An outsourced CFO provides the financial expertise of an experienced CFO, without the financial commitment of hiring a full-time employee. Outsourced CFOs can be leveraged through a variety of agreements, including part-time, interim, or long-term basis. Seeking the guidance of an experienced CFO from day one can help to set your business up for long-term success with processes, budgets, and projections that enable you to make well-informed decisions.
Ensure proper procedures are in place
Oftentimes business owners just aren’t sure where to start when setting up business procedures for everything from bookkeeping and financial management to inventory, compliance, and customer service. Without proper procedures in place, the company can fall behind in bookkeeping, taxes, and bill pay. A lack of consistent procedures puts businesses at risk of penalties, lost profit, purchase errors, theft, and a negative reputation in the marketplace.
Enlisting the help of an outsourced or virtual CFO can help you create processes and procedures in many areas of the business. With a deep background in finance, a CFO can establish accounting procedures and internal controls that ripple out into other business functions. They can also work with business owners to integrate cloud-based accounting apps, which can automate processes such as expense reporting, payroll, bill pay, and inventory management. Not only will these apps save valuable time by automating processes, but they will also reduce the risk of human error, fraud, and internal theft. With financial reports as easy as the click of a button, CFOs can teach business owners how to pull reports, analyze data, and make decisions.
Develop budgets for the new business
Budgeting can be an overwhelming task, especially when a business is just starting out and doesn’t have prior year performance to use as a basis. A budget must be set before the business even begins to acquire inventory, provide services, or reach out through marketing. Without a budget, business owners will be conducting business in the dark. CFOs work with business owners to understand the business, goals, and needs in order to develop budgets. Outsourced CFOs often bring industry experience, enabling them to help you make informed estimates of future expenses to develop budgets, as well as steps to take in order to stay on track. Developing budgets from day one is very important to managing cash flow and profit margins, all of which an outsourced CFO can develop and evaluate on a regular basis.
Even with a budget in place, a CFO can also help a business overcome budget constraints by evaluating funding options. If the owners’ plans or goals don’t fit within the budget, the answer doesn’t have to be no. Creative and strategic planning is a skill that CFOs bring to the table, including evaluating when it makes sense to take on debt or investment funds.
Create financial projections
Financial projections allow companies to input assumptions, see projected outcomes, and make decisions backed by data. Businesses of all sizes, and at all stages, can use projections to make well-informed decisions.
An experienced CFO will know how to create financial projections and help you understand how to use the projection. Outsourced CFOs can work with businesses to create financial projections before the business even gets off the ground. Using the projections, business owners can then develop business models, marketing strategies, and procedures.
Financial projections have become increasingly important as they are a valuable tool for building contingency plans due to unforeseen circumstances, such as supply chain disruptions, sudden decrease in demand, workforce shortages, and global crises. They can also be used in positive scenarios to develop strategies for how to handle a sudden increase in demand. With valuable information based on different scenarios, the business owner can take steps with a better sense of the likely outcome.
Modern CFOs provide strategic guidance, working alongside the CEO to drive the direction and success of the company. Many businesses don’t have the capital to hire a full-time CFO, making an outsourced or virtual CFO a financially savvy option. Our firm offers outsourced CFO services backed by decades of experience. If you’re starting a business and would like to see how an outsourced CFO can support your planning, contact us to schedule a consultation.