that you just can’t find through an in-house role. Outsourced employees are objective. They come into your company with no knowledge of past decisions, internal debates, or company politics (We are all human).

As in-house staff gain experience, these issues inevitably play into their decision-making. But outsourced CFOs maintain a necessary layer of separation from their client’s companies, giving them a more unbiased perspective on strategy.

They will focus on current performance needs, long-term strategic planning and guidance, and a more hands-on, ongoing operational approach.

Industry Knowledge

The outsourced CFOs ongoing engagement with the market provides another advantage: new industry knowledge. Outsourced CFOs are more plugged into relevant industry trends by the nature of their work.

Outdated strategies don’t cut it—every client they work for needs a forward-thinking and current approach. Compare this with a traditionally hired CFO, who may have spent years in their previous role. This specialization can be great—but it can also be a downfall depending on your goals. Many businesses find that CFO’s with a wider range of experiences suit their businesses better.

What about ‘Virtual’ CFOs?

Virtual CFOs guide your finance team through the process of taking all of your financial systems online, or into ‘the cloud’. They use the very best finance software to streamline your data entry, record keeping and reporting processes (to name a few).

They collaborate with your existing bookkeeping and tax accountant team members to bring together a holistic view of your business finances.

As they are ‘plugged in’ to your systems they can gain access at any time to compile the information and form the strategy your business needs.

How much could I save by outsourcing CFO duties?

Most businesses can save thousands of dollars by moving from a full-time staff member to a more efficient outsourced model. This frees up budgets for other areas of your business.

You could have someone managing and leading your financial affairs for a fraction of the cost of a full-time staff member.

Outsourcing your financials gives you the flexibility to access their expertise during busy periods (such as big projects) and pulling back when things are quieter.

While you may be nervous about the cost of outsourcing, in the long run, an outsourced CFO is an investment that pays for itself.

Could your business benefit from using an outsourced CFO?

The simple answer is any business can probably benefit. Having the confidence, from a financial standpoint, to make more informed decisions about your business is not a luxury, it’s a necessity. Businesses like yours can have the benefit of a high-level finance resource without breaking the bank.

In short, outsourcing your CFO role is more feasible than you think!

The benefits of outsourcing apply as much to these high-level roles as your day to day operational roles. When you have the right expert in your corner, you’ll be surprised at how quickly your business will take off.

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