For startups and growing companies, hiring an in-house chief finance officer (CFO) doesn’t always make sense. Maybe your team doesn’t have the workload to justify the hire, or you don’t have the resources to pay an executive salary and benefits.
Either way, you may still come to a time when you require the expert financial guidance and expertise that a CFO provides, but at a more flexible and scalable level. This is where an outsourced CFO comes into play.
There are many advantages to partnering with an outsourced CFO firm, so continue reading below as we explore the top benefits that SMBs can enjoy from this engagement.
As we mentioned above, one of the biggest advantages of hiring an outsourced CFO is that it can be a more cost-effective option for startups and small or medium-sized businesses (SMBs).
According to the Bureau of Labor Statistics (BLS), the median annual wages for chief executives, like CFOs, working in management was $239,200 as of May 2023. On the other hand, outsourced CFO firms typically charge a custom quote tailored to your unique needs, which is often much lower than the monthly salary you’d pay to a full-time, in-house CFO.
Not to mention, when you’re engaging with an outsourced firm, not just an individual operator, you may also get access to professional bookkeepers, controllers, and accountants as part of a bundled package, which helps you outsource a number of roles, not just the CFO position, providing further cost-saving opportunities.
Another key advantage of hiring an outsourced CFO firm is that the engagement can be much more flexible and adaptable to your current needs. Hiring a full-time CFO is typically a long-term commitment, given the resources and time that go into the recruiting and onboarding process.
In contrast, outsourced CFO firms handle projects on an ad-hoc or contract basis, meaning you can hire them for just a few hours a month, part-time, or full-time as needed to support your financial strategy. These firms may impose certain restrictions, like a minimum number of hours they must bill you each month. However, these are generally more flexible arrangements than hiring an in-house CFO.
Of course, one of the main reasons startups and SMBs hire outsourced CFO firms is to get access to their expert financial expertise. Not all business owners will have the skills (or desire) to manage the financial operations of their company. And, as we’ve reiterated throughout, hiring a full-time in-house CFO isn’t always in the cards.
In the beginning stages, business owners or other early employees may handle basic bookkeeping and forecasting on their own. These tasks are necessary to support operations and meet compliance requirements.
However, when it comes to building a comprehensive financial strategy and navigating the complexities of raising capital, investor relations, acquisitions and mergers, and more, these responsibilities often fall outside the team’s skill sets.
Thus, scaling companies will reach a point where they need additional support, which an outsourced CFO firm can provide. This comes with several tangible benefits as it relates to financial management and planning, such as:
From a more technical perspective, an outsourced CFO firm can help firms take advantage of advanced technology and financial programs that might be too expensive to implement internally and train employees on.
Through an outsourced CFO firm, businesses can get the benefits and results these programs provide while enjoying the economies of scale as the firm distributes the cost among its various clients.
Most businesses would like to minimize their tax obligations, though it can be challenging to understand the credits and deductions you’re entitled to if you’re not a tax professional. Outsourced CFOs can help you implement a winning tax strategy, drawing on their expertise in tax regulations and experience with companies in your industry to help you minimize your tax liability.
Outsourced CFO firms don’t just provide value in the early stages of your development. Whether you’re navigating growth, stabilizing operations, or gearing up for an exit, they offer dedicated guidance to help you achieve your goals.
Specifically, when you’re ready to exit, outsourced CFOs can help you prepare a favorable valuation, streamline financials, and ensure operations are running smoothly so you can secure the best possible deal.
After reviewing the benefits of hiring a fractional CFO firm, the next step is to seek out a reliable and knowledgeable partner. Not every outsourced CFO firm will help you reach your financial goals and deliver the tailored services your business requires to reach the next level.
With Bob’s Bookkeeping, you get access to tenured industry professionals with real-world experience leading the financial operations of companies in your industry. Our team understands the challenges, opportunities, and financial landscape that you’re navigating. We can offer tailored strategies that keep you ahead of the curve, giving you more time to focus on what you do best.
Contact us today to learn more about our custom fractional CFO solutions that help your business thrive.
