Many small businesses don’t need a CFO, and yours may be among them. Why not? Because the services of a CFO are not required in a small business, or the CEO or business owner carries out the services.
To be clear, every business needs some form of financial leadership, which a financial controller can offer.
Role of a CFO
It is necessary to first understand their role within the organization to critically evaluate the need for a CFO for your business.
The CFO acts as the director of your organization. Their responsibilities include directing the company’s budgets, goals, and objectives. The CFO also acts as the organization’s overseer with the responsibility of overseeing the investment of funds held by the organization and managing the associated risks.
2. Cash Flow Management
The CFO of a small business is responsible for cash flow management which is one of the biggest challenges businesses face. Yet, cash flow management is vital to the success of your business since it gives you the ability to manage cash flow. A CFO can help you optimize accounts receivable and invoicing processes.
3. KPI Tracking
The CFO can help establish and track the right key performance indicators with their skills and knowledge. In turn, these metrics can be helpful in tracking your business growth and performance.
4. Cost Reduction
A CFO can also help in cost reduction for your organization. They can determine where your business can save costs in different parts of the business. When you save costs, your business will eventually generate higher profits.
Most CFOs of small companies are required to carry out a wide range of accounting tasks. A CFO also supervises cash management activities to support organizational expansion.
While CFO services may be crucial to the success of your business, it can be expensive for your small business to hire and maintain a full-time CFO. Therefore, you can consider outsourcing CFO services which provide you efficiency in terms of value and cost.
When Do You Need Outsourced CFO Services?
Considering the services offered by a CFO mentioned above, it is clear that your small business would benefit from outsourced CFO services if you want to improve current business processes or are struggling with some aspects of your business.
Are you planning to expand your business or open a new location? A CFO can help you handle increased business activities as growth requires expanding automated systems to handle the additional capital required. In this case, a CFO will help to investigate the investment and determine the necessary technology in terms of capital acquisition.
Outsourced CFO services can also come in handy when your business is faced with problems in the financial department. The CFO will be better positioned to determine the source of financial problems and offer timely solutions.
Suppose you want to sell your company or want to make a huge investment in your company. For instance, if you want to buy out a competitor, a CFO can guide you, even guiding you through acquisitions and mergers.
You may also need the services of an outsourced CFO if your company goes through regular audits. You may want a CFO to ensure that the financial statements are prepared on time. The CFO will also represent your company during an audit, setting the CEO free to carry out other value-adding tasks for the business.
You may want to live in a perfect world where your business uses the services of both a CFO and a financial controller. However, both high-paying positions may not be sustainable for your small business.
You can hire outsourced CFO services to provide you with the resources and expertise needed at a fraction of the cost.