The simple answer to why you should onboard an outsourced CFO is this: strategic financial insight and maneuvering that leads to increased revenue, without the need to pay a full-time CFO salary. But you probably want a little more detail than that.
You’re likely a stakeholder in a startup or a small-to-medium sized company that is experiencing rapid growth and recognizes the need for C-suite level financial direction. When you’re bootstrapping or planning expansion and money is tight, you may feel it’s not feasible to hire CFO advisory services. Yet this is also when your business is most vulnerable, and even the smallest financial misstep can set you back incredibly far – sometimes beyond repair.
The good news is that you can hire a part-time experienced CFO in-person or as a virtual CFO for one day a week without demolishing your company’s bottom line (more on this below), and even this level of involvement can dramatically transform your operations. They can enable you to overcome many of the obstacles to business growth through various key responsibilities that are tailored to your specific needs:
- Design or tweak your financial roadmap to ensure you reach your business goals
- Identify problem areas in your current strategy and help you correct your course of action
- Implement reporting systems for various financial functions that provide strategic insight
- Oversee financial controls to ensure compliance and avoid errors and fraud
- Provide strategic insight into your product performance, customer demographics, and competitive insight
Read on to learn about just a handful of the services an outsourced CFO can provide your business.
Seasoned, Strategic Insight
Steady, long-term growth requires a sound business model that takes into consideration various factors:
Your internal and external resources
Customer behavior and demographics
A detailed financial plan
It’s not merely enough to look at last year’s data and develop a 12-month plan – the speed of commerce demands that critical metrics are continually assessed and acted upon promptly and regularly.
“The modern CFO’s office has all the information and data to be proactively forward looking and steer the business. The CFO needs to have a very clear understanding of what influences change, what the key business drivers are and of course the business metrics. The evolution of the traditional Financial Planning and Analysis (FP&A) group within the CFO’s function into more of a FD&A, where D stands for Data, further enables the CFO to help steer other functions based on financial benchmarks deeper within each function. The availability of data and the capability to analyze that data with accuracy and speed allows for much more granular action items. The CFO has to be able to digest those take-aways and then educate the executive staff to help them make the right decisions to move your business forward.”
Under the leadership of a CFO, accounting and reporting systems can be put in place to ensure your business units have full visibility into the core metrics required to make those decisions quickly and efficiently. Systems like this allow you to be far less reactive and much more proactive in your overall business strategy.
Some of these systems include:
360 View of Accounting Data: Allows a CFO to view real-time procurement, invoicing, and cash flow simultaneously.
Improve Controls: Systems that include audit tracking and financial oversight to reduce financial errors and ensure the accuracy of all accounting data.
Financial Planning: Data from various operational components of the business provides business cases for cash management, borrowing, restructuring, equity raises, etc.
Real-Time Compliance: ERP reporting provides an investigative interface that helps ensure tax compliance and remediate issues.
Save Precious Time and Money
An Entrepreneur article, When to Outsource, outlines the potential cost-savings in comparing a full-time CFO salary to hiring an outsourced CFO:
“A full-time CFO with a base salary of $175,000, plus an additional 25 percent for taxes and benefits, would cost $218,750 per year, or $18,229 per month. But most small companies might only need a CFO’s services for one day per week, at an estimated [monthly] cost of $6,400–a 65 percent savings.”
Hiring a part-time CFO allows you to save money while still benefiting from the same expertise you would gain from a full-time CFO. As they help your company grow, you can then scale up their involvement with your business as needed.
The CFO can also allow you to save time by providing the financial oversight of processes you were handling internally:
Paying your bills
Processing your payroll
Handling financial paperwork
Financial Management and Forecasting
A CFO will oversee the financial and accounting functions for your company. They will help develop internal accounting controls, provide regular financial reporting and guidance, and make sure there are proper checks and balances in all accounting matters.
Companies whose business models are dynamic benefit the most from financial forecasting and projections. CFOs will develop financial statements and rolling forecast tables that project up to 12-months out so that you can allocate resources to meet your goals.
Cash Flow Management
Cash flow statements that incorporate net income, long term assets, stockholder equity, and liabilities. Through regular evaluation of cash flow, they also help include cash improvement programs.
A CFO will also put together presentations and attend business meetings to aid in the acquisition of more funds from investors and lenders.
Tackle Financial Challenges
Finally, it can be helpful to bring in a CFO when you are struggling financially and need help righting the ship. The earlier you bring in expert advice, the easier it will be to get back on the path to financial health.
Issues a CFO can help remedy include:
Poor cash flow and profitability
High business overhead
High client churn
Inability to raise capital
Debt management and loan repayment
Scale Your Business
When you’re ready to scale your business, a CFO will help you make the right moves to do so with a healthy game plan.
They can support the scaling of your business by:
Ensuring your financial infrastructure is ready
Determining the most cost-efficient tax structure
Applying for multi-state registrations if applicable
Helping obtain financing and apply for loans
Performing financial forecasts and financial risk assessment
Benefit from the financial lessons we’ve learned from working with leading Silicon Valley VCs
Start a conversation with our CFO Consultants
Greenough Group’s CFO leadership team has extensive knowledge of the financial considerations of several industries and has provided value to early-stage startups and Fortune 500 companies alike.
When we started work with Gemini Mobile Technologies, the company was a fast-growing, “bootstrapped” business with emerging multinational operations. With significant market traction, Gemini needed to upgrade its financial systems, controls, and policies, as well as augment its internal staff.
We were initially brought in to provide interim accounting staff at Gemini’s US headquarters. Realizing that Gemini needed to update its financial and accounting systems, an experienced GCG fractional CFO helped guide Gemini through a process that included:
Specifying and managing the implementation of a robust ERP system that could accommodate Gemini’s international operations
Managing the development of a multi-country internal finance and control staff
Installing annual budgeting and periodic forecasting processes
Bringing revenue recognition policies and procedures in compliance with GAAP
Developing a project cost accounting system
Planning and managing its initial and subsequent annual audits
Supporting several major financings
Assisting management in restructuring operations as business and market conditions required
“GCG’s executives don’t work like typical consultants; they integrate themselves into the company like they’re part of it. They’re deeply engaged in our business, take full responsibility, and we trust them completely,” said Michael Tso, Chief Operating Officer and Co-Founder of Gemini.
Contact us for a free consultation today, and let’s talk about how our CFO financial services can help drive growth and profitability for your business.