Everything you need to know about outsourcing your CFO

Everything you need to know about outsourcing your CFO

 

If reviewing your business’ financial outlook on your own is daunting – chances are you’re considering (or need to consider!) getting a Chief Financial Officer (CFO) to help you out.
So, to de-mystify all things related to the CFO role and when and how you need to engage one, we’ve answered some of the most frequently asked questions on the matter. First off, the basics…

 

What is a CFO?

A CFO is generally the most senior member of the company who directly oversees finances. They collect financial data, analyse it and provide strategic financial advice.

Plus, a CFO is also likely to be involved in the management of financial processes such as auditing and budget setting. In terms of hierarchy, they report directly to the Chief Executive Officer (CEO) of the company.

 

At which point in my company’s growth would I need a CFO?

The exact point at which you’d need input from a CFO varies on a case-by-case basis. However, our experience shows that companies require a CFO when they need:

  1. Advice on regulatory changes
  2. To carry out the audit process
  3. To ensure the business is as tax efficient as possible
  4. Help to decode financial data to make better strategic business decisions
  5. Guidance on risk management and possible financial best and worst-case scenarios to take operational decisions
  6. To carry out damage control when the business suffers an unexpected setback that presents a financial threat (global pandemic – anyone?)

This isn’t an exhaustive list, but it does show the breadth of topics a CFO can support a business with.

I need this advice – but I don’t afford a full-time CFO!

Then you’re in the same boat as hundreds of other Maltese businesses who have shied away from getting a full-time CFO because of:

  • High costs – After all, hiring an experienced, full-time CFO full-time for 40 hours a week is likely to put a hefty dent in a small-medium business’ cash flow.
  • Low workload – The reality is that small-medium enterprises are unlikely to have a big enough workload to justify having a full-time CFO on the payroll.

Yet, we’ve routinely seen how small-medium enterprises benefit greatly from timely CFO input. Financial insight and advice will steer management in the right direction during critical moments of challenge and growth. This means that for many Maltese SMEs, having a CFO on board is non-negotiable if they want to take their business growth seriously.

 

So, how can I get a CFO’s expertise without hiring them?

Simple, opt for the middle-ground option!

Instead of taking on large payroll costs for an (unnecessary) full-time CFO or forego having one entirely, outsource your CFO.

 

What are the benefits of outsourcing a CFO?

Outsourcing a CFO means you only engage a CFO on an ad-hoc basis. This way, you only get a CFO’s input and support when and how often you need it. This approach significantly lowers the cost of engaging a CFO when compared to a full-time hire.

 

What kind of results can I expect by outsourcing a CFO?

Having a CFO on board adds a tremendous amount of knowledge and expertise to your management team. Some of the areas a CFO can inform include:

  • Strategy/Leadership – A CFO uses financial data and Key Performance Indicators (KPIs) to measure a business’ health and progress. All observations are then brought to the management’s attention and the CFO provides support and actionable suggestions to inform any decision-making processes.
  • Finance/Operations – A CFO provides guidance on cash flow and other financial matters in the business.

 

What do I need to look out for when outsourcing a CFO?

Given the high rank and influence a CFO is likely to have on your business, you’d want to make sure that your outsourced CFO has:

  • All the necessary qualifications
  • Extensive experience in the financial field and ideally, in your business’ industry
  • A proven track record of successful projects

 

Should I outsource the CFO function to a freelancer, or approach an advisory group?

Hiring a freelancer comes with several risks. If you’re not familiar with the financial field, it’s difficult to determine if the person in question has the qualifications and experience needed for your business’ needs. Plus, due to the nature of their work, freelancers do not have co-workers they can consult with, or a Group that backs their reputation. So, to remove the risk of outsourcing the CFO function to the wrong professional, we recommend approaching a reputable advisory group like NM Group to help you outsource your CFO.

How much does it cost to outsource a CFO?

Unlike a fixed wage, the rate at which you outsource a CFO will vary on your specific needs. However, one thing is for certain: outsourcing a CFO is a cost-effective solution. Clients only pay for the value of the time the CFO spends on their projects, down to the hour or at a pre-agreed rate.

 

I’d like to outsource a CFO – what do I do next?

Simply contact us and we’ll get back in touch to have a chat about your business needs and context!

We’ll work with you to find the right fit from our group of in-house, experienced financial experts.