Outsourced CFO services cost: what you need to know
Considering the cost of hiring a full-time vs. part-time CFO
As a small business owner, you’ve taken the necessary steps to get your business off the ground. You hired a bookkeeper, bought the latest edition of the top-rated accounting software, filled out the correct tax forms established the appropriate bank accounts. The bookkeeper understands the debits and credits and you keep an eye on the financial statements..
Business is growing and you think the time is right to expand. You and your potential investors would like to see some solid data — budgets, financial reporting and forecasting, proposed growth strategies, etc.
You ask the bookkeeper for information and they hand you back a print-out showing the revenues and expenses as generated by the software. Not exactly what you had in mind.
As you research a solution, all signs point to hiring an experienced Chief Financial Officer (CFO). Let’s take a look at what a CFO is and what they cost, the available options, the costs of hiring an outsourced CFO and what factors impact those costs and why hiring a part-time CFO from an accounting firm can be beneficial.
What is a CFO and what do they cost?
According to LinkedIn, a CFO is responsible for critical financial strategies and performance management, based on backward-looking analyses and forward-looking projections. A CFO’s day-to-day tasks may vary, but he or she is focused on the future, using the past to inform and guide his employer’s overall financial performance.
We estimate the cost to hire a CFO in Oklahoma, a mid-sized, market, to be between $100,000-$300,000. For a complete picture you should figure in benefits, bonuses, perks (such as company car/phone), office space, etc.
There is a more affordable CFO option
An employee is usually considered full-time if they work at least 40 hours per week or 2,080 hours a year.
There may be an occasion when they need some 40 hour work weeks, but probably not for all 52 weeks of the year. Shopping for fractional or virtual CFO services to be paid at an hourly rate or a contracted amount may be a better option.
Consider hiring a part-time CFO for your business
An outsourced CFO can provide and help implement the long-range financial plans and strategies you want for your business at a fraction of the cost of a full-time CFO.
While there may be minor distinctions between the terms part-time, outsourced, virtual, fractional and interim CFO, we use them interchangeably here. You can find more detailed information about the distinctions on Ascension’s website (link-part-time CFO) and (link-outsourced CFO).
What they’re not
Please note that an outsourced CFO has a different job description and duties from an accountant, bookkeeper or consultant. While some of a consultant’s responsibilities may seem similar, they are typically hired short-term to develop plans or strategies. Consultants don’t usually participate in the implementation process as the CFO role does.
In order to maximize the return on your investment if you hire an outsourced CFO, steer clear of assigning routine bookkeeping responsibilities or controller services to them.
What will the outsourced CFO cost?
Several variables go into determining an estimated cost. Before making a decision, you should consider:
- How much work do you realistically plan to give them?
- Is your business growing? Growth impacts numerous factors such as cash flow, forecasting and budgeting.
- How large/complex is your business? Your industry?
- Are your financial systems current and do they support your current level of business? Is growth factored into that infrastructure?
- Will your current staff require financial advice, training or oversight?
- Will the fractional CFO need to develop and implement an overall long-term financial strategy or does one currently exist?
- Do you need significant work done on company policies?
- Are you simply between CFO hires and just looking to fill that gap on an interim or temporary basis?
You also can structure your part time CFO to work intermittently. Perhaps you only need an outsourced CFO on a temporary basis and once they set up some best practices, you can hand most of it off to an accounting manager to implement the CFO’s vision. Maybe you only have the CFO set up to work on projects once a quarter or even annually.
While the cost will ultimately boil down to the scope, complexity and hours of work, you can typically figure to invest from $1,000 to $10,000 per month for an experienced part-time CFO.
Why hiring an outsourced CFO from a CPA firm works.
Depending upon the source, there are articles that argue the pros and cons of hiring an outsourced CFO from a CPA firm.
We offer CPA and CFO services in that we can set up financials and accounting processes as well as perform financial forecasting and work as company liaisons. Should you also have the need for additional or full-service financial/accounting assistance, we can offer the complete package ranging from outsourced CFOs to accountants. Your business can benefit from the continuity of having all of its accounting and financial leadership services in one place.
Let Ascension CPA provide the expert financial experience you need from a full-time CFO at a fraction of the cost