Over the past few years the rapid development of cloud based software systems has seen the rise of outsourced roles within many businesses. COVID has accelerated this even further, highlighting the need for businesses to create efficiencies, remain agile and to scale up or scale down in a short time span. 

As businesses continue to seek additional ways to create these efficiencies and push further towards cloud based software systems, this has opened the path for the role of Chief Financial Officer to be outsourced. 

Many businesses, especially those in the start up or growth phase don't necessarily have the financial resources to employ a full time CFO. The average salary for an experienced CFO across Australia is upwards of $200,000, which is quite prohibitive for many businesses. 

With the resources that are available it is likely that the full time employees would be operational / sales staff or internal accountants/bookkeepers to ensure that the day to day operations of the business are running smoothly and the statutory requirements are met.

Whilst this may be the case, many businesses would benefit from the services a CFO would provide. 

The list of services an outsourced CFO can provide, along with the benefits include;

Substantial cost savings: CFO's can be engaged for the specific services that the business requires, with the flexibility of additional services to be added or removed as required;
  1. Forecasting: Cash Flow forecasting/Budgets gives the business owners/management a great insight as to the expected performance of the business, and the ability to make critical, informed decisions on upcoming expenditure and strategy. Key Performance Indicators can be developed as part of this process, including Industry Benchmarking and KPI analysis; 
  2. Management Reporting: To make timely decisions for the business, it is important to have up to date, accurate and relevant financial reports available. Reviewing the monthly or quarterly reports for the business, in conjunction with the Cash Flow forecast should form part of the management/board meeting agenda to give the business the best chance of thriving;
  3. Risk Review & Mitigation: With the uncertainty of the current economic climate, it is imperative that businesses are safeguarded as best as possible against the various risks posed to both the business and the business owners. Conducting a risk review, whether it be financial, banking, employment, insurance, IT or contractual risks can be vital in strengthening the business. Having robust systems in place allows business owners to focus their energies on running and growing the business;
  4. Strategy / Planning: CFO's can provide advice or commentary on a range of topics, and quite often a fresh perspective can be beneficial. Whether it be ad hoc, or at management/board meetings CFO's can assist in formulating a business strategy or growth plan, assessing opportunities as well as updating the Cash Flows/Budgets to accommodate the 'what if' scenarios;
  5. Business Acquisitions: The process of buying a new business can be daunting, however an experienced CFO can provide tremendous support through this process via conducting Due Diligence, preparing Financial Forecasts, reviewing draft Agreements and Term Sheets, communicating with various stakeholders including the vendor, the vendor's Accountants and Legal advisors, business valuers, bankers and settlement agents. 
  6. Internal Procedures, Processes: Businesses that have gone through a growth phase typically find that the procedures required to run smoothly increase exponentially. Having an external consultant review these processes can provide the direction and support to ensure the business is adequately covered with appropriate internal controls;
  7. Business Structure review: Quite often as businesses develop, the internal structure remains the same for a period of time and business owners and employees take on more wide ranging tasks and responsibilities, all the while getting further away from their core role. Although the employees can develop new skills, quite often inefficiencies can occur as there may not be clear delineation between roles, reporting lines and responsibilities. Conducting a review can identify where improvement is required and realign the business. 
Ryan McLaren is a Chartered Accountant who has worked as a CFO for the past 4+ years and also has over 15 years' experience in public practice. 

Would you like to find out more about outsourcing CFO services? Don't hesitate to call Smith Thornton to discuss your needs.