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When Does an Outsourced CFO Make Sense?

November 1st, 2020

Do you wince at the term “outsourced CFO”? We understand.

Outsourcing simply means to get a product or service from outside of your company. But given that it has long been used by large companies to expand profits by sending existing jobs overseas, it has developed a pretty negative connotation.

But small, growing businesses can use outsourcing as a bridge to more full-time hires. Oftentimes, it can take years before startups make enough money and become large enough to warrant certain full-time hires. And that’s what can make outsourced CFO services so attractive.

Outsourced CFO services aren’t necessarily for every business, though. Here’s a look at what outside firms can do for you, and how to decide whether you could benefit from outside help for accounting and other financial services.

What Outsourced CFOs Do

You’ll be pleasantly surprised to find that an outsourced CFO can cover just about anything a full-timer would do. That makes this an exceedingly flexible option. You could outsource a wide range of CFO services to tackle all of your needs, or you could call in a pro to tackle a single specific goal.

So, what all can you expect?

Forecasting

Financial forecasts provide internal and external shareholders alike with a roadmap of sorts. This map illustrates where you want your business to be – whether it’s in one year or 10 – and how you’re going to get there. While this sounds like the kind of info only an insider could provide, it’s the job of an outsourced CFO to get to know your business and be able to provide this kind of analysis.

Budgeting

Just as important as forecasting is budgeting, which is more of a brass-tacks plan for how resources will be allocated, typically across a shorter timeframe (monthly, quarterly, a full year at most). Importantly, a budget doesn’t just outline how money should flow in and out of the business; it’s a gauge to look back across the year to determine whether you’re meeting, falling short of or exceeding your goals. An outsourced CFO also will be able to adjust your budget as business conditions change.

Cash flow management

While a budget will no doubt outline expectations for profits, the bottom line isn’t always the bottom line. Cash flow – literally the movement of cash in and out of the business – is every bit as important. In fact, it’s possible to be on a theoretical path to solid profits and yet still not have enough cash to pay certain bills. Because cash flow management is so important, it’s a popular ask of outsourced CFOs.

Payroll services

This one goes without saying. While many small businesses often tackle payroll themselves in the very early years, it can get complex as you begin to scale. Payroll isn’t something to be left to whenever you have spare time – having a dedicated outsourced CFO to handle checks will keep employees paid and happy.

Much, much more

Account analysis, bill pay services, bank reconciliation, financial planning – these are just a few more of the tasks that small and midsized businesses can get from McManamon’s outsourced CFO services. We can even provide QuickBooks setup and training for when it’s time to bring your accounting in-house.

Are These Services Right For You?

Every business situation is unique, but here are a few hypotheticals in which you could benefit from outsourced CFO services.

  • You’re a small-business owner who understands products, understands personnel and/or understands selling. But you have very little knowledge about managing the financial side of the business.
  • You run a business that actually has a CFO working for you. However, that CFO has just announced that she’s going to leave in a month.
  • You want to produce a revised forecast for your shareholders, but the employee in charge of running day-to-day accounting functions doesn’t have experience with analyzing and planning out the company’s financials.

Small businesses don’t have to think small when it comes to getting their financial houses in order. Learn more about our outsourced CFO services by calling us at 440.892.8900 or contacting us online today.

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