Throughout the past few years, a large shift has occurred with more business owners searching for ways to competitively grow without significantly increasing expenses. This shift, combined with the increased availability of cloud-based data and information management systems, has created the opportunity for many small and medium-sized businesses to grow in a leaner fashion.
Several roles in the financial industry can be outsourced thus cutting the hard costs associated with a full-time equivalent. However, when business owners consider outsourcing tasks, they tend to gravitate toward key operational functions such as payroll, accounting, or bookkeeping. What many companies don’t realize is that outsourcing at the C-level as well offers numerous benefits including industry expertise at a lower rate. Today, one of the most common roles being outsourced by industry-leading enterprises is the Chief Financial Officer (CFO) position.
So, what is an outsourced CFO? Why and when should they be considered? Who should outsource? What are the benefits? The experts at Tentho have answered these questions and more to help you make a well-informed decision on whether an outsourced CFO is right for your business.
Outsourced CFO Services Defined
Let’s begin by looking at what a CFO does and how they fit into an organization. Your Chief Financial Officer is responsible for everything related to your company’s finances. From managerial responsibilities to strategic reporting and planning, a CFO will keep tabs on the company’s financial wellbeing and provide guidance to help achieve your financial objectives.
The primary goal of a CFO is to help organize, strategize, and optimize your business’ finances. An outsourced CFO (also referred to as a fractional CFO or virtual CFO) will fulfill that same strategic role – but instead of joining your company as a corporate officer, they will work with you on a contract basis – saving you both time and money.
Guidelines for Outsourcing CFO Services
Many companies utilize this solution when it’s time to evaluate their financial strategy, overcome a financial challenge such as cash flow issues or unsustainable growth, or navigate events such as an audit, capital raise, etc.
Before jumping into the process of finding the right outsourced CFO service provider for your business, it’s important to understand which companies can benefit the most from this role. If you’re a sole proprietor or run a startup with little to no existing revenue, you may benefit from CFO consulting services on an occasional basis, however, contracting CFO services for the long-term isn’t in your best interest at this time.
According to an article in Driven Insights, they estimate a minimum revenue threshold of $1 million is recommended before bringing on an outsourced CFO, however, businesses that fall under this threshold can benefit as well based on their needs and goals. On the other side of the spectrum, companies around $50 million in annual revenue and higher should consider moving from fractional CFO services to a full-time equivalent. These numbers vary based on the type of business, their financial needs, and goals – but these revenue numbers provide a good starting point.
8 Most Common Benefits of Fractional CFOs
Although the benefits that fractional CFOs provide are numerous, below are 8 powerful ways they can help your business accelerate growth and set you up for future financial success.
- Financial Strategy
- Short- and Long-Term Cash Flow Forecasting
- Budgeting and Projections
- Financial Statement Analysis and Metrics
- Financial Statement Reporting
- Raising Capital
- Internal Controls and Processes Implementation Facilitating Mergers & Acquisitions
For a deeper look into these benefits and what they could do for your business, download this free eBook for expert insights.
Tentho Can Help with Outsourced CFO Services
Tentho has a roster of knowledgeable, on-demand professionals that are ready to meet the specific needs of your company. Their outsourced CFO services can help your business get to where you want to be by providing a dedicated resource to fill the role on an as-needed, part-time, or short-term basis.
If you’re in need of CFO services or other financial management solutions, Tentho is ready to help. With experience across all industries, their team will partner with you to help achieve profitable results for the future. Tentho strategy advisors will also walk you through your financials while taking it a step further by providing you with a complete set of management reports to help you grow your business.
Download Tentho’s free eBook, “What Are Outsourced CFO Services?” for a deeper look into how this role could benefit your organization, or schedule your free consultation to meet with a financial professional about your business’ needs.