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5 things you should expect when hiring an external CFO

Posted by Kanika Sinha

September 21, 2021    |     3-minute read (545 words)

As your company grows, you may increasingly need professional guidance to implement your strategic vision and meet your long-term financial goals. But at the same time, you may not require the services of a full-time chief financial officer.

In such a scenario, hiring an external CFO is an economical solution. Outsourcing the role affords your growing business access to a finance expert when you need them, without the cost of hiring a similar position in-house. 

What is an external CFO?

External CFOs are highly skilled professionals who work with companies on a project or hourly basis, sometimes for as few as even 10 hours per month. The role may encompass a broad range of responsibilities, often those that the existing team does not have the skills, experience or time to handle. But an outsourced CFOs service can be tailored according to the specific needs of the client.

The upsides of hiring an external CFO

Outsourcing CFO services allows you to hire for what your business needs when you need it. You can scale up or down on demand. Rather than feeling like you need to micromanage, which puts you and your employees at the risk of burning out, you will have an expert on hand who can see the big picture. The outsourced CFO can take ownership of time-consuming yet vital functions so you can focus on growing your business. But the benefits don't end here.

What you can bank on when hiring an outsourced CFO service:
  • The best of both worlds – An external CFO gives your business access to the skills and expertise you need without the cost of a full-time C-suite employee’s salary. They can quickly get up to speed and begin tackling problems with minimal disruption.
  • Access to specialized knowledge – As your business scales up, the nuances of your particular industry may necessitate specialized knowledge. Many external CFOs have a specific industry focus, so you get access to that specialization and industry relationships that you might not otherwise be able to tap into.
  • Taking on additional duties over time – Your business may grow through mergers and acquisitions. This may involve an IPO, purchasing or selling a portion of a firm's book of business, or acquiring a team or office from another company. An external CFO can work with your team on such projects and the duties they entail, like comparing potential investment returns, assessing financing and earn-out strategies or structuring a deal. Finance tasks stemming from expanded operations can also be done by the outsourced CFO.
  • Future readiness – An external CFO will prepare your company to move beyond analyzing cash management and keeping financials in order. They will help build a solid position for your company’s future as it grows. Also, financial planning involves many different facets, from deciding on new locations, sales growth and diversification, lease versus buy decisions, hiring key employees and more. Because they possess expertise in such areas, an external CFO is uniquely positioned to help pull those together for your business.
  • Hands-on mentorship – Many firms use CFOs to mentor internal staff for development. Smaller organizations may not have the internal expertise or resources to develop a finance and accounting person. Leveraging the skills of a fractional CFO to mentor employees can be a great option.

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