Why Hire an Outsourced CFO?
The tight grasp of the COVID-19 pandemic continues to loosen as all indications are that business is beginning to return to normal. The continued distribution of the vaccine and the rollback of state and local restrictions have meant the demand for services and hiring has picked up the pace. It was recently reported that New Jersey businesses had regained 54% of the jobs lost during the pandemic.
As the recovery continues, it will be necessary to make strategic hiring decisions to ensure needed resources are available to meet increasing demand. In addition, careful attention should be paid to the hiring of senior leaders in operational areas such as human resources, supply chain management, and financial reporting. Many business owners have become keen on exploring outsourced options to help manage costs and leverage expertise. For example, it has led several to inquire about why they should hire an outsourced Chief Financial Officer (CFO), the benefits of which we have summarized below.
Outsourced CFO Benefits
- Reduced Costs – While most understand a CFO is an essential ingredient to success, they cannot afford the cost of hiring one. It was recently reported, the national average CFO compensation package is nearly $140k per year (almost $202k in New York City). Of course, this does not include payroll taxes, insurance, and related expenses. Given this reality, relying on an outsourced CFO can result in significant savings. It was found that outsourcing senior-level positions can increase annual savings between 40% to 65%.
- Broad Experience – Outsourced CFOs often have years of experience serving multiple clients with various needs and challenges across several industries. This experience can be leveraged to gain in-depth insights about key challenges and the potential solution to each. In other words, outsourcing often means access to the ingenuity and creative thinking developed over years of experience.
- Unbiased & Actionable Insights – Since an outsourced CFO does not have personal ties to other employees, departments, or interactions with other influencers, they can provide an unbiased assessment of the company’s financial condition, key challenges, and solutions to address each. They also may develop a concise plan designed to achieve financial objectives with straightforward steps and a timeline for each.
- Meet Changing Needs – Although some businesses hire an outsourced CFO to help on a short-term basis, most need long-term support and guidance. This can include cash management optimization, controlling cash flow, improving profitability, and even help to obtain financing or raising venture capital. Regardless of the immediate need, an outsourced CFO can provide scalable services to offer the right level of support needed today and in the future.
- Broad Network – The contact list of an outsourced CFO includes a personal network and the firm’s more comprehensive network. This means it can be easier to find financial institutions, venture capital firms, institutional investors, and others best suited to meet the company’s needs. In addition, for those interested in expanding into new markets or new product lines, the possible international network belonging to an outsourced CFO can also provide tacit insights and assistance that can otherwise be tricky to find.
One of the most important benefits of hiring an outsourced CFO is the peace of mind that comes with knowing a seasoned professional provides the needed insight and guidance, which can go a long way, especially now during a time of economic recovery.
Contact Us
If you have questions about the information outlined above or would like to explore utilizing an outsourced CFO, Klatzkin can help. For additional information, click here to contact us. We look forward to speaking with you soon.
©2021 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date and does not constitute accounting, tax, or financial advice. Please consult your advisor concerning your specific situation.