6 common business challenges that can be addressed by a CFO outsourcing service

As a business owner, you’re likely aware of the potential savings that can be achieved by outsourcing finance and accounting operations. But when done right, outsourced finance and accounting services can also relieve you of many challenges best addressed by someone at the CFO level, helping you to generate better results, in addition to just providing financial reports.

In today’s fast-paced business ecosystem, companies need strong financial management not only to survive during down periods, but also to thrive when business goals have been attained and keep driving performance forward. 

A CFO outsourcing service can help bring these skills to fruition at your business, acting as a strategic partner to assist you in making sound financial decisions and tackling obstacles as they arise.

1. Effective budgeting

An effective business budget can be the factor that distinguishes a successful company from rivals. After all, it doesn’t matter if revenues are high if expenses are running amok.

Yet business owners are often so consumed with running daily operations that they lack time for effective budgeting. Through a CFO outsourcing service, you’ll have access to a professional who can deftly handle the process by performing in-depth analyses of your expenses and by researching possible adjustments to your business’s overall budget and operations. 

By providing you a roadmap for how to allocate resources, the CFO can help your business become more lean and efficient than the competition.

2. Cutting expenses

You can’t simply trim expenses and expect your business to continue operating at an optimal level. An outsourced CFO can advise how to use fewer resources and still operate the business efficiently.

They may also implement cost-cutting measures such as switching service providers and getting bulk discounts from vendors.

3. Evaluating business performance

The business budget alone doesn’t necessarily show how well your business is performing. An outsourced CFO can evaluate your business’s actual performance against its proposed budget through a budget variance analysis.

Comparing your anticipated transactions for a certain time (budget) against its real financial outcomes for the period (actual) is a key step. The CFO’s expertise allows them to ascertain the reasons behind the variance and make actionable insights to support strategic decision-making.

4. Financial forecasting

It’s not enough to have accurate, up-to-date books. Financial forecasting keeps your business’s financial strategy directed forward instead of focusing on historical data.

Your outsourced CFO partner will compare your company’s past performance against market and competitor data to identify the optimal path forward to achieve its goals. 

Financial forecasting requires agility to account for new opportunities, changing goals and market shifts, and this is the CFO’s forte.

5. Fundraising

An outsourced CFO can help you to identify prospective investors, prepare for due diligence and guide you through the fundraising process. They can also develop key financial statements that external parties will rely on to evaluate your company’s financial strength.

Finally, a CFO can also assist you with choosing the right business structure for your business and the best type of fundraising to pursue, such as venture capital, bootstrapping or convertible debt, to name a few.

6. Structuring prices

An outsourced CFO can propose options for implementing a price hike, if required. For instance, you could increase prices overall or just for specific goods or customers. 

Or, it may be better for your business to plan annual price hikes, or introduce a tiered pricing strategy to offer customers more choices.

Data from the CFO can help your business explain the “why” behind price hike. Is it an attempt to maintain availability, service levels or product quality? As a business owner, it’s your responsibility to convey this information clearly.

Other business scenarios that call for CFO outsourcing services

An external CFO can be a viable solution for an array of other business circumstances and growth stages. For example:

• Booming startups where the founder is short on time for handling finances.
• Small and midsized business owners who rely on their gut rather than data for financial decisions.
• VC-backed founders who need to keep investors apprised of finances but don’t have the resources.
• Business owners who have an in-house controller or bookkeeper but who need to tap into a CFO’s expertise.
• Owners of businesses whose performance is sagging.

The takeaway

These common challenges shine a light on the fact that many business owners need some financial help, but not enough to warrant a full-time, in-house CFO. A professional from a reputable CFO outsourcing service can analyze the numbers and identify improvements so you don’t have to face these challenges alone, while also saving you money versus hiring for the role internally.

This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.

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