Many companies choose to hire an outsourced CFO to maximize the amount of financial expertise they can bring to their company without the cost of the salary of a comparably-experienced CFO. While it can be easy to don rose-colored glasses when reviewing the qualifications of these highly-experienced financial experts, it’s important to make sure the CFO who partners with your organization is the right fit.
Below you’ll find 4 important questions to consider when hiring an outsourced CFO:
1 – Will my Outsourced CFO have Relevant Industry Experience?
You should look for an outsourced CFO who has “been there, done that” regarding your industry or the problem you need solved.
One of the greatest benefits of hiring an outsourced CFO is that you’re gaining access to a highly-experienced financial expert without the cost allocation of bringing that same level of expertise and industry knowledge onboard full-time. Make sure you are getting the most out of the outsourced CFO model by finding a CFO with industry and finance experience related to your business goals and challenges.
2 – What is my Outsourced CFO’s Prior Project Experience?
There are many reasons an organization may hire an outsourced CFO, including:
- Elevating financial strategy to improve future business performance
- Establishing efficient, scalable operations
- Implementing or improving financial systems
- Forecasting (often for fundraising or budgeting purposes)
- Optimizing cashflow
- Measuring and improving profitability
- Debt and equity financing
- Financial risk assessment
- Shareholder relationships
- Expanding into global markets
- Expanding product or service offerings
By hiring an outsourced CFO, you have an expanded opportunity to find an expert with qualifications specifically in line with your project needs or business goals since you can access a greater level of expertise without the proportional cost increase of a similar in-house hire.
3 – What Type of Systems Experience Will my Outsourced CFO Have?
Many organizations when hiring an outsourced CFO, are also looking to that individual for expert advice on better optimizing their financial systems. This can mean refining tools and processes already in use, or exploring, designing, and implementing a more effective system.
Some CFO firms, like Preferred CFO, are passionate about the integration of intelligent and effective systems as a means not only to streamline financial processes but also to improve operations in the business as a whole.
By ensuring your outsourced CFO has extensive systems experience, you’re gaining expertise in business optimization changes that can have a dramatic positive impact on your organization.
A fractional CFO is an experienced CFO who provides services for organizations in a part-time, retainer, or contract arrangement. This offers a company the experience and expertise of a high-end CFO without the in-house cost—salary, benefits, and bonuses—of a...
4 – Can You Provide Relevant References?
It used to be the way of B2B services that you found a networking contact who had a contact with someone who had the expertise you were looking for. Nowadays, as communication technology, virtual operations, and cloud-based data have become much more advanced, businesses have access to a much greater network of professionals.
However, it is still important to acquire the relevant vetting to give you confidence in your outsourced CFO hire. Don’t be shy about asking for references from companies in the same or similar industry as well as a same or similar lifecycle stage or growth stage as your company.
Am I Better Off Using an Outsourced CFO Firm or Hiring a Freelancer?
Partnering with an outsourced CFO firm can often save time and money as they usually keep a variety of highly-experienced CFOs with a wide range of industry and project experience on their staff. This allows them to best meet virtually any client’s needs.
While you’ll have a primary CFO with whom you work, most CFOs within these organizations will collaborate on difficult problems. This means by default you gain access to multiple great finance minds for less than the cost of an in-house CFO with equivalent experience.
It also means that should there ever be turnover (which is unlikely in higher-end CFO firms), you won’t have a lag in service during which you’d seek candidates, hire, and train a new CFO like there would be if you lost a freelancer. Since your agreement is with the CFO firm and not the individual CFO, you can expect little or no disruption of service for training or onboarding time as the previous CFO’s duties are taken over by the new CFO.
Is the outsourced CFO model right for your company? Learn more by contacting us or exploring some of the articles and insights below.
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