When do you need a Chief Financial Officer (CFO)? Is Outsourcing the answer?

If you are a small to medium-size business and accounting and administration functions seem to be taking up more and more of your time – is it time to consider a Chief Financial Office (CFO)? Nearly all large businesses employ a CFO because they have the required resources to do so. Is it time for your business to decide it needs to invest resources into appointing a CFO?

The following indicators may suggest a need to appoint a CFO:

  1. You do not have up-to-date accounting information.

In a world of cloud accounting, all businesses need access to up-to-date accounting information. You should have timely and accurate information about cash flow, forecasts, budgets and profit results. If you do not have this information, it will be very difficult to make decisions and plan for the future.

  1. You do not have the time or the inclination to perform multiple functions.

You may love growing and running the business but loathe accounting, compliance, budgeting and forecasting. It is important, however, that you have a leader in your organisation who is skilled in these areas. You are better off doing what you know and having a CFO take care of the financials.

  1. You have no strategic plan.

No matter what the size of your business, you need to have a strategic plan. If you don’t have a strategic plan, you and those who work for you cannot know what they are trying to achieve. If you are looking at expanding the business, do you have access to the necessary finance or capital? Have you prepared the necessary projections, considered what competitors are doing, considered the current market conditions?

  1. You are stagnating (not growing).

Growth is a great thing. However, sometimes it may feel like business operations are getting out of control. Growth often brings a host of financial challenges. If you start to concentrate on the financial aspect of the business, then you may lose sight of the bigger picture. Concentrate on what you are good at and leave the cashflows, budgets, stock control, funding and other accounting activities to a CFO. A stagnating business is often the result of no strategic plan (see above) and no plan for growth. It can also be a consequence of the owner becoming caught up in other activities rather than concentrating on their strengths and overall business growth.

  1. You are considering exiting the business.

It may seem counter-intuitive to consider a CFO when you are considering an exit from your business. However, when you start to consider leaving your business, you tend to start to look at things differently. Are the financial statements 100% accurate, do we have the budgets and forecasts prepared at least 24 months in advance, can the business be easily transitioned to new owners, is there an exit plan in place, what legal agreements need to be in place? A CFO can assist with all these matters.

Once you have determined that your business needs the benefits of a CFO, you then need to decide whether to employ a full-time CFO or outsource your CFO function.

A significant benefit of outsourcing the CFO function to an accounting firm is that you pay only for what you need. Outsourcing your CFO function will give you access to a broad range of services, skills and independent advice. It is a great way to obtain the benefits of a CFO, but at a smaller cost.

If you are unsure what a CFO does? Find out more here. 

Do any of the 5 point above refer to you? Have you thought about outsourcing your CFO role? Talk to your local Accru Adviser today and find out how Accru can help make a difference in you business. 

About the Author
Martin Rush , Accru Perth
Martin’s hands-on approach to understanding his clients’ needs enables him to find the best possible solutions for them. His approach builds trust and has enabled him to forge many long-term relationships over his 20-year career. Martin Rush joined Accru Page Kirk & Jennings in 1993 after completing his Bachelor of Business degree. He was promoted to partner after 12 years with the firm. His professional experience includes three years working in London with the National Audit Office and Audit Commission.
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