How to Tell if Your Business Needs an Outside CFO
There comes a time for every growing business when the owner is no longer able to take on all of the tasks associated with running the company alone. This is especially true on the financial side of a company’s operations; even one small mistake can have significant repercussions for the business.
The following are a few signs your company might consider an outsourced chief financial officer (CFO) to manage its finances and plan for the road ahead:
You are experiencing significant growth quickly: If you are seeing a lot of rapid growth in your sales and revenue, it may be time to work with a third-party CFO. More money and rapid growth means more financial risk, and working with a CFO can help you mitigate those financial and regulatory pitfalls. If you let your business continue to outgrow your financial processes, it will become easier for you to fall behind and run into trouble.
You don’t fully understand your finances: Although you can likely get by with managing your own finances in the early stages of your business, you will eventually hit a point where you are no longer completely comfortable taking on those tasks yourself. If you do not fully understand the financial side of your company, you are not going to be able to figure out ways to improve its financial efficiency and maximize profits in the long term.
You do not have a sound financial strategy for your business: Outside CFOs are able to serve as a sounding board for your financial and overall business strategy. Upon analyzing your operations, these professionals will recommend changes and improvements that will help you spend smarter and become more efficient. Outsourced CFOs likely have significant experience working with a wide range of businesses and industries, and they can leverage this experience to best serve your needs.
You are planning on going through a merger or acquisition: CFOs are an absolute must-have for any merger or acquisition. Their professional consulting services help you to interpret the financial and regulatory terms of the deal and allow you to work through the process in an efficient and effective way. In the months after the merger or acquisition officially goes through, a CFO will oversee the creation of brand-new accounting systems and the documentation of financial procedures.
You are having problems getting paid: If you are experiencing challenges getting paid by your clients in a timely fashion, an outside CFO might be able to create more effective accounts receivable policies. Even if you are not having problems, however, you should not wait for them to arise before hiring a professional to help you develop and implement these policies. It can be incredibly beneficial to the long-term financial health of your company.
Consulting an outsourced CFO gives you the services of a financial expert whenever you need them, without having to pay for a full-time professional’s salary and benefits. If any of the above situations apply to your business, the time may be right for you to seek an outside CFO.