What Is A CFO And What Benefits Do You Get From Outsourced CFO Services?

Nida Bohunr | May 16 2021

Knowing how to run your business is one thing. But knowing whether your business is actually making you money is a completely different topic. Business owners are usually so encumbered in the weed of things and trying to make it through each day that they don’t take the time to oversee their operations from a distance and answer important questions like: whether their business is performing to its highest capacity, whether they should hire extra staff or not, or whether they are getting the proper return from the investments they’re making. To answer these questions and introduce scalability in an organization, outsourced CFO services are sought out.

So, What Is A Chief Financial Officer (CFO)?

A Chief Financial Officer (CFO) is responsible for evaluating the financial metrics that drive the success of a business. They act as a sort-of advisor on what matters the most to your business and provide valuable strategies to increase scalability and efficiency in your operations. They also assist your accounting team in keeping your books up-to-date and ensuring you are accurately meeting your tax liabilities.

If your business does not have a Chief Financial Officer (CFO), don’t worry – you aren’t alone. Most small businesses do not have in-house CFOs, and it’s something of a rarity even in medium-sized businesses. However, the work of a CFO and its effect on a business’s revenue cannot be understated. It’s crucial for the financial well-being of a company because a CFO is responsible for supervising all its financial operations. But if CFOs are so influential, why don’t most small and medium scale businesses hire them?

The Problem With In-House CFOs

The problem with In-House CFOs lies with the money required to hire a full-time CFO, which is often expensive for businesses that are yet to become big. A full-time CFO can cost you up to $300,000 yearly, and for startups that are very constricted on their budget, it’s a challenging investment to make. So, if you’re a business owner reading this, what do you do? Do you continue without a CFO, or do you outsource CFO services? In this post, we’re going to tell you why it’s in the best interests of your business to go down the outsourcing route. So, read on!

What An Outsourced CFO Brings To The Table:

1. Qualified Experts, Always

CFO firms have thoroughly qualified professionals working for them, and when you outsource, you get expert advice at every turn. A CFO has six main responsibilities:

. Maintaining your budget

. Making decisions related to the capital acquisition

. Forecasting and managing cash flow

Controlling your inventory

. Reviewing and analyzing your KPIs

. Innovating measures to control costs

When you outsource CFO services from a reputed firm such as Monily, you can rest assured knowing that all six responsibilities will be taken care of efficiently, effectively, and in strict compliance with regulatory standards. Your outsourced CFO will act as a virtual business affiliate and also aid in the procurement of ample funds from investors and lenders.

2. Saves Money and Time

Outsourcing a CFO means that the services you hire to perform the CFO duties work only when your business needs the services. Meaning that you won’t be charged a single dollar extra that is not being spent towards your business’ needs. On the other hand, with an in-house CFO, you’ll have to pay them a fixed salary irrespective of how much work they put in, i.e., the in-house CFO has to be paid even if they didn’t have much work to do for a particular period. Having an in-house CFO also means that you need to devote time and money towards the recruitment process, which is bound to increase your business’s operating costs. The only defining difference between a virtual and an in-house CFO lies in the “virtual” part, actually, and you’ll be getting the exact same services with a virtual CFO that you get with an in-house hire.

3. Provides Fresh Perspective

In-house CFOs may not want to stir up any sort of trouble with business owners. After all, it’s the owners who hired them and are paying them. As a result, the perspectives and opinions they provide regarding businesses’ financial health may not always be honest. But this is not a problem with outsourced CFOs, who are likely to give you a transparent perspective about how your business is doing financially. They will judge your statistics objectively and take assertive steps towards ensuring the long-term financial stability of your business.

4. Helps You Stay One Step Ahead

A CFO will develop a rigid oversight routine to ensure proper check and balance in the financial and accounting operations of your company. They will help establish extensive accounting controls, provide comprehensive financial reporting and guide you continually on how to run your business more efficiently. CFOs also generate cash flow forecasts and financial statements projecting up to 12-months, so you have the ability to plan a coherent financial roadmap for your business and allocate budget and resources accordingly to meet your financial goals for each year. These cash flow statements can include net income, stockholders’ equity, and projected expenses and can actually help you stave off potential losses even before they happen. Companies who rely heavily on automation in their business models benefit the most from such financial reporting of CFOs; however, CFOs are mainly sought out for businesses that are in the early stages of their development.

See Also: Cash Flow Forecast: Understanding Your Numbers

Final Words

An outsourced CFO’s ability to provide informed analysis helps a company achieve both short-term and long terms goals more efficiently. A business owner may not always possess the financial aptitude required to fulfill a CFOs duty. An outsourced CFO bears this expertise, which comes from years of experience working with a variety of different businesses. Their financial knowledge gives the CEO actionable insights to help them make strategic investment decisions and expand their business more robustly. So, instead of hiring an in-house CFO, outsource one, and you’re sure to benefit from the points mentioned above.

Author Bio

A highly skilled accounting professional at Monily, having extensive and diverse experience of working in US healthcare and agriculture industry. Nida is a CA finalist with expertise in Bookkeeping, Auditing, Bank Liaison, Tax Preparation, Accounts Payable, Accounts Receivable.