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CFO services as a small business strategy

By Jamie Ward, CPA

A Chief Financial Officer (CFO) is an experienced, executive-level finance professional who can help businesses design financial solutions and strategies needed for businesses to grow and succeed.

While there is general consensus that a lack of CFO services often leads to business stagnation or failure, opinions vary as to when CFO services are necessary. Opinions also vary as to what size businesses will benefit from CFO services. We’ve done some research to help you decide if CFO services are right for your small business.

How big should your business be in order to need CFO services?

The New York Times states outsourced CFO services are needed after a company hits $2 million in annual revenue. According to industry sources, businesses with lower complexity need a full-time CFO when their revenue reaches $10 million or more.

How complex is your business structure?

Something to consider is the complexity of your business or industry and the stress level surrounding it.

Having a CFO on your business team can make a big difference if you have daily operations that involve any of the following:

  • layers of contracting;
  • insurance and bond requirements;
  • a large number of employees and/or contractors and subcontractors;
  • cash flow and financial management issues;
  • complex business strategies.

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However, they more than likely would see the benefit from investing in outsourced CFO services.

How part-time CFO services benefit your small business

To get a better understanding of how investing in CFO services will benefit your business, let’s compare services they can provide versus the cost.

What services can an outsourced CFO provide?

As your business grows and evolves, a part-time CFO can perform financial planning and develop timely financial statements, projections and reports that can help you make solid business decisions. 

Additional services part time CFOs may provide include:

  • Improving cash management;
  • Providing financial management;
  • Improving your current bookkeeping system;
  • Providing guidance through a merger, acquisition or expansion;
  • Training and oversight of accounting services and bookkeeping staff;
  • Acting as an executive liaison with banks, vendors, investors, auditors, etc.;
  • Ensuring tax compliance;
  • Overseeing contracts and purchases;
  • Developing Key Performance Metrics (KPMs), annual reports and long-range strategies for growth and development;
  • Presenting financials to the board;
  • Incorporating risk management by developing internal procedures to help reduce errors or fraud.

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What do outsourced CFO services cost?

We estimate the cost of hiring a full-time CFO to range between $100,000 to $300,000 in Oklahoma.

Outsourced CFOs work on an hourly, contracted or part-time basis. Small businesses can utilize these full-service CFOs as much or as little as they need. While the final cost will ultimately boil down to the scope, complexity and hours of work, you can expect to invest from $1,000 to $10,000 per month for an experienced part-time CFO.
Find out more regarding factors that contribute to the cost of an outsourced CFO.

Common objections to bringing on an outsourced or part-time CFO

While hiring a part-time CFO can be a great business strategy, change can be hard for some. Let’s look at some of the arguments against hiring an outsourced CFO.

Our business is too small.

As we’ve already noted, there is no defined point at which a business should hire outsourced CFO services. Some people base the decision on sales revenue and/or the complexity to their business and the volume of transactions. Also, if the business needs policies established or more experienced financial leadership, the time may be right to hire a focused financial leader.

We don’t have that much money or business.

If your business is growing, or you want your business to grow, developing a financial strategy is the best route to take. You will need someone to develop this strategy particularly if you plan to approach outside investors. Or, if your business is going through a merger or acquisition, CFO services can be invaluable by providing timely financials or providing guidance through the process.

We already have an accountant on staff.

Remember, a CFO is not the same as an accountant, even if they can have similar training. An accountant helps you paint an accurate financial picture of your organization. A CFO focuses more on long term and higher level matters. 

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How does outsourcing CFO services remove geographical borders?

Many times the candidate pool for experienced CFOs in smaller markets may be limited. However, those boundaries expand when small business owners tap virtual CFO services from companies based in other cities or states. By going beyond these boundaries, small businesses may find virtual CFO services who are experienced in their specialized industry or market if those CFO services are not available locally.

Ascension provides the resources you need to rise above

Ascension CPA offers complete outsourced CFO services as well as all-in-one financial solutions. They are ready to partner with your business as often as you need, wherever you are located, to bring you financial peace of mind. To set up an appointment, please contact us.

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Tags: Accountant, CPA