A Chief Financial Officer can be an extremely important resource – no matter how big or small the company.
In today’s competitive economy, every business can benefit from the services of a professional who can control and manage a company’s finances, set budgets, oversee forecasts and develop strategies in line with business objectives.
However, not every company is in a position to employ a full-time CFO. This may be due to capital limitations, headcount restraints, timing or a lack of talent in the market.
Outsourcing solves this problem and generates additional value.
We recently wrote about the benefits of outsourcing your accounting and bookkeeping function. Now, here are 6 reasons why outsourcing your CFO, and not hiring a full-time CFO, can add more value to your business.
Outsourced CFOs can be cost savers
A Chief Financial Officer can be an expensive employee for a company. The role generally forms part of the senior management team and comes with a lot of responsibility.
In addition to salary, an employer can have additional employee related payments including insurance, health coverage, income tax, bonuses, company cars and other forms of payment.
The recruitment process can also be costly for companies with limited resources. There can also be costs involved in accommodating employee requests such as flexible working arrangements.
Outsourcing a CFO is a much more cost effective solution. No recruitment fees. No salaries. No 13th month payment. No mandatory employee deductions or contributions. No expectation of an annual salary increase. No severance payments.
You can however get a professional service at a competitive price and loaded with the additional benefits outlined in this article.
A cost effective solution for a finance related issue. Perfect!
Outsourced CFOs are more independent
Outsourced CFOs often operate remotely from outside the organization. They are often referred to as a virtual CFO. They are less likely to have any company related bias and are more likely to provide a truly independent service that ultimately benefits the company’s financial position.
In-house financial controllers or finance managers may be obliged to adhere to internal politics or other internal company matters. This may, in some circumstances, lead in-house financial controllers to make decisions that might not be in the best interests of the company.
On the other hand, independent CFOs can focus on ensuring objectivity when providing finance services to a company. They can present a company’s financial data in “black and white”, propose strategies without fear of backlash and ensure that management always receives the clearest and most accurate information about company finances.
Many outsourced CFOs have wider skill sets
Outsourced or virtual CFOs can have a wide knowledge of other disciplines and industries.
To gain more clients, outsourced CFOs are consistently upskilling. As such, a lot of outsourced CFOs obtain professional certifications, outside of finance. Some might even seek industry specific qualifications.
For example, an outsourced CFO may have specific knowledge of tax breaks in a particular industry as a result of previous consulting experience or qualifications in that industry.
Some outsourced CFOs can also be Chartered Financial Analysts, Chartered Management Accountants, Certified Actuaries, Certified Engineers or even lawyers. A lot more value can be added to a company with such a varied professional background.
Information systems is a particular area where outsourced CFOs tend to upskill. CloudCfo, for example, is a professional and trusted consultant in the areas of cloud accounting, online accounting solutions (e.g. Quickbooks, Xero) CRMs and ERPs.
These added skill sets could be the advantage a company is looking for when scaling in a competitive market.
An outsourced CFO can solve a short term problem
An outsourced or virtual CFO can be engaged at short notice to replace a terminated or resigning CFO.
They can also advise businesses during periods of growth to reach the point where the company is in a position to employ a full-time financial controller.
Businesses must develop a financial strategy as part of their business plan. They also need to ensure this strategy is executed and monitored. This may not be within the skill set of the existing accounting team.
Companies can use outsourced CFOs to advise on best practice, strategic decisions and build systems and processes while the business is still growing.
The learning curve can be smoother when you outsource your financial services to an independent CFO. Outsourced or virtual CFOs are used to working with new businesses across a range of sectors and can get up to speed on the business and industry requirements quickly, even if only required for a short term period.
Outsourced CFOs have a wide network of financial institutions
An outsourced CFO’s contact list will not only include his personal network, but also the network of his firm (assuming he is not an independent contractor) and a network of previous clients.
Companies can get access to a wider pool of resources, people and potentially new clients or customers. This can be extremely helpful for companies seeking to grow, engage new vendors and reach new markets.
They can help you find the right financial institutions to work with. They may know which banks offer the lowest interest rates and may have an internal contact to assist. They may also have worked with different venture capital firms or institutional investors which can help if the company is raising funds.
An outsourced CFO with an international network might even be able to help a company expand into new geographic locations or into new product or service lines.
Outsourced CFOs can provide holistic financial services
Outsourced CFOs can be multi-taskers. They can provide services beyond the traditional outsourced accounting, bookkeeping and finance services. They advise on much more than just the financial statement – they provide value added financial analysis based on industry experience and knowledge.
A CFO sourced from an outsourcing firm will also have access to a range of diverse resources from within their firm. As a result, the client company benefits from a depth of experience, expertise and knowledge that an internal CFO operating on their own may not be able to provide.
Other services where an outsourced CFO can add more value include:
Raising Capital and Restructuring
Financial Plans, Financial Strategy and Financial Reporting
Implement financial systems (payroll, inventory, financial management)
Outsourcing a CFO in the Philippines
Is the management of your company cash flows and financial reporting not adding enough value to your business? Need a professional financial executive but dont have the capital for a full-time Chief Financial Officer? Are you finding it difficult to find top level candidates for your CFO role?
CloudCfo can help. CloudCfo is a team of professionals providing the full range of outsourced accounting, bookkeeping and finance advisory services to companies in the Philippines, particularly in Metro Manila.
CloudCfo offers clients a professional and trusted outsourced/virtual CFO advisory service.
As your growth partner, we will handle all of your financial needs, from operational level to strategic level, and add the value required to enable you to grow your business with confidence.