The Benefits of Outsourced CFO Services

Companies outsource many functions today, from payroll and IT to marketing. However, many business owners don’t realize they can outsource the company’s financial function.

Outsourced Chief Financial Officer (CFO) services provide the financial leadership, strategic guidance, and expertise of a full-time CFO but at a fraction of the cost.

So, let’s define what an outsourced CFO does, discuss how these services benefit your firm, and compare the costs of outsourced CFO services to hiring a full-time CFO.

What Is an Outsourced CFO?

An outsourced CFO—sometimes referred to as a fractional CFO—is a financial leader hired on a contract or part-time basis to provide high-level financial strategy and oversight without the commitment of a full-time, in-house executive.

These professionals bring years of experience in:

• Corporate finance
• Financial planning
• Cash flow forecasting
• Budgeting
• Risk management
• Strategic growth initiatives
• Key performance indicators
• Financial processes and internal controls
• Financial reporting

They work with companies on a flexible schedule to deliver services that align with the business’s specific needs.

Outsourced CFOs can collaborate with your internal finance team and other advisors to provide insights on cash flow management, capital structure, tax planning, and regulatory compliance. They also offer critical financial reporting, projections, and analysis, helping the leadership team make informed decisions.

Benefits of Outsourced CFO Services

Fractional CFO services can provide significant value with an objective outside view and deep financial expertise. Here are a few benefits.

Cost-Effective

One of the most significant benefits of outsourcing CFO services is the cost savings. A full-time Chief Financial Officer commands a substantial salary—often well into six figures—along with additional benefits like bonuses, healthcare, retirement contributions, and equity options.

Outsourcing provides access to experienced financial leadership at a fraction of the cost since you pay for only the services and time you need.

Access to Expertise

Fractional CFOs are typically highly experienced financial experts who have worked across various industries and companies, bringing a broad skillset. This diversity of experience allows them to offer insights that might not be available from a single full-time hire.

If you need advice in specialized areas like mergers and acquisitions (M&A), financial statements disclosures, scaling operations, or financial restructuring, an outsourced CFO can provide targeted competencies without the long-term commitment.

Scalability and Flexibility

As your company grows, you may have more complex accounting needs, navigate an uncertain economy, or your need for strategic financial leadership may fluctuate. Outsourced CFO services offer scalability, so you can increase or decrease the level of financial support based on your current business needs.

Whether you need ongoing financial leadership or help with specific projects like venture capital fundraising or audit preparation, a temporary or part-time CFO lets you tailor the engagement to your requirements.

Objective Financial Oversight

Having an outsourced CFO offers objective oversight of financial matters. Since they’re external to the organization, a fractional CFO provides an unbiased perspective on your company’s financial health, business strategy, and opportunities for growth.

This impartiality is particularly valuable during financial audits, strategic planning sessions, or periods of financial stress because an outsourced CFO can identify areas for improvement that your in-house team may overlook.

Focus on Core Business Functions

Small and mid-sized businesses often struggle to maintain an in-house CFO due to budget constraints or competition for talent. This situation usually results in other business leaders, such as the business owner or CEO, handling financial duties.

Outsourcing the CFO function frees up those leaders to focus on their core business responsibilities, such as operations, marketing, sales, strategic decisions, and customer relations, knowing that financial oversight is in expert hands.

Comparing the Cost of an Outsourced CFO to a Full-Time CFO

When weighing the decision to hire a permanent, in-house CFO versus outsourcing, cost is often the primary consideration. So let’s compare the cost of a full-time hire to an outsourced CFO.

Salary and Benefits for a FT CFO

Hiring a CFO on a full-time basis is a significant financial commitment. According to CFO.com, nearly three-quarters of CFOs earn between $201,000 to $400,000, including compensation and cash bonuses.

Many CFOs also expect to benefit from business growth. According to the same survey, 67% of CFOs received initial equity awards of 0.5% or more, and nearly half (47%) said they received more than 1% at some point after.

Additionally, you need to factor in the cost benefits, including health insurance, retirement contributions, and other fringe benefits.

Cost of an Outsourced CFO

Outsourced CFO services are generally billed on an hourly, monthly, or project basis. This flexibility allows you to pay only for the time you need.

The cost will vary depending on the services you need, your location, and your outsourced CFOs level of experience, but it generally costs anywhere from $150 to $500 per hour.

For example, say you engage an outsourced CFO for ten to 20 hours per month at a rate of $200 per hour. That equates to $24,000 to $48,000 per year—far less than the cost of a full-time CFO.

Plus, some firms provide solutions beyond financial leadership, packaging CFO expertise with controller services, bookkeeping, etc. So, you may be able to outsource your entire finance function, allowing you to cut costs without sacrificing financial strategy.

Can Your Organization Benefit from an Outsourced CFO?

Outsourced CFO services offer a cost-effective, flexible solution when you need expert financial leadership without the significant overhead of hiring a full-time CFO.

If you’re ready to gain access to high-level financial knowledge, objective oversight, and the ability to scale services according to your needs, contact Percipio Business Advisors today. We’re happy to discuss how this model can provide strategic financial guidance without the financial commitment of investing in a permanent full-time CFO.

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