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The CFO and Accounting Functions Among Top Three to Outsource

An informative article in Forbes entitled The 3 Jobs Your Startup Should Outsource provided some great proof points as to why outsourcing the CFO and accounting functions for startups and small businesses makes sense. We at The CFO Squad are seeing a similar trend in the marketplace with our own clients, so we thought it was worth sharing this important piece.

Startups Should Outsource

The Forbes article stresses that small business and early stage companies should focus their energy on what they do best and should consider outsourcing certain functions within the organization that require a higher level of expertise. This includes outsourcing the CFO function, along with the accounting and HR functions.

As to why outsourcing the CFO function makes sense, the Forbes piece provides several proof points. These strategies are also tightly aligned with The CFO Squad’s founding principles and core financial and accounting services. For this reason, we thought we’d list a few of the key findings below and encourage you to check out the original article.

Focus on Core Strengths and Differentiators

Leave the rest to someone else. This is particularly true for early-stage startups and small businesses. Unless the company is founded around providing back office services like human resources and talent management or accounting and financial planning, trying to develop strengths in these areas while building and growing a new business, is typically not an optimal use of resources.

According to the Forbes article, “if you’re running an early-stage startup, chances are there are some knowledge gaps in your core team. You may be strong on the technical side or a product whiz, but what about financial strategy, administration, HR? Are you prepared to manage the day-to-day of your startup, from recruiting new talent to bookkeeping to financial planning?”

There is likely a knowledge gap in these areas, and that’s OK. You just need to fill in the gaps in a cost effective, low risk, and efficient way.

Fill the Financial Knowledge Gap

You’ve identified a problem – you need to focus your limited resources on your core strengths and competencies, but you still need to run a business, especially having the right controls and reporting functions in place to make sound budgetary decisions and smartly plan for growth.

This is where CFO Outsourcing through the right partner to take on these key financial business functions can really fill this financial knowledge gap to reduce risk and maximize the value of your business.

There are several key functional areas you can opt for, usually separated by those tasks traditionally handled by a full-time CFO, and those that an accountant can support. So, what’s the difference?

CFO Services: A few good rules of thumb stated in the article to consider: “If your company has closed a seed round of funding or is earning more than $250K per year, you need a CFO to handle your financial strategy and run your accounting team. Even if you’re not yet funded or earning significant revenue, you may still need CFO services. For example, if you’re in high-growth mode or have a lot of activity or expenses, you definitely need a financial professional to oversee your financials.”

Other services can include financial projections and planning, financial reporting, M&A, debt sourcing, management and negations, equity financing, and business planning. These are different than what you can get out of your accounting team.

Accountant Services: If the above CFO services don’t really describe your business, perhaps you don’t need a CFO, but you will still need some level of support to help manage daily accounting and compliance functions. “Outsourcing your bookkeeping to the right firm will give you the support you need for cash management, AP/AR, financial close and taxes.”

Outsourcing is NOT a Bad Word

Outsourcing does not mean your business is lacking key capabilities or that you have inefficiencies you can’t solve. Rather it’s a smart way in today’s constantly changing, fast-paced business environment to reduce costs, increase your company’s ability to respond and act on change and new opportunities, and keep your internal resources focused on the highest priority tasks. Outsourcing is about strategic partnerships.  Make the right ones for your business and your company will be better positioned to grow and beat out the competition.

The CFO Squad – How We can Help

The following is a short list of some of the CFO services that we provide our clients. Don’t see what you are looking for –  please ask your CFO Squad representative for a more comprehensive list of our services and offerings.

Financial Control and Visibility

• We provide you a true understanding of the financial side of the business with less surprises and more control over the money.
• Benefit from seasoned CFOs and accounting pros helping with important financial decisions and business planning based on hard and true numbers of the business.
• We establish strong financial controls in your business to minimize potential losses and increase profits.

Training and Staff Management

• We can train and manage your accounting staff, or we can be your back-office staff or manage your existing staff.
• Our team can quickly scale up or down to always changing business requirements, hiring of new accounting resources, handling special projects, etc.
• You get the best CFO talent to bring out the best in your own resources – just when you need it.

Financial Reporting, Planning & Budgeting, and Compliance

• We can improve the quality and timeliness of financial information, such as financial reports and regulatory reports for government agencies.
• We can aid in the budget preparation and monitoring of forecasts on a monthly basis and update the forecasts to reflect how actual results impacted them.
• We can prepare profitability analysis by division or product line and inform management on which products should be more of a focus to increase margins.
• We can handle the tax planning for a growing business and monitor the businesses tax situation to ensure funds are set aside for taxes, assure quarterly payments are made and make the business aware of future tax liabilities so there are no surprises at tax time.

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