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5 tips for hiring an outsourced CFO

As an entrepreneur, you probably feel like you have to be the chief cook and bottle washer in your growing business. But can you also be the chief financial officer (CFO)? It may be possible to do it all yourself when you are just starting out. But as your business expands you will soon need someone that can do more than just “take care of the books”.

What does a CFO do?

The chief financial officer or CFO of a business is responsible for managing and overseeing the long-term financial health of the company. This role includes tasks such as tracking your cash flow, analysing your company’s financial strengths and weaknesses, and suggesting steps to remedy any problems. A qualified and experienced CFO can play a pivotal role in helping you to make the right strategic and financial decisions. A good CFO is not only responsible for your company’s current finances but can also help you to predict and drive its future growth.

Why hire an outsourced CFO?

A qualified CFO can provide valuable insights to help entrepreneurs when making the many critical decisions needed to scale a business. However, even if they could afford one, very few small and medium-sized businesses (SMEs) can really need the amount of advice and oversight that a full-time CFO provides. SMEs don’t need 2,000 hours of a CFO’s time – they just need the right advice at the right times during the year. Outsourced CFO solutions solve this problem by giving smaller businesses access to the same high-calibre professional CFOs that big businesses rely on.

A virtual CFO or outsourced CFO fulfils all the tasks a regular CFO does, but without being permanently employed in-house at your company. While most highly experienced CFOs would not be willing to take up a permanent position at an SME, they may be able to devote 25 hours a month to high-level oversight and assistance when you need it most. A part-time CFO can help you free up your time as a business owner to focus on what you do best. However, choosing the right part-time CFO or outsourced CFO firm requires just as much care as any full-time hire. Here are five CFO hiring tips to help you pick the best outsourced CFO for your business.

Five tips for hiring the best outsourced or part-time CFO for your company

Education and training

Any job comes with a job description and the best outsourced CFO business advisory services will help you to identify exactly what kind of training and experience you should look for in an outsourced CFO. You no doubt make sure that the candidates applying for any other vacancy in your business meet the educational and work experience requirements you set out, and you should do the same for an outsourced CFO. Like with any other hire, make sure to do your due diligence on your chosen candidates, verify their educational attainments, and call up their references to get more background about them. A positive reference means that you are getting what you pay for.

Industry-specific experience

The right CFO does not only understand financials and accounting – they should understand your business, industry, and operating environment. If you are an SME operating in a niche environment, a CFO with industry-specific experience is a must. Industry knowledge can be helpful in competitive benchmarking, knowing which systems are most effective in your industry, understanding laws and regulations, and having access to valuable networking contacts.

Value for money

Hiring a fractional CFO is significantly less expensive than the fixed salary of a full-time CFO, but it still costs money. You want to make sure that your new CFO will be up-and-running and delivering value to your start-up as close to day one as possible, so make those calls and check those references. Ultimately, an outsourced CFO should be an investment, not a cost. Your CFO should provide you with a return on investment, improving your profitability in line with or more than the cost of their services.

Company fit

An outsourced CFO may not work in your business every day, but even part-time employees need to be a good fit with your company culture. Good professional chemistry is critical because a CFO needs to be able to work closely with your top management and finance team. Look for someone who will buy into your stated vision and who is prepared to help you realise your goals. Without support and trust from your team, even the best CFO will struggle to add value to your business.

Onboarding

An outsourced CFO should not feel like an outsider in your business – they should feel like they are part of the team. This means it is crucial that you get buy-in from your entire team about using an outsourced CFO. Start the onboarding process by keeping your current staff up-to-date and informed. Your new virtual CFO should also provide you with a roadmap of their normal onboarding process and their requirements. It might be a good idea to start with one project, for example, a month-end report. That gives everyone a chance to grow into the arrangement and provides a mutual opt-out point should the new hire not be a good fit.

Hiring a part-time CFO can seem intimidating, but if done right, it can help your company soar. A good outsourced CFO can focus on advanced financial reporting, detailed cash flow forecasting, other higher-order finance functions that might place too much strain on your in-house resources. They can round out your finance department and lend a hand when you need it most.

Outsourcing the CFO function of your business can significantly contribute to the financial and strategic success of your start-up, without adding to your payroll burden. As an expert in providing outsourced CFO services, OCFO is ready to help you  achieve your growth goals, while you concentrate on running your business. Reach out to us today.

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