If you’re looking for financial support for your new or growing business, you may be considering hiring an outsourced CFO. But, that decision might lead you to questions.
What is an outsourced CFO?
What does an outsourced CFO do?
And how do I know if it’s the right solution for my business?
If you’ve been asking yourself these questions, we’re here to help. Let’s dive into what an outsourced CFO is and how they can support your business to see if this financial service is right for you.
What Is an Outsourced CFO?
An outsourced CFO is a person or group who provides financial management services to businesses on a part-time basis. Rather than being a full-time employee, an outsourced CFO works with businesses on a contract or retainer basis. Sometimes referred to as a fractional CFO, an outsourced CFO provides services that help an organization set up and optimize financial systems, increase profit, manage growth, and improve operations.
What Does an Outsourced CFO Do?
Outsourced CFOs customize their financial services to provide what clients need most. They begin with an assessment and then determine which mix of services will help the business reach their goals.
Outsourced CFO services include:
- Setting up financial systems
- Accounting tasks and reporting
- Cash management
- Bill payment
- Managing credit cards
- Invoicing and revenue recognition
- Financial forecasting
- Budgeting
- Monitoring KPIs
Depending on the stage and needs of your business, an outsourced CFO will create a plan with a mix of services that meet you where you are.
Should I Outsource My CFO?
Many new and growth-stage businesses don’t have (or can’t afford) a full-time financial expert on their team. Those organizations get by with the resources they have, until they reach a point when they need financial expertise and experience.
That’s when it’s a good time to bring on an outsourced CFO.
Your business can benefit from working with an outsourced CFO if:
- You struggle with cash flow issues.
- Revenue has flat-lined or started to drop.
- Financial operations are disorganized.
- You don’t have a budget or aren’t sticking to the budget.
- You don’t have reporting to inform business decisions.
- You don’t know how to read reporting to inform business decisions.
- You are seeking investments and capital.
- You are going to be a part of a merger or acquisition.
- You’re getting ready to sell your business.
- You are getting burned out trying to do everything for your business!
Outsourced CFOs are a great fit for growth-stage businesses that want to increase revenue or don’t know how to manage the growth they already have. Outsourced CFOs are also useful to early-stage businesses that don’t have financial processes in place and need to verify that they are maximizing profit.
What Does It Look Like to Work with an Outsourced CFO?
A good outsourced CFO isn’t a full-time staff member, but they are an extension of your team.
They work closely with your team to get to know you (the business owner) and your business. Only then can they offer the financial advice and CFO services that align with your mission, vision, and goals.
An engagement with an outsourced CFO may look something like this.
#1) Discovery. During a deep-dive meeting, you discuss:
- Business goals and vision
- Business owner’s personal vision and goals
- Pain points and financial challenges
- Objectives and steps to resolve problem areas
- Financial services most needed by your organization
- KPIs and financial metrics to monitor and hold both parties accountable
#2) Recurring strategy sessions. You and the outsourced CFO set a cadence for your strategy sessions based on your goals and needs. Most outsourced CFOs meet with their partners on a monthly or quarterly basis. During each strategy session, you will discuss any new changes and challenges, review KPIs and financial forecasts, and lay out new objectives and steps to continue making progress toward your goals.
#3) Ongoing support. In between your strategy sessions, your CFO is available to answer questions and provide advice. They act as a partner available to support you and your business when needs and questions arise.
#4) Supplemental services. In your discovery session, you may uncover that your business needs supplemental financial services to organize and support your financial systems. In that case, your outsourced CFO can provide support for supplemental services such as bookkeeping and tax planning and preparation.
How Much Does an Outsourced CFO Cost?
If your business can’t afford a full-time CFO, you aren’t alone.
According to Salary.com, “the average Chief Financial Officer salary in the United States is $422,786 as of January 26, 2023, but the range typically falls between $321,409 and $540,229.”
With an outsourced CFO, you can avoid these high expenses and pay for what you need — and can afford.
Most outsourced CFO fees are fixed and charged on a monthly basis. They are tailored to the client’s needs and based on the complexity of the work and the level of staff needed.
Rates for an outsourced CFO often range from $1,000 to $12,000 per month, but you can work with an outsourced CFO to create a partnership that meets your budget, while offering the key financial services you need to support and grow your business.
If the rate still feels out of your budget, you may consider working with an outsourced CFO on a smaller engagement or program, such as our Guiding Profit Solution™, to receive the benefits of CFO expertise and advice at a lower cost.
See How an Outsourced CFO Can Help Your Business
If your business is in an early or growth stage and financial tasks are getting overwhelming and preventing you from increasing revenue, let’s talk.
See how the support of an outsourced CFO can help you take your business to the next level.
Get all of your questions about working with an outsourced CFO answered in a discovery call with CFO2U. Schedule your free intro call today.
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