If you find yourself yearning for strategic financial advice to guide your decision-making process, it’s a clear sign that you need an Outsourced CFO. Keeping a full-time CFO busy in the early years of your business may prove difficult. Since an outsourced CFO operates under a contract basis, they’ll only conduct work for your business when it’s needed. This means that you won’t be paying for support you don’t require and can invest all of the additional dollars into growth initiatives. Off-loading the financial work to someone else can free up your time to spend it where it counts the most. Hiring a financial consultant can also set you up for long-term success.

It records and presents information about the company’s financial position, revenues, expenses,… A company generating $5 million in revenue may be ready for a CFO while a company generating $20 million may not. One business could sell a product for $1.5 million but sell only five units in one year, while another might need 48,587 transactions to reach $10 million with an average transaction of $206. The complexity of the transactions themselves is a factor in determining the need for a CFO. If the answer to any of these questions is yes, you may want to work with an outsourced CFO service to find a part-time CFO.

What Is an Outsourced CFO and Do You Need One?

An Outsourced CFOs value could come from more than just their skillset. Many outsourced CFOs will have a network of accountants, consultants, and lenders that you tap to help your business get the help it needs to go to the next level. If your needs aren’t overly complex and your finance plan is costing you more than 2% of your revenue, ask yourself why? ORBA Cloud CFO can replace the equivalent of one full-time employee (plus, we often see an additional 20-30% savings in the finance department). For example, we also work with in-house CFOs, but recently one of our client’s CFO left and we simply increased our scope of work with the client to absorb the CFO’s former responsibilities. This was a win for our clients considering the current economic climate.

• As most outsourced CFOs will be assisting several similar businesses at a time, they’ll bring with them a wealth of insights into how your business can succeed based on a much wider range of experience.
• Having an outsourced CFO provides spot-on, high-level financial analysis of your cost and profits to help you plan strategies to deal with the financial problems or concerns your company faces.
• In other industries and businesses, the decision may not be so clear.
• A few may work on an hourly rate, but you will usually see fees by day, week, or month.
• Based in the PNW, she’s the proud owner of 8 pairs of Birkenstocks and a sassy, cuddly cat.
• When we bring up the topic of CFO services, some of our business clients wonder if their businesses are big enough to justify paying for a CFO.

They’ll ensure that your accounting measures, wages, revenue and expense schedules, balance sheet verification, etc., are in order. This not only helps in financial planning and funds allocation but also in acquiring and managing funds. Most importantly, financial systems provide insights for critical financial decisions. However, most companies wait until they experience substantial growth that presents complex financial processes and requirements to outsource a CFO. For example, companies experiencing rapid growth bring in a CFO to help manage the growth and cash flow, deploy proper processes, and budget for a corresponding increase in expenses. While outsourcing CFO services offers numerous advantages such as cost savings, flexibility, and access to top talent, it is essential for businesses to carefully consider the potential drawbacks.

Outsourced CFO services USUALLY DON’T: *

If you’re looking to free up some time in your busy schedule or would like to remove the stress of bookkeeping and financial planning from your to-do list, this could be the time for you to hire an outsourced CFO. How much financing do you need, and what combination of debt and equity will help you uphold company value while achieving the growth you desire? An outsourced CFO provides services to help you determine what capital structure is ideal for your organization. Finances are imperative to the daily operations of an organization, and financial reports keep you apprised of your current (and future) standings. Many outsourced CFO services include financial report facilitation, interpretation, and drill-down. Let a CFO analyze your reports and give you the most important takeaways in a way that best supports your business needs.

The savings can be even more significant when you consider an integrated outsourced finance department, complete with bookkeeper and fractional controller. Are you 100 percent sure that your bookkeeper and controller are https://www.bookstime.com/ delivering a competitive advantage? Some outsourced solutions include assistance in these areas along with CFO services. The costs of a virtual CFO also average around $175 to $350 an hour or $3,000 to $12,000 per month.

Advantages of an Outsourced CFO

An outsourced CFO is a financial expert that you hire as a consultant for your business. They can come in and help you make big strategic decisions, they can provide financial strategy services, and they can work on your budget. This means they’re available as a part-time, ongoing resource based on your needs. For many small businesses working on a budget, these are not functions readily available within your current staff, but might be critical to your success.

• Outsourcing also saves the time from dealing with staffing, supervising, and guidelines the controller should follow.
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• You will want someone that understands the latest financial and accounting practices, and you also need someone you can trust.
• However, it is beneficial if the prospective CFO has worked with companies in the same industry as you, as this means they have the experience to handle your type of problem.
• The same reasoning applies when asking how much it would cost to hire an outsourced CFO.

If your organization’s books are a mess, it could be due to a variety of reasons. Maybe your organization never had financial systems in place until now, or perhaps you’re raising funding and realize you need accurate books to approach potential financiers. Unlike private outsourced cfo companies, nonprofits set out to achieve a purpose greater than generating revenue. However, just like for-profit companies, nonprofit organizations must have processes and procedures in place to manage daily financial transactions and meet compliance requirements.

You must speak directly with the person who will be your POC and ensure that your communication styles are in sync so you can be sure you will have a synergistic relationship if you do choose to sign with that company. It’s not enough to look at previous year’s data and come up with a 12-month plan — the current speed of business demands that essential metrics are assessed continually and acted upon promptly. Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish. The information we have provided here will help you evaluate your needs and decide whether outsourcing is the best choice. You will want someone that understands the latest financial and accounting practices, and you also need someone you can trust.

Contrast that with the average CFO salary of $225,000 to $275,000 per year (salary + benefits), and you’ll easily save 80 percent by outsourcing the CFO role. When it doesn’t make sense for your business to hire a full-time CFO but you are still facing challenges that require those skills, an outsourced CFO could fulfill that need. For businesses that are growing quickly or who need CFO-level guidance at a part-time capacity, an outsourced CFO can make the most sense.