Many businesses are seeking to outsource CFO as a way of reducing costs and risks whilst improving their company’s processes and growth.
However, an equal number of businesses are unaware of the value in hiring a chief financial officer. This is mostly due to a lack of knowledge as to what a chief financial officer actually does; they don’t just sit around keeping track of bills, they are responsible for overall financial strategic operations. They are more of an asset than an expense.
Here’s everything you need to know before you outsource a CFO:
When you should do it
Employing a third-party chief financial officer is typically done on a project basis as a way of sourcing financing, bettering internal controls and processes, and boosting organisation growth.
When a business is growing, it may find that its working capital is being surpassed quickly. A chief financial officer can recommend a range of financing options (e.g. private equity, bank debt or asset-based lending) to the company in order to help them figure out ways to raise the capital required to sustain their growth until they are in a better place.
While CEOs know how to manage operations and customers, they may need assistance with their finances, especially in regards to how to make investments that can help boost growth. They may want to outsource a CFO to get help with the financial components of their business, such as dealing with investments, economic strategy, cash flow, and return on assets.
What arrangements should be made
Arrangements depend on the needs of the business. A company may want to have a chief financial officer visit on a weekly basis in order to keep them up-to-date with what’s happening, or they may be happy to have them engaged only when they need a specific task to be completed, such as a budget preparation. Other companies may outsource a CFO when they are in-between chief financial officers (i.e. when they have recently lost their previous one).
Despite the fact that a third-party chief financial officer is engaged on a temporary basis, it is important that they are thoroughly involved in all aspects of the business. In order to make fully-informed financial decisions they must be highly knowledgeable about the company.
Essentially, the CEO should be well aware of the needs and expectations they have before they outsource a CFO. They should communicate with the chief financial officer to ensure they know what is expected of them.
How to find a skilled professional
Each region will have their own range of chief financial officer firms; there should be a wide variety to choose from. To find a suitable person, web searches can be useful – be sure to look up company reviews, which can be found on social media or on search sites such as Google. Alternatively, you may want to use word-of-mouth referrals, as these can be more reliable than online reviews. Have a chat to other business partners and contacts.
Regardless of how you find them, it is important that you interview your candidates before you hire them. This ensures that you can find someone that is the best fit for both your business and your CEO. When you outsource a CFO it is crucial that they get along with the CEO – a strong partnership is an important part of the process.
Employing a specialist to assist with a company’s financial needs can help businesses grow and reach their goals. A good chief financial officer will improve a business’ financial efficiency and strategy whilst increasing profits.