Outsourced CFOs are becoming an increasingly popular trend among SMBs looking for expert financial guidance without breaking the bank. So, what’s all the hype about, and can a small business really rely on an outsourced CFO to act as a true business partner?
Let's unpack some of the common concerns and objections related to outsourced CFO services and try to dispel some myths associated with outsourcing financial guidance and responsibilities.
Top Outsourced CFO Concerns
Lack of Contextual Knowledge
Many businesses may balk at the idea of hiring an outsourced CFO because they feel that they aren’t as qualified as a full-time CFO. After all, they won’t spend every day in your offices, living and breathing your business. They probably have other clients they are serving concurrently.
However, this perception couldn’t be further from the truth. The market today is full of highly-skilled and experienced CFOs who enjoy the challenge of working with several companies at once. In almost every instance, they bring even more experience and expertise to the table, because they have a broader outlook.
Furthermore, in addition to getting access to a professional with a great deal of experience across industries, outsourcing your CFO will also often get you access to an impressive tech stack that comes baked into the retainer fee. Best-in-class outsourced finance firms provide their clients with the latest tech stack, including financial dashboarding services, that allow the CFO to quickly and effectively understand your business finances.
Culture Fit
The most common concern as it relates to outsourcing a position of any kind is culture fit. This concern is valid, especially if your company has a unique culture, and if you’ve been dinged in the past by high-level executives that haven’t been able to fit in.
However, this concern is generally overblown, given that your business would essentially go through an interview process when evaluating outsourcing agencies in the same way you would if you would be hiring an internal asset. You can ask your outsourced CFO all the same questions you would a full-time employee.
If anything, an outsourced candidate is more likely to be a culture fit precisely because they have experience working across a larger group of organizations and industries. These individuals have had to adapt to different work environments, cultures, and hierarchies, and they bring that experience with them when they are onboarded to your team.
Control
Another outsourcing concern, particularly for a position as important as the CFO, is the loss of control. Whether it’s accurate or not, organizations tend to believe that hiring someone in-house allows them to maintain a higher level of control over their business operations and finances.
In reality, your relationship with an outsourced CFO doesn’t have to be any different than with an internal hire. If anything, an outsourcing agency can give you more control over your finances by introducing advanced dashboards and analytics tools that provide you with real-time data visibility.
Your outsourced CFO should be communicating with your management team on a daily basis, providing you with the insights and updates you need to run your business. Poor communication can happen whether you decide to insource or outsource; it all depends on who you choose to work with.
The Benefits of Outsourced CFO Services
An Outside Perspective
Perhaps the most valuable aspect of an outsourced CFO is the fresh, objective view they bring to the table. Regardless of how impartial you claim to be about how you run your business, you’re almost never seeing the full picture or recognizing every opportunity for change and improvement. An outsourced CFO, on the other hand, can objectively analyze your balance sheets, your growth goals, and your overhead to provide you with expert guidance that is rooted in financial reality.
That’s not to say that an outsourced CFO won’t invest the time to understand the particularities of how you run your business and why it’s structured the way it is. Best-in-class professionals will consider a variety of factors before making a strategic recommendation. But the outside perspective that a CFO brings, coupled with the fact that they are likely working with a number of different organizations at a time that may be going through similar challenges, is a valuable addition to your business.
Cost-Effectiveness
A critical reason why many SMBs turn to outsourced CFOs comes down to cost. A part-time outsourced CFO can provide you with expert strategy and feedback at a fraction of the cost of a full-time employee.
The median salary for a full-time CFO in the United States is nearly $400,000. That’s simply not a feasible number for most SMBs. And investing in a cheaper full-time asset isn’t a way out either, as CFOs with low salary expectations probably don’t have the experience or skill you need to be successful. An outsourced CFO can give you the guidance and advice your business needs to realize its full potential at a much more affordable price point.
Growth Help
Many SMBs experience periods of high growth where it feels like they’re growing too fast. According to Cox Business, the two main causes of SMBs failing are losing track of their finances and cash flow errors. These mistakes are avoidable. The guiding hand of an outsourced CFO provides stability during these times by ensuring correct financial projections and providing both short and long-term strategic guidance. This ensures your business is financially healthy as it continues to grow.
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We understand that running a small business can be stressful, but there’s no reason to go at it alone. From providing a fresh, expert perspective to improving data visibility, an outsourced partner can be an invaluable resource. finairo offers best-in-class outsourced CFO services that provide businesses like yours with actionable, data-driven financial insights.
Request a consultation to learn more about how finairo can help empower your business through accurate, timely, and insightful financial practices.
