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CFO Services for Small Businesses

As a small business owner, you’ve probably wondered whether you should consider getting a CFO for your business. After all, your business could do with expert financial management.

Let’s face it, you have so much on your plate that it’s not always possible for you to manage all the aspects of your business. So, in this post, we’ll look at CFO services for small businesses in more detail.

More specifically, we will be looking at outsourced CFO services. Why? This simple reason for this is that, while a CFO can contribute significant value to your business and make your financial management more effective and efficient, they do come at a cost.

Think about it, when you hire an in-house CFO, you’ll need to pay them a hefty salary. And this is expected considering their expert skills and knowledge. In addition, hiring any employee comes with an extra expense, and you’ll often have to provide them with additional benefits that cost you more.

So, then it makes sense to use an outsourced CFO. In this way, you’ll have access to the best CFO services for small businesses but without the massive expense that comes along with it. This means you’ll be able to limit your expenses which ultimately translates to more profits.

What services do outsourced CFOs provide?

Often, the first stumbling block when considering CFO services for small businesses is the thought that CFOs can only contribute to a larger business that generates more revenue.

So, you might think that CFO services are only ideal for corporations and larger companies or that your business doesn’t generate enough revenue to justify hiring an outsourced CFO. The thing is, there are no hard and fast rules on when you should hire a CFO. This means that, ultimately, it will depend on your unique set of circumstances and your business’s needs and requirements.

As a result, to decide whether you need a CFO, you’ll need to understand what services they offer. Generally, CFO services for small businesses include the following key functions:

Budgeting and planning
CFOs can develop extensive financial projections for your business. In other words, they'll be able to show you what your business’s revenue potential is and exactly what your expenses are. Simply put, you’ll be able to budget and plan better when you use the services of a CFO. This is vital in your business’s day-to-day operations and helps you effectively manage your business’s finances.

Short-term and long-term forecasts are some of the most valuable tools you can have in your business. This is simply because it gives you the roadmap that will show you how you’ll get from you where you are to where you want to be. To do this forecasting, however, requires an understanding of your business, its industry, business strategy, and the specialist skills and knowledge that only a CFO can provide.

Cash flow management
One of the biggest challenges for small businesses is cash flow management. Yet, despite this, effective cash flow management is vital as it gives you the ability to optimise your cash flow by, for instance, optimising your invoicing and accounts receivable collection processes. In this way, you’ll always have the necessary cash available to pay your business’s expenses and pay suppliers.

KPI tracking
With their specialist skills and knowledge, CFOs can establish and track the right key performance indicators (KPIs). In turn, these KPIs give you to vital metrics to track your business’s growth and performance.

Financial reporting
Financial reports like balance sheets, profit and loss and income statements, and cash flow management reports gives you insights into the financial health of your business at a glance. Apart from this, these financial reports help you get ready when the time comes to pay your taxes. This, in itself, relieves stress and gives you peace of mind.

Cost reductions
CFOs can show you where you’ll be able to save costs, whether it’s in your hiring processes, your supply chain, or any other part of your business. And when you’re able to reduce your costs, you’ll be able to increase your profit.

Strategic planning
One of the biggest benefits of using a CFO is developing your financial strategy. They can help you implement the necessary measures and strategies that will help your business grow and generate more revenue.

Risk management
Due to their skills and experience, CFOs can identify issues and challenges long before they materialise. This means you’ll be able to avoid these challenges which, in turn, reduces your overall risk.

When do you need outsourced CFO services?

Considering the CFO services for small businesses mentioned above, it’s clear that you would need a CFO if you struggle with any of these aspects, or you want to improve your current processes. In other words, you’ll need to consider CFO services if you want to budget and plan better, reduce your operating costs, get your tax affairs in order, and the like.

In practice, therefore, CFO services can be extremely helpful when:

  • You intend to expand your business or are opening at a new location.
  • You want to optimise your invoicing and accounts receivable collections to improve your cash flow.
  • You want to better manage your small business’s expenses and manage its finances better.
  • You’re planning large capital purchases or investments.
  • You want to improve your financial decision-making processes.

Keep in mind, though, that these are just some examples of where a CFO will be invaluable and there are many more. The key takeaway, however, is that a CFO will support you in the overall financial management of your business which, in turn, frees up your time and allows you to focus on running your business. This is simply because they’re the experts in these aspects while you might not be.

What are some things you need to consider when hiring an outsourced CFO?

When looking at CFO services for small businesses outlined above, you’ll probably see the value in them. However, before hiring an outsourced CFO for your small business, there are some things you need to consider. Ultimately, these considerations play a vital role in finding the right CFO services for your specific needs and requirements.

These considerations include:

1. The financial services you need
One of the first considerations is deciding what services you’ll need. For example, you should consider whether you only need CFO services or an offering that includes accounting services as well. Once you’ve decided what services you need, you’ll need to find a firm that offers all the services you require.

2. Whether you need a dedicated CFO
You’ll also need to consider if you need the services of a dedicated CFO or whether you’re satisfied getting advice and guidance from a pool of CFOs. Ultimately, this depends on whether you want a single CFO to manage your business’s affairs and want to speak to the same CFOs every time.

3. The businesses they support
Just like different businesses offer different services and products, outsourced CFO firms offer varying services to different types of businesses. Moreover, CFOs firms will often focus on offering their services to businesses of a specific size. You’ll, therefore, need to ensure that the chosen CFO firm supports businesses in your industry and businesses of your size. If they do, they’ll understand the unique needs and requirements of your business and the industry in which you operate.

4. The CFO’s experience in your industry
Apart from offering services to businesses of your business’s size and in its industry, you’ll also need to ensure that the specific CFO firm has the knowledge and experience in your industry. If they do, they’ll understand how the industry works and what issues you’ll likely encounter. They’ll also understand the best practices and the processes in your specific industry.

5. The type of reporting they do
A vital consideration is what type of reporting the CFO firm offers and how often they provide reports. This will be critical in giving you access to the data you need to make better decisions and manage your business’s finances effectively. It’s also important that the data and reports you get, are easy to understand and provide you with actionable insights into your business’s financial health.

6. Their pricing
Considering the value you’ll add to your business when you hire an outsourced CFO, pricing shouldn’t deter you from making this decision. Yet, pricing is still an important consideration, especially when you're conscious about your expenses. But is it as easy as just choosing the cheapest provider? Not necessarily. Ultimately, you should consider what you’ll be getting for the price you’ll pay. In other words, you need to consider the value proposition that the CFO firm offers.

Isn’t it time you hired and outsourced CFO for your business?

Hopefully, this blog helped to eliminate a few misconceptions and answer a few questions. Firstly, it’s important to remember that you don’t need to be a large corporation or company to use the services of a CFO. In fact, with their specialist skills and knowledge, they can contribute significant value to any business, no matter its size.

Secondly, considering the functions of a CFO, you’ve seen the value that you can add to your business by hiring one. And when you do, why not consider Accountancy Cloud.

With our CFO services, you’ll get access to expert CFO support and the strategic finance support your business needs without having a seasoned, full-time CFO on your payroll.

To learn more about our CFO services and how they can help your business, why not contact us today to discuss your specific needs and requirements.

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