Outsourcing CFO Services – Is The “Fractional CFO” Right For You?

When you think of a CFO, you might think of someone in a management position. Someone who dedicates all their time to one company, driving the financial affairs and being intertwined with the day-to-day running of the business.


But business roles are changing…


A CFO still takes charge of the financial matters of a business, including the financial strategy, cash flow, and forecasting, but this role doesn’t have to take the shape of a traditional employee.


Businesses have the option to outsource virtually everything in the modern age, including CFO services.


This is often referred to as a “fractional CFO” – a Chief Financial Officer working on a monthly retainer or contract, splitting their time advising multiple businesses.


As the owner of a growing business, is it time to take advantage of an outsourced CFO?


Here, we’re presenting the argument for the “fractional CFO”. Let’s dive into the benefits.


Financial Intelligence


An outsourced CFO carries a wealth of experience and knowledge ready to be tapped into.


This is one of the key ways in which they provide value to your business, and function like a trusted member of your team, and a consultant, all in one.


Find the right partner, and you’ll be able to lean on their commercial acumen and ensure the financial performance of your business is optimised and effective. Someone who is experienced in the industry will have seen the same challenges your business faces, and be able to impart their wisdom when it comes to optimising the finance function. This includes teams, systems and processes that are embedded in your business.


An experienced CFO can also provide you with a benchmark. Having seen what works and what doesn’t, and how other businesses in the industry are performing, a fractional CFO can provide you with much needed context.


It can be very helpful to have an outsider view of what ‘good’ looks like in the industry, and how your profit margins, overheads, or even the structure of your business sits amongst the rest.


A Potential Cost-Effective Solution


Employing an experienced in-house Chief Financial Officer can be an expensive hire.

Virtual CFOs or fractional CFOs can be the solution. They may work remotely and part-time, and help you to avoid the usual costs of employment.


Outsourcing means not taking on the cost, and risk, associated with a permanent hire. National insurance, employment contracts, pension contributions… It all adds to a company’s liability.


You can save money, especially while your business grows, and not compromise on your financial future.


Of course, you’re not going to find a quality fractional CFO for a snip, but their return on investment can often pay their fees ten fold.


Flexibility


Flexibility. It requires a bit of give and take in business.


If you’re not taking the flexible approach then you are likely to be taking the wrong approach (people value it incredibly highly).


Remaining agile as a growing business lets you de-risk and pivot as required, giving you a competitive advantage. Where a permanent CFO is a fixed cost, an outsourced CFO can be scaled up or down depending on where the business is and what it needs in the near future.

Outsourcing allows for quick strategy-changes, and for speedy growth.


Further, you may even change to a different CFO in the future, without the cumbersome experience of firing and rehiring for the position. Fresh perspective and further outside knowledge can sometimes be what your business needs to take the next step.


Impartiality


A fractional CFO’s financial experience also has the benefit of being impartial. They don’t have the same investment as you.


While you may have a biased or emotive view of your business, the CFO can take a factual and balanced view based on the objective numbers.


By using the CFO as a sounding board and an impartial advisor, you can ensure you’re making smart decisions, with the head, rather than the heart. Making the right financial decisions is where a CFO earns their corn.


Run a Sustainable Business


A fractional CFO will ensure your company is being built on a solid financial foundation.


You never know what is around the corner. Depending on your own background, you might be relatively inexperienced when it comes to surviving the tectonic shifts that the economy and the world of business always provides.


An outsourced CFO service means you’re more likely to have the skills – and access to advice – to navigate almost any eventuality.


As well as having the financial acumen to build a strong balance sheet, and sustainable growth within the business, your CFO will also have a network you can tap into. This can include lenders, legal professionals, and industry experts on hand to help you to navigate any challenges you face, and often at a discounted rate.


Opportunities for Growth


A CFO’s role is ultimately to help your business grow with a good financial strategy.

One of the ways in which a fractional CFO can prove to be a good investment is to optimise your business for growth, and to leverage their expertise to help you make the right business decisions.


CFOs can help you answer the biggest questions that play on a CEO’s mind: Is it time to hire? How much money can you afford to take out of the business? How much cash needs to be reserved for paying the taxman?


Your fractional CFO will have their finger on the industry’s pulse and know where the opportunities are, and how you can take advantage of them. This industry knowledge can prove invaluable.


Freeing Up Your Time


If you’re a founder or owner of a business, you won’t need me to tell you that your time is precious.


It’s likely that you have to wear many hats and take on different roles over the course of the working week, especially if you are in a growth phase.


Outsourcing financial services and management can take one of the most challenging tasks off your plate and let you focus on things like marketing your business and scaling.


You probably didn’t start a business with a view to taking on the role of a CFO and managing the finances takes your valuable time away from doing what you do best. Spending 20 hours a week on directing the finances of your business can take its toll.


If you don’t employ someone full-time for this position, a fractional CFO can free up your time to grow your business and play to your strengths.


Summary – Is Outsourcing a Viable Option?


As an agency grows, having control of the finances inevitably becomes more important, and a far bigger job than bookkeeping and submitting a tax return. Hiring a full-time CFO may not be an option, and even if it is, it might not be the right option.


A fractional CFO provides a different route. Scalable, time-saving, and cost-effective, especially when you find the right person. Who wouldn’t want to tap into this resource of knowledge?


This is about far more than finances, it’s about building your business for long-term success.


FAQs


Is an outsourced CFO only for large companies?

No, an outsourced CFO can be valuable regardless of what stage your business is at. Startups, scale-ups, and established businesses will have different needs, from structuring the business, planning for growth and investment, through to minimising tax. An outsourced CFO is well placed to grow with the business and help at every stage.


Does a CFO work alongside my team?

Yes, a CFO should be integrated to work closely with your team, providing financial insight and ensuring your systems and business processes are effective. Your team will likely be glad of the support.


Can a fractional CFO provide consultancy services?

Some fractional CFOs will act as consultants on a one-time basis which is great if you’re testing for fit. They may take a snapshot of your business and then provide their advice on strategy and process. However, in most instances, working with a CFO long-term and allowing them to integrate with your team will be most valuable.