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What Is an Outsourced CFO and Why Would You Need One?

What Is an Outsourced CFO and Why Would You Need One?

The most challenging thing about running a small business is handling your finances. Hiring individuals to keep your books and file your taxes is one thing. It is quite another to develop innovative yet financially good strategies for growing and scaling your organization while also running your company.

What is an Outsourced CFO?

An outsourced CFO is a part-time member of your executive team who reviews your business through a financial lens and provides the strategic understanding you need to make decisions. This person is an experienced manager and trusted consultant who can perform all the same procedures as a full-time CFO at a fraction of the cost.

It helps you to know that an outsource CFO is not the same as an interim CFO. An interim CFO is a temporary hire who fills in for an individual on leave or bridges the gap while you look for an endless replacement. It is different from an outsourced CFO who becomes a crucial part of your team and can potentially work with your company for years.

What Do Outsourced CFOs Do?

Outsourced CFOs are financial experts who can handle a wide range of activities, so their day-to-day preferences will depend on your needs. For example, CFOs normally consider responsibility for a business’s administrative, financial, and risk-management methods.

Thus, they manage your complete accounting and finance department and manage your human resources team while also overseeing special projects. Let’s break it down to give you a better understanding of their daily tasks.

Financial Plan

A good CFO always takes a long-term idea, creating plans that will help you 3-5 years into the future. So first, they analyze your business’s financial situation and work with your executive team to select difficult yet possible plans and a strategy for estimating progress.

Then, they reevaluate every month to look at how the company is doing compared to its targets so they can help you create strategic decisions about hiring, pricing, and investments to make sure that you stay on the path.

Financial Infrastructure Development

Outsourced CFO services help you build the financial infrastructure you need to grow and scale, which means they could engage in any number of activities that keep your organization running smoothly such as:

  • Developing realistic hiring plans.
  • Establishing and implementing technology.
  • Building adequate policies and procedures.
  • Making a solid and repeatable financial budgeting and forecasting procedure.
  • Establishing systems for tracking your key performance indicators and managing cash flows.
  • Team Leadership

As the senior finance and accounting group member, your CFO is eventually responsible for your financial reporting and analysis procedures. Therefore, they hire, train, and guide the staff you need to get it all done. Over time, this includes a myriad of functions.

Initially, however, they will handle your business’s accounting team and do much of the financial accounting themself to summarize that data into meaningful understandings. They will also be the primary issue of contact for outer financial partners, like your tax counselor, bankers, and investors.

As with all business decisions, analyzing the pluses and minuses of this approach to hiring is important. After all, this person will become a key member of your administrator staff and intimately familiar with the inner workings of your business, so it is imperative to be wise.


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