Outsourcing is a common practice today for many multinational companies. Outsourced employees can be found in almost all functions, from IT to payroll, accounting, and marketing. Along with outsourcing accounting and bookkeeping functions, businesses are also outsourcing their financial officers and experts so they can work with the best in the field. Working with only in-house resources limits the opportunities and exposure that a company deserves. Outsourcing helps a company enjoy the benefits brought by experienced financial experts.
Due to a lack of experts on their staff, small business owners in Singapore often have to worry about their finances. Outsourcing has allowed them to fill this gap by working part-time with trained financial experts and strategists. It has proven to be a highly beneficial and cost-effective solution.
What is an Outsourced CFO?
An outsourced Chief Financial Officer (CFO) is a financial officer working for you but from outside your organisation. This person provides financial expertise to your company, helping with the accounting and operations part of the business. A virtual or outsourced CFO can work part-time, full-time, or on a contractual basis for your business on different projects.
An outsourced CFO resolves cash flow and capital issues and takes on the challenge of implementing efficient financial solutions for growth. It is possible they would be lending their services to various public and private companies simultaneously. They usually work with businesses of all sizes and perform multiple jobs, from financial planning to projections.
Small businesses in the early stages of development can use the help of a part-time outsourced CFO instead of hiring a full-time in-house CFO. It helps them get the services of a highly experienced person but on an affordable budget.
What Is The Difference Between a Traditional CFO and Outsourced CFO?
A full-time in-house or traditional CFO differs in some respects from an outsourced CFO.
Many businesses would recruit a full-time CFO to manage their financial operations. Trained and experienced in-house CFOs can help with business growth and also keep track of monthly insights. But, they come at a considerable cost.
Hiring a full-time in-house CFO involves onboarding, staffing, salary, equipment, and training costs. You may also need to hire consultants, which adds to the financial costs and labour charges.
However, hiring an outsourced CFO gives you a cost-effective solution. This model includes all costs involving labour charges, processes, and systems. The cost model remains constant over time and doesn’t involve additional charges, for example, for updating software or training new CFOs.
Irrespective of the business scale or growth, outsourced CFOs offer the best services when it comes to financing. More companies are therefore choosing the outsourced CFO model over traditional in-house CFOs, mainly due to rising costs.
5 Benefits of Hiring an Outsourced CFO
Hiring an outsourced CFO can bring several benefits to your company. The following are the top 5 benefits:
1. Unlimited Expertise
Having an experienced CFO can help your company reach greater heights faster. They are not only a must for SMEs to grow but also an essential part of bigger organisations to set broader strategic goals and achieve both financial and non-financial milestones.
Your in-house CFO may have got both expertise and experience. But, if you can expand the level of knowledge as per your needs, why not take advantage of outsourcing your CFO? As requirements change over time with different projects, one full-time CFO cannot always offer you satisfactory services.
You can benefit much more by working with part-time CFOs as you can tailor the role and set your expectations per your needs. Along with the flexibility, you get the right expertise to meet your dynamic company goals.
2. Cost-Effective
Hiring a finance team or a traditional CFO can be very expensive for new start-ups and small SMEs, but outsourced CFO services come at only a fraction of such costs. If you have just started seeing profit as a business and are still in the growth phase, such cost-effective solutions are essential.
Reap the benefits of the extra profits and re-invest the money to see your business grow instead of spending unnecessarily on full-time traditional finance officers. A relief from the burden of added costs is a blessing to all companies.
3. Cash Flow Management
Outsourced CFOs are highly skilled and can help you manage your finances well and keep your cash flow in check. For example, they track invoices to eliminate errors like missed payments or incorrect entries.
Virtual CFOs can find opportunities to save and efficiently manage costs. These financial experts know how to identify avoidable expenses and save on your resources. They can also find ways to raise capital and increase your cash flow. With a clear-cut revenue plan, they help achieve goals and to drive revenue by encouraging their clients to invest and reinvest and to work with a proper financial strategy.
4. Experienced Services
Outsourcing CFOs does not limit you geographically. You can have access to experts from anywhere who have decades of experience. There are many finance experts out there who have worked in public, private, and non-profit organisations across industries and already have all the know-how.
They are equipped with up-to-date financial plans and can use their experience of working with many companies to help boost your company’s value. You can choose your CFO as per your needs and reap the benefits. Their global exposure and experience can help you reach your business goals effectively without spending a huge amount.
5. Reduced Risks
Business owners can become a victim of fraud if untrustworthy people are involved in the business. For example, small companies in Singapore often hire people to collect and deposit cheques, prepare invoices, and manage financial statements. Such situations increase the risk of fraud while executives are busy trying to achieve their profit goals. As a result, they ignore financial management and can fall victim to scams when they cannot keep track.
Outsourcing to get a skilled and experienced CFO separates these duties, divides the work and reduces the risk of fraud.
Final Thoughts
If you are ready to see your company grow to new heights but don’t want to invest in building a big finance team, then outsourced CFO services are just what you need.
Whether you are a new small business owner or an executive in a rising company, it’s your right to seek financial expertise from the best in the industry. Let geographical barriers no longer stop you from hiring the services of people with excellent skill sets and experience.
In this age of globalisation, having a part-time CFO is an excellent, cost-effective, and flexible solution for the needs of your business.
