For most small to mid-size companies, struggling or flourishing, outsourced CFO services can provide significant benefits. Most smaller companies lack the financial resources to hire a full-time professional CFO. As a result, they do not have the expertise to optimize financial performance, manage cash flow, provide accurate tax reporting, oversee recordkeeping, and maintain regulatory compliance. While a company may be able to hire a full-time bookkeeper, they most often find that the level of expertise is insufficient to meet their needs.
Having a professional CFO is crucial to a business’s financial stability and profitability. Writers from Investopedia commented, “The CFO role has emerged from focusing on compliance and quality control to business planning and process changes, and they are a strategic partner to the CEO. The CFO plays a vital role in influencing company strategy.” If CFOs are so significant, what option do small to mid-size companies have?
For organizations in need of comprehensive financial leadership, outsourced CFO services are a cost-effective solution.
The Benefits of an Outsourced CFO
Ensured Financial Accuracy
Maintaining sound accounting processes and accurate records is absolutely critical. Accurate financial statements and tax-reporting are entirely dependent on good processes properly followed. An outsourced professional CFO will be able to assess the existing processes and staff, address shortcomings and provide training for employees with the goal of optimized financial management. Banks and other lenders are always concerned about the reliability of financial reporting from smaller companies. Those concerns are diminished when the statements are supplied by an outsourced professional CFO.
With accurate and timely financial records, tax time is made easier. Outsourced CFO services can minimize the normal time-consuming process many smaller business owners deal with.
Outsourcing CFO services reduces payroll expenses as the business will not have the burden of a full-time CFO salary with benefits. Additionally, experienced CFOs can lower costs through effective expense control, recommend or utilize software that heightens business efficiency, and identify and eliminate unnecessary spending. Each of these items increases profitability by reducing expenses and optimizing the company’s processes.
Improved Cash Flow
Outsourced professional CFO’s are focused on improving working capital management which leads to improvement in cash flow and the reduction of debt outstanding and interest expense. Without proper focus and attention to inventory levels and accounts receivable, profitability and cash flow issues can be overlooked; simultaneously, opportunities for increased efficiency can be missed. Many business owners simply do not have the time or expertise to engage with this crucial aspect of their business.
Fully understanding the terms of agreement involved in a loan or any other contractual negotiation is crucial for every company. Understanding a business owner’s personal responsibilities is extremely important. Negotiating reasonable loan agreement covenants can have a significant impact on future financial viability. Standard covenants often include conditions that can tie the business owner’s hands and restrict future decision-making. An experienced CFO guide a smaller company through loan negotiations, ultimately positioning the company to have the flexibility to make smart business decisions.
Planning & Strategy
Outsourced CFO services extend beyond accounting and finance. A professional CFO should impact every facet of a company. Small to mid-size businesses benefit from the influence a CFO has on the health and productivity of the entire organization. For many business owners, the daily, urgent tasks of managing the company can be overwhelming. High-level financial and operational analysis get neglected because they are working “in” the business as opposed to working “on” the business. A professional CFO can ensure that those important yet often neglected issues get the proper focus, in light of long-term business goals.
Operating without a financial plan is like flying blind. “Any business,” Andra Picincu of BizFluent wrote, “needs a financial strategy… it outlines the steps you need to take to grow your business and reach your financial goals. Think of it as a road map for your company’s future.” Outsourced CFO professionals can supply the expertise and focus needed to evaluate current operations in light of the long-term goals ownership has for the company. They can craft the roadmap needed to attain those goals. Furthermore, they can establish processes for measuring progress and developing course adjustments.
Beyond lacking the expertise to tackle accounting or financial issues, most business owners simply do not have the time. Because CFO-type tasks are crucial to keeping a business afloat, business owners often assign responsibilities to trusted employees that may not have financial management skills. Hiring an outsourced CFO will allow business owners and key employees to reclaim their time and dedicate it to their areas of expertise.
Increase Efficiency Via Foundational Technology
Professional CFOs most often are familiar with various accounting and financial software packages that can improve and expedite bookkeeping and accounting. They can manage conversions to new and better systems as well as offer training within the company.
Optimize Decision Making
An outsourced CFO is an on-demand consultant. They bring great perspective to the process of making important business decisions that impact the future of the company. Every operational and strategic decision should be supported by input from a financial expert.
Businesses of all sizes are susceptible to risk, from cybersecurity issues and lack of internal controls to fraud. Operational and IT risks can be complicated, with severe repercussions. Outsourced CFOs can provide practical ways to reduce the organizational risk profile. Risk management is an essential task of outsourced CFO services.
Flynn & Company
As a business owner, identifying ways to improve your organization without wasting resources is crucial. At Flynn & Company, we understand this. If you are in need of holistic financial support from a professional perspective, our outsourced CFO services can be precisely tailored for the needs of your business. Our services include financial, business, and strategic planning & implementation, development and monitoring of performance measures, accounting department oversight, financing, risk management, cash flow management, and preparation of budgets and projections.
We pride ourselves in being a small firm, expertly poised to guide your business to financial success – and ready to personally walk beside your company along the way. To begin a conversation with our team, get in touch with us today at (513) 530-9200 or via our online contact form!