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3 Ways an Outsourced CFO Can Improve Your Cash Flow

An outsourced CFO is an external professional who helps your business improve its cash flow position, among other CFO services. They are otherwise known as Virtual CFOs, and their popularity has been increasing in recent years. An outsourced CFO is a great alternative for a business who is not large enough to bring on a full-time CFO.

But what is an outsourced CFO?

An Outsourced CFO is a service a business such as an accounting firm provides so businesses can enjoy the traditional services of a CFO at a lower cost. Instead of hiring a full time CFO at significant cost, businesses can now hire an outsourced CFO at a much lower cost, but still get the benefits of having a CFO.

The CFO provides many services, which is why they are so valuable for businesses. These services include setting strategic direction, budgeting and forecasting cash flow, setting business KPIs, expense analysis, risk analysis and more.

An outsourced CFO can often be the the difference maker for many small and medium businesses.

1) They provide budgeting and forecasting

Budgeting and forecasting is critical for the success of any business.

Often, small and medium sized businesses do not have the internal recourses to do proper budgeting and forecasting. The reality is that either there is not the money to pay for hiring an internal CFO to get the job done, so the task falls upon them business owners themselves to do budgeting and forecasting.

But the business owners themselves are way to busy to do any budgeting and forecasting.

That means it just doesn’t get done. Without budgeting and forecasting, business owners are wading blindly into the financial future of their businesses. They are just guessing what their cash flow positon will be. It’s no wonder that in this situation so many businesses fail within the first three years.

That’s where an outsourced CFO comes in. A CFO gets the budgeting and forecasting done so the business owners can make informed decisions in their businesses.

When the budgeting and forecasting is accurate, the cash flow follows. Cash flow can be managed based on real numbers and real forecasts. That means cash flow is managed in a far superior manner with an outsourced CFO.

2) They set strategic direction

The outsourced CFO uses their experience and expertise to ensure the strategic direction of the business aligns with both the success of the business financially and the goals of the business owner.

Business strategy is both about experience and ideas. On the ideas front, someone coming in externally to a business and taking a bird’s eye view adds tremendous value. That is because business owners are often so caught up in the day-to-day of their business that the issues that are getting in the way of their goals are often so under their nose. However, an external CFO is able to identify those issues and set strategic direction to navigate the business away from them.

Outsourced CFOs have experience working with many different business owners across both similar and diverse industries. That gives them experience to know what a positive strategic direction of businesses in particular industries looks like. When you have someone with both experience and who can generate good ideas, the strategic direction they set for your business can take your business to another level and help you achieve your business goals.

3) They provide accountability

All business owners need accountability.

Very few people can hold accountable to themselves in business because there is so much that they need to be accountable for. It’s easy for business owners to make excuses that they were “too busy” or “just focusing on other things” when they don’t achieve goals they set in their business, but an external CFO provides accountability with the business owner to help them achieve their goals.

Outsourced CFOs will often meet with their clients once or twice a month and part of these meetings is checking-in on how the business is progressing towards the mutually agreed upon goals.

Simply by meeting with your outsourced CFO and reporting to them your progress towards your business goals, you will be more motivated to make the improvements to your business you promised yourself you would make.

If you are interested in an outsourced CFO for your business, please get in touch with us.

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