What Are The Benefits of Outsourced CFO Services? (And Why You Should Care)

Many small to medium sized businesses have discovered the benefits of outsourcing their CFO function to a specialist, and they are reaping the benefits. At TeamBlueSky, we talk to numerous business owners about their accounting, bookkeeping and strategic financial planning needs every week. From these conversations we have learned that these clients have come to us for one of three main reasons. 

1. Finding talented part-time CFO’s is difficult if not impossible. 
2. The cost of an experienced full time CFO is beyond their current budget.
3. They are not sure what a CFO really does.

When a business is smaller, and going through rapid growth, rarely is there time to focus too heavily on the long term financial management strategy. When small business owners are working “on the business” and concerning themselves with tactical financial management, such as cash flow forecasting, having an experienced outsourced CFO to manage the big picture helps to further strengthen the strategic direction of the company, and increases the chance of the business continuing to succeed. 

Hiring a Full Time CFO: Cost vs Value

Depending on the level of experience you are looking for, hiring a full time CFO is an expensive exercise. Payscale.com suggests that the average CFO earns anywhere from $98k to $243, with the average salary sitting somewhere in the $150k range. For small businesses who are growing, but still wanting to invest the majority of their profits into other profit generating activities, such as inventory purchases, product range diversification, sales and marketing resources or global expansion, this cost can often outweigh the value. 

Outsourcing your CFO function to an experienced team like TeamBlueSky means you are able start with a low commitment in terms of hours and effort, and gradually increase this over time as your business needs increase. 

What does an Outsourced CFO do?

The answer is in short, anything a full time CFO does. The CFO’s main areas of responsibility are:

Strategic Direction

Having access to the experience of a CFO means you can work collaboratively to ensure your businesses strategic financial plans are solid and in support of your wider business goals. A good outsourced CFO will sit down with you and the finance team to understand your business in as much detail as possible, and formulate a strategy to add value. 

Financial Management Process Improvement

Process improvement is something we at TeamBlueSky are deeply passionate about. With the explosive growth of cloud accounting software such as Xero, MYOB, Reckon, J Curve and NetSuite, an increasing number of small to medium sized businesses are running in the cloud. The practical benefit of this is that your virtual CFO is able to work actively on your systems from anywhere, becoming a key member of the team. These systems also have a lot of untapped potential when it comes to financial process automation, which is something that most businesses owners have never had time to explore. 

Compliance Managed

It’s not too often we come across small business owners who get a thrill out of managing the various aspects of financial and reporting compliance. Depending on the size and structure of your business, it is likely that between the Tax Reporting, Single Touch Payroll Reporting and Business Activity Reporting you can start feeling overwhelmed. An outsourced CFO takes full responsibility for the preparation and lodgement of all business related documentation to ensure that you are always up to date with your reporting obligations. 

Advanced Planning and Budgeting

Most businesses we work with have at least some type of budget that they use to steer their spending decisions. However, preparing these budgets and forecasts is time consuming and often left to the last minute. An outsourced CFO will use a combination of skills and experience to create budgeting and forecasting tools that will help support not only good decision making, but also ensure that the businesses financial resources are optimised. 

Other Benefits

In addition, your virtual CFO will be able to assist you with a wide range of financial management tasks as they arise or become relevant. Some examples of these include: 

• Designing and tweaking your financial plan to meet the fast paced changes of a growing small business.
• Identify any areas of risk with regards to financial strategy and liquidity.
• Implement highly aligned financial reporting to make understanding your businesses financial performance simple. 
• Manage ad hoc threats such as payment errors or fraud.
• Budgeting and planning
• Transactional accounting like invoicing, paying bills or chasing outstanding accounts.
• Processing payroll in line with the ATO regulations. 

Financial Management and Forecasting

A good outsourced CFO will take full responsibility for the financial and accounting functions for your company. They will be proactively involved in setting up or improving internal accounting processes and controls, provide frequent feedback regarding financial performance and KPI tracking as well as ensure that your accounts are accurate and up to date. 

Businesses whose nature is dynamic and fast paced benefit the most from having a solid plan when it comes to forecasting and business performance projections. 

Cash Flow Management

In every small business we work with, having a solid understanding of current and future cash flow is one of the most important factors in determining ongoing success. However as a businesses cash management needs become more complex, it’s often easy to lose track of obligations such as loans, leases, car payments or equipment finance.

Your outsourced CFO will be able to set up transparent systems to manage all aspects of cash flow and work with you proactively to help you understand how to best manage your cash.

Your Champion During Financial Challenges

If 2020 taught us nothing else, it is that businesses can be side swiped at a moments notice, and having the right team and experience on hand can be the difference between sinking or swimming (however slowly!)

When these challenges occur, they often have a negative impact on profitability, cashflow, administrative workload and client churn. These are all things that a CFO, through their years of experience have navigated before and can help you do the same. Don’t wait until it's too late to choose a trusted advisor.

If you think your business is reaching the point where you could benefit from bringing an experienced CFO into the team, then feel free to reach out to us for an obligation free discussion.