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Time and time again, the 3 biggest challenges I see for small and medium-sized businesses (SMB’s) today are time management, cash flow and growth. When the options and levers start to dry up, there is one tactical option that small businesses often overlook: Outsourcing at the higher end. In particular, outsourcing CFO role.  

Outsourcing - the practice of using outside firms to handle work normally performed within a company - is a practice that many SMB’s will be familiar with. It’s more commonplace to consider outsourcing to accomplish business functions such as HR, marketing or web design. I see a number of businesses outsource as many functions as possible, while others outsource a few functions or none at all - there is no right ratio however, you should understand the trade-offs.  

How much could I save by Outsourcing CFO duties?

  Most businesses can save thousands of dollars by moving from a full-time resource that is often under-utilised, to a more efficient outsourced finance model. This frees up funds for investment in higher impact areas of the business. All of this, without compromising on quality. You could have someone managing your financial affairs from under $35,000 a year. While it may sound like a lot of capital expenditure, in the long run, an outsourced CFO is an investment in your business that pays for itself.  

What are the other benefits?

  A good outsource CFO will play a pivotal role in shaping the overall direction of your business, question conventional thinking and challenge the entire business to perform better. They see other businesses and learn, so they don’t have to do all the learning on yours!   Outsourcing your financials gives you flexibility by drawing on these resources during busy periods (such as big projects) and pulling back when things are quieter. With a part-time virtual CFO, you get the benefits of high-level financial expertise without the commitment or risk.   In summary - an outsourced CFO can provide you with quality assistance and tailored solutions at a much cheaper cost. They will focus on current performance needs, long-term strategic planning and guidance, and a more hands-on, ongoing operational approach.    

What’s the potential downside?

  Hold on! Before you fire your current CFO, consider a few things:  

  •   As they are not a permanent resource, they will not be available all the time.
  •   Will the outsourced resource be reliable?
  •   Will the outsourced resource be able to deliver the required work within the timeframes required?
  •   Will you get the quality of work you would expect from a full-time resource?
  •   If the outsourced arrangement is not properly defined there could be potential hidden costs.

  Most of the above potential drawbacks can be overcome by using a professional with a proven track record.   Could your business benefit from using an outsourced CFO? The simple answer is any business can probably benefit, where finance isn’t the main focus from a customer perspective. From restaurants and retail to IT and advertising, most SMB's can add benefit to their business if they employ someone in this way.   Before outsourcing your CFO, make sure you ask these four questions:  

  • How often will they be needed?
  • Is that enough time to maximise their value add?
  • Do the two parties (you and the CFO) have a mutual understanding of what they are trying to achieve?
  • Will they have a positive financial impact on the business in the short run and long run? (Could be one or the other or both depending on your needs!)

  Having the confidence, from a financial standpoint, to make more informed decisions about your business is not a luxury, it’s necessity. Companies like yours (if it’s a small to medium enterprise) can have the benefit of a high-level finance resource without breaking the bank.  

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