White Paper: When Do Outsourced CFO Services Make Sense for Your Business?

Most business owners seek to boost revenue, improve profitability and increase shareholder value. However, a lack of high-level financial expertise by the CEO can keep them from achieving these goals, and using the services of an outsourced CFO services provider may be the solution.

This veteran financial professional will bring hands-on experience to the engagement than can help drive profitability, growth and shareholder value. Our complimentary white paper suggests considerations and questions when looking at a working relationship, engagement scope, and expected outcomes.

The Business Case

It’s important to establish a clear business case for hiring an outsourced CFO before committing to an engagement since there’s a cost involved, in both money and time. Start by asking a few questions:

• What are the root causes of your company’s financial challenges? Common financial challenges include cash flow, profitability, inventory turnover and managing growth. An outsourced CFO can help you dig deep to identify the root causes of each of the challenges.

• What are your opportunity costs? Even if your company is doing well financially, your financial staff might not be spending time on the kind of high-level strategic planning that can take you to the next level. It’s hard to put a price tag on the lost opportunity costs of failing to plan strategically, but few would question that they exist.

• Do your key financial managers have tunnel vision? Sometimes it takes an objective financial outsider to come in and help existing staff see that there are new, more efficient ways of managing the finances in order to achieve your goals.

• How will you capture ROI on your engagement? While it might be difficult to monetize the return on investment of your outsourced CFO engagement, it’s logical to assume that a tangible ROI exist.

The Working Relationship

Before engaging the services of an outsourced CFO, you should learn as much as you can about how the working relationship will look. Here are a few questions that can help you get an idea:

• Will the outsourced CFO fully integrate into your company?
• Can the outsourced CFO work well in a collaborative environment?
• What kind of communication does the outsourced CFO prefer?
• How will knowledge be transferred from the outsourced CFO to your team?
• What does the successful outcome of an engagement look like?

The Scope of Engagement

It’s important to identify which specific areas of your business the outsourced CFO will focus on and what specific objectives they will try to help you achieve. This will help ease concerns the CEO might have about the project scope expanding after the CFO is hired and losing control of the engagement. Here are a few steps that can help:

• Tightly define the engagement.
• Determine the underlying causes of your problems and challenges.
• Develop, deploy and document a specific solution.
• Perform regular debriefings throughout the engagement.

Expectations for Outcomes

You should think carefully about the outcomes you expect to achieve before hiring an outsourced CFO. Or in other words, “begin with the end in mind.” Otherwise, you won’t have any criteria against which to measure the success of the engagement. Common expectations for outcomes include:

• Higher productivity and profitability
• Lower costs
• Improved cost control
• Better financial control
• A more strategic financial focus
• The meeting of compliance, restatement and other deadlines
• Improved overall financial performance

Concluding Thoughts

Most CEOs today are passionately committed to growing their businesses, improving profitability and increasing shareholder value. However, many are faced with mandates to accomplish more with fewer resources. Using an outsourced CFO services provider is an affordable and efficient way to gain high-level financial expertise while enjoying the flexibility that comes with hiring a consultant instead of committing to a full-time CFO.

Click here to download the white paper discussing when it makes sense to hire an outsourced CFO services provider. No registration is required to download the case study.

Arthur F. Rothberg, Managing Director, CFO Edge, LLC