If you’re wondering, “Should I outsource my CFO?” – the answer is almost always a ‘yes.’
Outsourced CFO services are the perfect alternative for business owners looking to hire a full-time CFO – but are unable to justify the hours or afford the cost.
Let’s break down “What is an outsourced CFO?” when you should consider CFO outsourcing, and what the benefits of working with outsourced CFO firms are.
What is an outsourced CFO?
An outsourced CFO is a part-time chief fractional officer that works for a company on a flexible, as-needed basis. They are often referred to as virtual CFO or fractional CFO.
This partnership can be short-term or long-term, but the hours typically fluctuate based on what your business needs and what its future goals are.
Fractional CFOs typically charge either on an hourly rate or retainer basis. Even retainer amounts are calculated on an assumed number of hours; however, this is normally adjusted up or down as needs increase or decline.
An outsourced CFO is a financial expert who can be hired to complete one specific project (such as getting finances for an exit strategy) or assist with ongoing strategic financial services (such as managing cash flow or raising capital).
Should I outsource my CFO?
When debating whether or not to outsource CFO services, there are a variety of factors you should consider – including budget, needs, internal resources, and goals. Here are some typical situations where outsourcing CFO responsibilities is ideal:
- You need expert help with a specific project: When companies are about to enter a period of change and require financial expertise, fractional CFOs can be the missing puzzle piece. These projects can include anything from mergers and loan applications to audits and forecasting. Engaging a fractional CFO also allows you to find the specific talent you need for your particular task – rather than relying on a generalist.
- You can’t afford a full-time CFO: Companies between $5mm to $75mm are great candidates for fractional CFOs. At this size, a company usually has enough need to justify allocating $5,000 to $7,500 every month for this specific type of financial service. While this is the average range, costs can be higher if your needs are greater or if your business is highly complex. This being said, they can also be lower if you have staff in place that can support the fractional CFO. Keep in mind, a full-time mid-market company CFO would cost between $273,800 (26th percentile) and $345,100 (51st percentile) before benefits and other incentives. This is 2023’s national average – which can be higher in different markets. For example, in the Dallas market, this range is 10-11% higher.
- You need strategic, forward-looking financial expertise: While your accounting staff focuses on what has occurred in the past, a CFO uses the information to develop forward-looking plans – including projections, forecasts, and recommendations for revenue and profitability growth. As part of the executive team, CFOs also help with additional innovation opportunities that are related to process improvement across departments and technology investments. Lastly, the CFO typically becomes the chief communicator of organizational goals and how each team member’s work contributes to them.
- You can’t decide on who to hire: If you are reaching the point where a full-time CFO is necessary – but can’t decide on who to pull the trigger on – an outsourced interim CFO is a perfect temporary solution. This is also great for companies that are in-between CFOs. Some fractional CFOs can also pitch in and help you find a qualified full-time CFO candidate and/or help you vet candidates’ qualifications.
Want to keep learning? Check out a few other responsibilities covered by a fractional CFO.
What are the benefits of CFO outsourcing?
A fractional CFO can provide your business with a slew of big business benefits. As a result, outsourced CFOs can become an invaluable asset for your team. But what are some of the biggest benefits of fractional CFO services?
With outsourced services, your team gains access to:
- Expert financial guidance and planning
- Mission-critical budgeting and forecasting
- Properly managed growth
- Lower-cost, yet highly experienced strategic financial services
- A full team of multi-talented CFOs (when you outsource to a firm)
Looking for outsourced CFO services?
At New Life CFO, we have decades of combined experience helping companies of all shapes and sizes get their finances under control, and we’d love to help yours, too. At New Life, our CFOs have held CEO, President, or General Management operational roles in addition to acting as CFOs. As such, we are uniquely equipped to help CEOs identify opportunities to maximize their growth and profitability. We’ve walked in their shoes and know what keeps them up at night.
We also deploy the “Best-in-Class” personality trait profiling system to ensure our CFOs are proactive, driven multi-taskers who can work with executives to both push and encourage. We develop the insights and implement the action plans they and their team need to realize their greatest potential, getting the CEO back to living the dream he or she envisioned when starting their company.
If we can’t help you, our promise is to help find someone who can. This can be another fractional CFO firm or one of the many CFOs we encounter that may not be the right fit for New Life or would be more comfortable working full-time for one company.
If you’d like to learn more about our fractional CFO services, request a free consultation today.
