Have you ever stopped to think about whether outsourcing financial management functions of your business would benefit your organization?
You will probably be surprised how many activities they encompass and how vital they are to the success of your company. Your business thrives when these activities are in order. When faced with the options, a business owner quickly realizes that either they will need to manage their organization’s finances or hire someone else to do it.
planning, financial risk assessment, record-keeping, and financial reporting
are time-consuming cogs in the wheel of a functional business and are best
managed by someone who has the right qualifications. But the fact of the matter
is, CFOs cost money, and most small businesses do not have forty hours of work
for a qualified individual. Rightly dividing resources within an organization
is a critical matter, which is why outsourcing CFO services makes a lot of
What is an outsourced CFO?
An Outsourced CFO is a valuable partner that can:
- provide budget guidance,
- prepare and analyze financial statements,
- forecast cash flow,
- provide strategic financial planning and advisement,
- evaluate current bookkeeping systems, and
- act as a negotiator.
Beyond these critical finance utilities, an Outsourced CFO can deliver expert “back office” support to organizations so they can focus on growing their business. The finance function can be broken up into three main activities, each with a series of sub-functions.
- Transaction processing – accounts receivable, customer billing, credit and collections,
accounts payable, general accounting, payroll, tax accounting, cost accounting,
fixed asset accounting, benefits administration, and internal and external
- Control and risk management – budgeting, cash flow
management, insurance risk management, forecasting, tax planning, performance
reporting, treasury management, and internal and external audit
- Decision support – business performance analyses (ratio analysis, cost analysis,
pricing analysis), business planning support, and finance function
Is it time to consider outsourcing?
Determining whether to outsource requires a focused and deliberate
approach. Below are six advantages that
will help you decide whether outsourcing financial management would benefit
Operating Costs – Any change that will reduce costs without otherwise endangering
operations will generally be positive. Many businesses are just too small to
justify hiring a full-time, in-house CFO.
Efficiency – Inefficient operations harm your organization. A real advantage of outsourcing is that behind
your outsourced financial planning expert stands an entire team of accountants,
partners, consultants, and bookkeepers. When financial activities are
outsourced and analyzed by an independent party specializing in that activity,
efficiencies will result.
Flexibility – When a business owner wears too many hats, one is bound to fall
off. Outsourcing CFO functions will
allow your organization to become more flexible in its ability to deal with its
environment and core activities. Changes
that make an organization more agile will make it better able to excel.
Risk – Outsourcing a function may reduce the risk an organization
faces. Outsourcing payroll, for example,
is likely to reduce risk, as experts will now do the job.
Ideas – Outsourcing CFO duties will bring new ideas to the table. Small
businesses need to recognize that outsourcing an expert will give them a clear
advantage with complex financial activities.
Growth Potential – Many organizations are limited in their ability to take on more
activities because their current staff is spread too thin. Outsourcing financial activities can allow
business owners and other staff to engage in better-targeted tasks.
Before determining whether to outsource financial management functions, there are many factors to consider including the size of your business, industry, number of employees, volume of transactions, and skill sets.
As a business owner, accepting the “virtual” reality of outsourcing means adjusting your expectations. In this environment, you will not be your CFOs only client, but you will have access to exceptional quality. If you are involved in the authorization process and can extend trust beyond your four walls, then you will truly benefit from this arrangement. However, if you are hung up on signing checks and are not able to hand over responsibilities, you will hinder the process and negate the experience.
Outsourcing services from your organization may enable you to operate more effectively. With our requisite knowledge of different types of organizational structures, we can help you create innovative changes in your organization. If you would like to learn more, please call our office to speak with one of our professionals and learn how you can enhance the success of your business.
Learn more about our outsourced CFO services by clicking here.