Outsourcing the finance function of a growing business has many clear benefits. If your business is fast-growing, competitive and keen to do more, among those options is CFO (Chief Financial Officer). How does this work as an outsourced service and is it right for you?
Bringing value
If you own and manage a growing business, you may feel that to warrant hiring a CFO or another ‘C-suite’ role (e.g. Chief Digital Officer and Chief Marketing Officer), you need to be at a certain stage or size. We hear this a lot among growing businesses – that their finances are not complex enough to justify the cost of employing a full-time finance professional.
The truth is that a professional accountant brings considerable value to a business, and you don’t necessarily have to hire one yourself to access the benefits.
Business owners often make the mistake of thinking that their accountant is purely a cost to the company. Their role is to make sure that the business meets its compliance obligations, pays the right about of tax on time, and prepares the year-end financial statements. In fact a professional accountant has much more to offer.
Forward-thinking financial direction
Bookkeeping is retrospective: by the time your year-end accounts are completed, the business has already moved on by several months. Sitting down with your accountant to discuss your last financial statement provides limited insights into how the business is performing today, or where it may go in the future.
A CFO has a different role. They use recent and current financial information to seek out ways to improve your profitability and efficiency.
Fractional CFO service professionals (also known as outsourced CFO) are constantly looking for ways to add value to the business. Numbers tell a story, and an experienced adviser will always look beyond the top line and think about how the business could be improved.
Four areas where an fractional CFO can help
Cashflow is one of the most important indicators for a business but can often be overlooked. Available cash is critical to a company’s health and survival, and the first warning sign that trouble may be ahead. Expert advisers can help businesses plan and cope when cash is tight.
Sources of revenue. Revenue may be growing, but does your business know exactly where this growth is coming from? If you rely on referrals, do you always know which client was the source of a referral? Otherwise, how can you reward them, or focus your further efforts in the right place?
Forecasting. By making use of historical data and listening to your ambitions for the future, your fractional CFO can make your future plans viable.
Identifying economic strengths and weaknesses. Are some costs increasing? Is there anything you can do about it? Are some income lines struggling? Expert guidance from a fractional CFO can help to identify this sooner rather than later.
A fractional CFO thrives on live financial information, using it to suggest ways that the business can grow. With most businesses we work with, there comes a stage in their maturity where the value of access to this information means that they set up their own internal finance function. To us, this is a measure of the business’s success, and we are always happy to see our clients move on.
In providing CFO skills, strategy and support, our role is not to tell business owners where they’ve been – we want to guide them to the limits of where they can go.
For more information about how our fractional CFO service can help you, please get in touch with your usual BKL contact or use our send us a message.