In our current labor market, employers are scrambling to hire and keep qualified employees. Many small businesses are growing and desperately need help navigating their financial statements. The cost of a full-time CFO starts at $150,000 and goes up from there. For small and medium businesses, this cost is likely too high. Therefore, outsourcing the role of the CFO makes the most sense.
The terms Controller and CFO, or chief financial officer, are sometimes mistaken for one another.
A Controller will coordinate all the accounting of a company. They will then verify the accuracy of the financial information as presented to management. A Controller is more proactive in their approach to the financial statements.
A CFO is the person responsible for the strategic financial outlook of a company.
CFOs provide higher level analysis of a company’s financial statements. The CFO must understand all the complex rules of accounting, while providing forward looking advice.
Think of it this way, the Controller is like the quarterback of a football team. They make sure the players are in the right spot and the run the play called.
The coach is the CFO. The coach is usually thinking 2-3 plays ahead. The CFO is ultimately responsible for the strategic vision and direction of a company. They will evaluate revenue earned by a company from a historical standpoint and then apply it to future revenue streams. The CFO will also make sure that the company has maintained enough liquidity or seeks out access to liquidity. All of these processes are done well in advance to when the actual product or liquidity is needed.
Without a CFO, a company will be sailing blindly into each phase of development or miss out on opportunities.
Currently, many business owners outsource one or several aspects of their business. Payroll is the most common outsourced service. Because of all the rules and requirements in payroll, it is easier to outsource that process versus trying to maintain a payroll department.
CFO outsourced services are no different.
An outsourced CFO will bring their analytical knowledge and business experience, but at a fraction of the cost. Sometimes outsourced CFO services are referred to as fractional CFO or virtual CFO. No matter the title they take, outsourced CFOs will bring substantial knowledge and experience to any organization. They bring strategy that many small and medium businesses are searching for.
Some small business owners mistakenly believe that they cannot afford CFO outsourced services. They try to just go it alone. With most outsourced CFO services, you can start on the lower end of the fee schedule.
There is not a requirement to need all services offered. The beauty of outsourced services is you pick and choose from a menu of services.
Maybe you just need help setting up a key performance indicators (KPI). Once they are set up you plan on managing yourself. Or, you just want training on how to analyze your financial statements. It is not uncommon for smaller businesses to start out with only a couple of services and then build up to all the services. These are referred to as corporate finance services. You only pay for the actual services you need.
For newer businesses, I recommend the following outsourced accounting services:
Steven D Hovland is a Certified Public Accountant and a Certified Forensic Accountant. He has 20+ years experience in auditing, accounting, and forensic investigations. He is the founder of Hovland Forensic and Financial, a virtual CFO service company as well as forensic litigation services.