What do Businesses Gain from Outsourcing CFO Services?
Working with a seasoned expert in finance and accounting, with advanced degrees and experience, is one of the quickest ways to propel your business to a whole new level. This is exactly what CFO outsourcing provides you with. The CFO can help you overcome several obstacles to your business growth and handle various financial operations accurately and efficiently.
Outsourcing CFO services therefore enables you to access high-end knowledge and expertise at just a fraction of the cost of hiring a full-time CFO.
Advantages of outsourcing CFO services
Outsourcing CFO services can have many benefits, from improving financial stability, to helping you to implement strategies and bring credibility to a business. Here are a few more advantages that every entrepreneur can benefit from by outsourcing CFO services:
- Save time and money: With outsourced CFO services, you can free up your time to drive product development and sales, leaving financial matters to the experts. An outsourced CFO allows entrepreneurs to save their time by managing the processes they were handling internally, including processing payroll, paying bills, budgeting, and handling financial paperwork.
- Tackle financial challenges: Outsourcing CFO services can help you prepare action plans during times of financial crisis or economic uncertainty. Most outsourced CFOs work across many different companies and industries with unique challenges. They also have experience in solving financial problems, such as an inability to raise capital, high business overheads, poor cash flow, and high client churn. Therefore, they can serve as long-term strategic advisors for your business and help you navigate many financial challenges.
- Improve business processes: With outsourced CFO services, you can bring the best practices to the functional areas of your business. Improving financial reporting will allow the owners to make better business decisions faster while also increasing profitability and reducing costs. This is done by implementing robust financial controls and monthly reporting, which leads to better operational efficiency and risk management.
- Get the books in order: By outsourcing CFO services, you can keep your accounting records accurate, in order, and up to date, thus avoiding tax and banking errors. This can help you in the future, for instance when you’re looking to expand or add a new division into your accounting system.
What your business will gain from outsourcing CFO services
Here are some examples of how an outsourced CFO will help your business:
- Accurate forecasting: An outsourced CFO can forecast your business’ cash flow, strategise the best ways to use the funds, and make adjustments as things change. By outsourcing CFO services, you can ensure that you have sufficient resources to build and grow your business and best utilise future opportunities.
- Tax planning and compliance adherence: The CFO will guide you during tax planning and in building the most cost-efficient tax structure for your business. They will also advise on the most tax-efficient means for property and asset purchases.
- Generating data-driven insights: With outsourced CFO services, you can ensure the quality of your financial and operational data. An outsourced CFO can interpret the business data to generate the quality data-driven information that business owners need in order to make informed decisions.
- Find new funding sources: An outsourced CFO can prepare financial reports of your business to pitch to investors or lenders. They can also convince potential investors, lenders, and vendors about the reliability of these reports.
- Forge new relationships: If you are building a new business or new revenue streams, the CFO can help you build and maintain new relationships with investors, lenders, vendors, and customers. You can also benefit from the outsourced CFO’s network, knowledge, and experience to grow your business connections.
- Financial planning: A highly skilled CFO can bring experience and insight to help members of senior management identify potential risks and build a risk management plan to mitigate these in advance. An outsourced CFO can assess, manage, and organise processes to avoid procurement or operational risks, such as late payments, misplaced inventory, or misuse of corporate assets.
- Trusted reporting: Business reports are essential tools that can help business owners in their everyday decision-making processes. An outsourced CFO can prepare custom reports, profit and loss statements, cash flow statements, and balance sheets to help key decision makers make the right decisions. With accurate and thorough financial reporting, you can keep track of your company’s progress against business strategies.
- Strategise short- and long-term goals: An outsourced CFO can analyse your business parameters, such as revenue growth rate and debt-to-equity rates, in order to help you set your goals. They can also map out a plan to help you achieve and measure your short-term and long-term objectives.
- Strengthen the skillsets of your teams: With outsourced CFO services, you can enhance the skillsets of your internal accounting and finance teams. This will help your teams manage a wide range of special projects, including pricing analysis, ROI evaluation, and entity restructuring.
- Provide business analytics: An outsourced CFO can review your business data to determine its operational efficiency and help you improve team productivity. With in-depth financial analysis, you can plan and implement the next steps for your company effectively.
- Fulfil audit requirements: Outsourcing CFO services can assist a business when an investor requires an audit from a third party. Since the CFO is not working full time at your company and doesn’t have an emotional connection with your staff members, investors will have more confidence that their reports are unbiased.
- Build a scalable infrastructure: A CFO can set up an infrastructure and even implement different processes to prevent future issues and support the business as it grows. The CFO can help you create a scalable financial system from payment processing and payroll to cost analysis projections to meet changing business demands.
- Develop a sales strategy: Outsourcing CFO services can help you formulate pricing policies based on the competitive conditions and the market environment. An effective sales compensation strategy can motivate the sales team to hit targets aligned with the company’s interests. Your outsourced CFO can regularly review your sales compensation policy and ensure its effectiveness concerning sales quotas, commission rates, and performance incentives.
- Improve cash flow: Your outsourced CFO can help you determine where you can cut costs. They will streamline processes and develop strategies to improve your cash flow. They can prepare complete cash flow statements that include long-term assets, net income, liabilities, and stockholder equity for your reference.
- Financial projections: An outsourced CFO can analyse your balance sheets to guide you on budgeting, investments, hiring plans, and overall financial management. They can also analyse your business data to make the following financial projections:
- Your company performance over the coming months and years
- Sales or income across all key verticals
- How your expenses will grow
- Number of salespeople required to meet revenue targets
- Review client contracts to ensure contract terms are in your company’s best interests
- Prepare for mergers and acquisitions: An outsourced CFO can help you prepare a business plan for mergers or acquisitions. They can advise your company on whether to proceed with a deal or not. They can also help you make necessary changes in corporate structure and take other actions to make the transition smoother.
In this article, we have described some of the areas through which outsourced CFOs can help businesses. So, if you’re considering whether your company might benefit from an outsourced CFO when navigating the above or other scenarios, Thrive Financial can help. Building on years of financial expertise covering CFO, accounting, consultancy, and reporting efforts, Thrive Financial offers guidance according to your needs.
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