Too often, staffing challenges keep a CFO mired in tasks better suited for a controller
An important part of a Chief Financial Officer’s duties is to keep abreast with changes in the finance marketplace, including accounting technology and best practices. Moreover, a CFO needs to provide and strategize insights and data to support the CEO and the board (if there is one) in mapping out the company’s future.
Yet too often, staffing challenges and adherence to outdated protocols keep a CFO mired in tasks that are better suited for a controller, such as bookkeeping, reconciliations and accounting tasks. This situation is repeated in the finance departments of many small to medium-sized companies, where a single professional or two people fill all the roles – AR/AP, bookkeeping, controller-level analysis and CFO functions.
This often results in highly paid executive-level professionals performing functions that could be done by lower-paid staff or, conversely, less-skilled and lower-paid workers doing work that really requires the skills and analysis of more educated and trained professionals.
In today’s rapidly changing marketplace, business owners need a professional who is qualified and capable of strategic decision making to occupy the CFO position.
But hiring that position brings its own challenges. There is currently a shortage of finance professionals at all levels throughout the nation, so finding the right person is tricky. Moreover, most finance professionals seeking a CFO position would expect it to be a full-time position with an appropriate salary. But if your company only needs the strategic functions of a CFO for 20 hours a week, outsourcing may be the best solution.
Business owners often start thinking about outsourcing the CFO position when a long-time CFO retires, and sometimes the departing CFO is the one to suggest it.
Outsourced CFO
An outsourced CFO brings the advantage of working with different companies in different industries. They know how things are done in other companies, what the “best practices” are and how customized accounting technology can streamline the efficiency of an accounting and finance department.
They try to see “over the horizon” and keep their eyes on financial trends that may impact your company down the line, for which you should be prepared. Business owners usually don’t have the time to learn how others are taking care of their businesses.
Just as important, when you decide to work with an outsourcing organization, they will start the process with a detailed assessment of your company’s needs. They know what an accounting and finance department should look like and will assess what you are missing. How many hours per month of CFO-level skills will serve your business? Are you overpaying for a fulltime payroll clerk when that position could go part-time? Part of the value of outsourcing is having a knowledgeable team come in to do the mixing and matching necessary to get your accounting and finance operation to the right size and configuration.
What Types of Companies Outsource Their CFO?
While all types of companies outsource their CFO or other finance and accounting positions, outsourced CFOs are especially effective in companies that have some level of complexity, such as multiple locations, high volume of transactions, subsidiaries, or an audit requirement, among other factors.
Additionally, companies that are growing or expanding can benefit from an outsourced CFO’s ability to complement the owner’s strategic vision with an understanding of the financing options, staffing requirements, and operational enhancements that may be needed. The outsourced CFO’s knowledge of other companies’ experiences is particularly valuable in this kind of setting.
Outsourced CFO’s do not bring a one-size-fits-all mentality to their work. They understand that every business is unique. That’s why an evaluation of your company’s needs, operations and markets is an important part of determining if an outsourced CFO (or other accounting positions) is right for you.
To find out if an outsourced CFO would bring value to your organization, contact your KRD advisor to start the conversation.
