Outsourcing Your CFO: A Solution for Small Businesses

Written by David (DJ) Johnson
Business PlanningStartup Finance
African American businesswoman going through documents while working in the office

Are you a small business or start-up in search of financial guidance, but unsure about the cost that comes with hiring a CFO? By outsourcing CFO services, a professional can use their skill set and experience to provide support when it’s needed, without requiring a full-time salary.

At some point, startups must outsource an expert to help ensure the company’s financial systems are sound. A competent outsourced Chief Financial Officer (CFO) should be considered in order to establish sound business practices and ensure financial health for long-term success.

What is a CFO?

A Chief Financial Officer (CFO) is a top-level executive who is responsible for the financial health of their organization. CFOs are typically in charge of analyzing, developing, and implementing strategies that either increase revenue or reduce expenses. They also typically take a lead role in presenting the company’s finances to stakeholders and determining how available funds should ideally be used for investment or growth opportunities.

The CFO is more senior than a controller or an accountant. CFOs also differ from accountants and controllers by having broader responsibilities. For example, while controllers focus primarily on the day-to-day duties associated with the financial side of a company, the CFO might be overseeing long-term plans related to financial operations and mentoring staff members. They also distinguish themselves from accountants by taking on bigger responsibilities within organizations and possessing more strategic insight into potential business decisions. Accountants typically handle the reporting aspect of taxes or other regulatory requirements on behalf of an organization.

Signs you should outsource a CFO

As a startup founder, it can be hard to know when and if you should hire an outsourced CFO. However, there are some tell-tale signs that suggest it’s time to consider hiring outside help.

An outsourced CFO is essential when your company needs help with high-level decisions such as strategic planning and budgeting. Embracing change and taking the right steps can make all the difference in mitigating risks and enabling growth during pivotal moments in the company’s development. It may be time to hire an outsourced CFO when you find yourself overwhelmed with strict deadlines, unfamiliar accounts terminology, or long-term financial planning.

If you need more insight into forecasting cash flow or navigating complex finances, an outsourced CFO provides invaluable experience and knowledge. For example, if a startup is growing without improving cash flow management or seeking outside advice on how to optimize revenue. It might also be time to hire a qualified outsourced CFO if your team is struggling to understand the full financial implications of their decisions.

When your team is struggling to keep up with the number of tasks associated with financial oversight, an outsourced CFO can free up valuable resources that could be better utilized elsewhere in the company. Additionally, if you’re unable to keep up with the constantly evolving accounting standards or need assistance understanding complex tax laws then seeking out a skilled outsourced CFO is a great solution.

Benefits of outsourcing a CFO

Outsourcing a CFO for a small business can provide many benefits that would otherwise not be accessible with an in-house staff member. This kind of expertise allows the business to focus on operations and sales rather than spread resources too thin across the different functions of running a business. Outsourced CFOs bring a wealth of knowledge about a variety of important business decisions and investments, reducing the need for costly outside consultants who could take valuable time out of a business’s operations.

Outsourced CFOs are able to think strategically and create long-term value while finding opportunities to enhance efficiency and growth. The outsourced CFO is better equipped for predicting future trends by spotting areas that have the potential to both maximize profits and cut costs. As such, outsourced CFOs can provide critical insight on how to better manage accounts payable, credit limits, and taxes. They also allow access to technology and tools unavailable without hiring someone in-house.

Tasks you can outsource to a CFO

There are a variety of CFO-level tasks that you could benefit from outsourcing to a seasoned professional. These include but are not limited to: financial planning & analysis, budgeting & forecasting, bookkeeping & financial reporting, risk management, strategic planning, capital raising, mergers & acquisitions, debt restructuring, and tax planning.

Selecting your outsourced CFO

One of the key indicators that an outsourced CFO is the right solution for your small business is if you don’t have resources to hire a full-time chief financial officer. An outsourced CFO provides expertise and strategic financial operational advice, but without the need to offer employee benefits, payroll, or office space. An outsourced CFO also allows you to focus on what matters most: growing your business.

But still, deciding whether or not to outsource your CFO is a huge decision for a small business owner. To assist in determining if an outsourced CFO is the right solution for your small business, first ask yourself a few key questions.

  • Do you feel comfortable leaving key financial decisions to an outsourced professional? If not, you may want to consider hiring someone permanent.
  • What kind of experience and knowledge does the outsourced CFO bring to the table? Look for individuals with a broad range of experience in the industry to help your small business achieve its financial goals.
  • How much access will you have to the outsourced CFO? Determine ahead of time how available they will be and what level of engagement will be expected.

When your small business has outgrown basic accounting and needs sound fiscal advice to stay profitable, an outsourced CFO is an excellent solution. With expert analysis and guidance, an outsourced CFO can help provide detailed reporting and financial insights which provide long-term sustainability as well as additional value.

Long-term benefits of CFO outsourcing

Outsourcing a CFO for small businesses provides countless long-term benefits that can aid in the growth of an organization. An outsourced CFO can help drive profitability by crafting plans to reduce costs, review and interpret data, identify areas of improvement, advise on investment decisions and so much more. Companies can save drastically on the overhead costs associated with hiring a full-time employee into a management role, while gaining access to an incredible accounting skill set and knowledge that they otherwise wouldn’t have available.

A CFO outsourced from an experienced accounting firm, like Rooled, will be able to review, monitor and discuss the current financial condition of your small business, providing expert advice on how to improve it. With the intermediary insight offered by an outsourced CFO, small businesses can make financial decisions more quickly with much more accuracy and professionalism. Having access to this outsourced expertise is far more cost-effective than hiring an internal CFO, and can provide valuable financial oversight, strategy, and risk management.

Access to these skills yields tangible improvements on the bottom line, ensuring the stability and longevity of a business going forward. Long-term benefits can include improved operational decisions and preparedness for tax season that add up greatly, improving the longevity of their business down the line.

As a small business or startup, you may not have the internal resources to justify hiring a full-time CFO. However, this doesn’t mean that you can afford to overlook your financial needs. Outsourcing your CFO services is an effective way to get the expert advice and guidance you need to make informed decisions about your finances without breaking the bank.

Outsourcing your CFO services to Rooled is a smart move for any small business or startup. Not only will you save money in the short-term, but you’ll also see increased profits in the long run. With Rooled, you can rest assured that you’re getting the high-quality financial management services your business needs at a price that fits your budget.

About the Author

David (DJ) Johnson

DJ is the Director of Rooled. His entrepreneurial journey started as an accountant for two Big Four accounting firms, then to managing rock bands for 10yr. Financial advising called him, and he built one of the first ever outsourced accounting firms.