Small businesses compose 99.9% of all the businesses in America. Interestingly enough, a survey states that 60% of small business owners do not feel that they have enough proficiency in accounting and managing finances.
This discrepancy has led to only 35% of smaller businesses, on average, surviving for a decade. So, how can small business owners ensure they are running their businesses with complete clarity? One proven approach is through outsourced CFO. This blog will discuss its benefits in detail.
Outsourced CFO- Who Are They And What Do They Do?
An outsourced CFO handles the responsibilities of a Chief Financial Officer. They provide sophisticated financial strategies, designs, systems analysis, and ways to optimize operations, among others. The outsourced CFO assists the company financially and prepares them for business growth. They have all the same responsibilities and duties as full-time CFO, helping to review financial results, along with interpreting and presenting them to upper management. Here are some of the primary responsibilities of an outsourced CFO:
• Raising capital
• Overseeing audits
• Controlling inventory
• Implementing systems
• Deciding on capital acquisitions
• Managing and forecasting cash flow
• Controlling costs
Other than managing day-to-day finances, an outsourced CFO has to be forward-thinking. When strategizing a business’s financial objectives, they account for governmental, tax, industry, economic regulations, and social issues.
Reasons To Hire An Outsourced CFO
There are several reasons why businesses, especially smaller ones, may hire an outsourced CFO, with some of the main ones being:
Experienced Financial Experts
An outsourced CFO often has several years of experience, meaning they have worked with various businesses facing unique challenges. Due to this, they can give companies the best assistance and advice to help them meet their goals optimally.
An outsourced CFO has often worked across many kinds of sectors, such as non-profits, public, corporate, and more. Therefore, companies can receive high-quality services no matter the scope of the requirements.
Companies can receive objective, transparent financial information with an outsourced CFO, as they are unbiased. Therefore, they will only be honest about the finances, guiding company owners regarding the best decisions to make.
They will not hesitate when reporting issues that should be addressed and will also have solutions to offer. An in-house CFO may have their perspective hampered because they have personal ties with the management and may not be free to express unfavorable viewpoints.
Assistance In Raising Funds
An outsourced CFO is most commonly hired to raise capital, which is time-consuming and challenging. However, they usually have prior experience within that function. Due to their experience, these individuals have strong connections with those providing financial backing.
They can also provide insight into funding possibilities that weren’t explored before.
The outsourced CFO ensures that they research and analyze the financial situation of the company in question, create business strategies, and assist with negotiations to raise adequate funds.
Helps in Saving Money
An outsourced CFO helps businesses save money, as their service costs less than hiring an in-house CFO. Since the business’s success doesn’t impact them directly, they make strategic decisions more quickly and do not struggle with decisions involving cutting costs.
An outsourced CFO helps businesses get results quickly. Since they have ample experience, they do not need to figure out where to start, but rather, they prioritize results. When a good overview of company objectives and goals is made, the hired CFO can help the owner meet them quickly.
Hiring an outsourced CFO is more cost-effective than hiring an in-house team member. The reason for that is that a CFO is generally one of the highest-paid employees of a company. Therefore, outsourcing this function can be smart for smaller or growing companies, as the saved money can be invested in business expansion.
Furthermore, an in-house CFO will require other payments apart from their salaries, such as payroll taxes, benefits, recruitment fees, bonuses, insurance, severance payouts, thirteenth-month payment, office space, contributions to a retirement account, and more.
Therefore, a business can receive the assistance of a highly competent CFO at half cost by outsourcing.
Crisis Control And Restructuring
An outsourced CFO holds knowledge regarding all kinds of products, industries, and markets, enabling them to predict financial risks accurately. They provide a comprehensive plan to defend an organization’s finances from getting impacted. This is done by controlling risk factors, such as recessions, accounting problems, and financial confusion.
Hiring an outsourced CFO is an excellent idea to gain clarity regarding business financials. Apart from assisting in day-to-day bookkeeping, they also provide business owners with detailed insights regarding the state of their finances, the best decisions to take, and how to raise funds. Moreover, they also save a lot of costs compared to hiring an in-house CFO.