The 2020s have not been kind to the global economy, with various geo-political situations and the COVID-19 pandemic resulting in the closure of thousands, if not millions, of businesses worldwide. Amid cutthroat competition in a financially uncertain and economically volatile environment, businesses today are forced to make many difficult choices. In a prior publication titled “Benefits of Offshore Accounting for Business”, experts at Expertise Accelerated cited a study that concluded that 40% of US businesses outsource some part of their accounting function to offshore professionals to cope with the prevailing inflationary spell. Outsourcing your CFO and other business functions may just be the right choice for your business, too!
While many businesses have now come to terms with the reality that the Work from Home (WFH) model is a strategically sound method of cost savings going forward, outsourcing the duties of the Chief Financial Officer (CFO) is still quite a big ask for most entrepreneurs. Not only is it a big question of security, but there is also skepticism about the viability of delegating a core team responsibility to an offshore professional. Before delving into questions of viability, let’s talk about what being a CFO entails.
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What is a CFO?
A CFO is the apex finance official in an organization, responsible for the management and execution of its financial affairs. The range of responsibilities of a CFO varies depending on the size of the organization, the scale and complexity of its operations, the industry, the economy in which it operates, and the legal and regulatory framework applicable to it. Still, generally, a CFO is responsible for maintaining accounting and finance records, financial planning and control, financial decision-making, and statutory, tax, legal, and regulatory compliances.
Outsourcing as a Concept
The concept of outsourcing, where a third party is hired to undertake a process—perform a task or a service—on behalf of an organization, became known in the 1950s. However, it was not until the 1980s that it started to be widely applied as a technique for mitigating cost and honing core competencies. The idea of outsourcing your CFO or any other executive role is still quite rare today.
In a prior publication titled “The Future of Accounting: Demand and Evolving Technology 2022”, EA experts highlighted that outsourcing would be a core business strategy. Terming it a form of “process evolution”, the article concluded that outsourcing the accounting function was necessary for businesses to overcome the negative effects of inflation and economic volatility. Outsourcing your CFO, or even basic bookkeeping responsibilities, will be the bare minimum every business must invest in to keep up in the competitive race.
What is an Outsourced CFO?
Historically, finance has fundamentally been perceived as an in-house support function. However, modern times have seen companies outsourcing their finance, partially or completely. This means that some companies have an outsourced chief financial officer (CFO).
An outsourced CFO is an external, third-party resource hired contractually to undertake the financial leadership role of an organization, which otherwise would have been the responsibility and scope of an in-house CFO. An outsourced CFO can either be an individual or an organization having certified expertise in relevant fields such as accounting, finance, and auditing. Generally, members of chartered accounting bodies or auditing or management consulting firms are hired for this purpose.
Think about it this way: Instead of having to pick and choose the business’s CFO from a small, local pool of talent, outsourcing your CFO entails access to a global pool of finance professionals who can take over the CFO role.
Read here to learn everything about a fractional CFO.
Why Have an Outsourced CFO?
Even though many still consider finance a support function in an organization, it is fast evolving into a core function like marketing due to the fast-changing economic trends and market dynamics. Strong marketing without the support of strategic financial planning renders an organization vulnerable to a competitive onslaught. This means that finance is no less important now.
While this supports the notion of having finance as an in-house function, it is vital to note that amidst the current inflationary spell, hiring in-house is simply not an option for most businesses. The US Bureau of Labor Statistics notes that the median salary for an executive position such as a CFO was $8248/month in 2021. This number has since only increased as inflation soars, and such sky-high figures are impractical for small businesses to accommodate.
Even if a business is financially capable of hiring an in-house CFO, the cost is no less impactful on the business’s bottom line. Budget cuts must be made, and outsourcing your CFO and other business functions is precisely the answer to this conundrum.
Is Outsourcing Your CFO a Viable Solution?
Returning to the original question we posed earlier, there is no denying that, slowly but surely, businesses are now coming around to making the smart choice of having an outsourced CFO. With access to the global talent pool of finance professionals, businesses can benefit from high-level finance expertise and a greater focus on strategic planning and core competencies.
While there is just cause for skepticism, businesses can rest easy knowing that an outsourced CFO is completely secure and, often, more efficient than an in-house equivalent. The rewards reaped from outsourcing your CFO are frankly too good to be true, but they are true, nonetheless. Outsourcing your CFO opens the door to achieving huge cost reductions.
For example, Businesses can achieve up to 60% payroll savings when hiring an outsourced CFO from Expertise Accelerated. Furthermore, it is far more cost-effective from a hiring perspective to opt for an outsourced CFO, as the contracted firm manages the entire hiring process, saving the business valuable time and money for business development.
Conclusion
Thus, outsourcing your CFO allows the business to benefit from the superior finance expertise available with the specialists, redirect its focus on matters of strategic importance, and bolster its core competencies.
Expertise Accelerated as Your Outsourced CFO Solution
Expertise Accelerated – your outsourcing and co-sourcing partner–houses a team of top-notch, US-based industry experts, leading high-quality and affordable finance professionals from a global talent pool, who can become your instruments for ripping through the growth and competition barriers.
If your organization is facing accounting or financial planning issues at the strategic, tactical, or even operational level, get immediate advisory support by booking a Free Consultation session with Expertise Accelerated CEO Mr. Haroon Jafree (CPA) today. With decades of experience in the US accounting landscape under his belt, Haroon has his pulse on the economic realities of the US and endeavors to help small businesses withstand the approaching recession.