Outsourcing CFO Services Yields Significant Benefits for Small and Mid-Size Businesses by Anya Stasenko, CPA
Posted on January 02, 2018
Operating a small business in the U.S. comes with a wealth of opportunities and an equally abundant set of complexities, including tax reporting, regulatory compliance and meticulous financial recordkeeping. For many entrepreneurs, hiring full-time professionals to oversee these functions in-house is simply unaffordable. Instead, many are turning to outsourced CFO services to receive on-demand assistance with a myriad of financial budgeting, reporting, planning and fraud-prevention services.
By outsourcing CFO functions to qualified and experienced certified professional accountants and auditors, business owners can more easily afford the financial and operational expertise of a CFO without incurring the expense of paying the high salary and benefits associated with hiring full-time candidates in-house. Yet, having these services available on a once-per-month, quarterly or as as-needed basis is not only cost effective, it also centralizes and expedites a small business’s decision-making processes.
While it is not uncommon for small business owners to hire part-time bookkeepers to record financial transactions and oversee payroll, the extent of these professionals’ expertise is typically limited to the specific tasks they perform. For example, bookkeepers may lack the skills required to analyze a business’s performance, profitability and cash flow. In addition, they may be unqualified to look beyond the numbers and provide overburdened owners with the strategic counsel required to establish and meet operational and financial goals, minimize risks and take advantage of market opportunities.
Following are five additional benefits business owners will receive when they outsource CFO services:
Financial Reporting Accuracy
It is critical that businesses maintain meticulous financial records for both tax-reporting and financial-analysis purposes. When businesses outsource this task to experienced professionals, they receive a second set of eyes to confirm the accuracy of financial data as well as a valuable resource to help train workers, including bookkeepers, on best practices for managing accounting and financial processes, procedures and technology. In addition, businesses gain the benefit of having a qualified expert on call to prepare with precision and on time the requisite financial documents that they need when seeking to secure loans or investment dollars from third-parties.
Profitability and Cash Flow Analysis
Entrepreneurs wear many hats and juggle multiple job responsibilities as they grow their businesses. It is not uncommon for them to become so mired in day-to-day tasks that they do not take the time to evaluate the facts behind their financial data. As a result, they may overlook potential issues that could turn into very real problems in the future or miss out on opportunities to improve profitability and cash flow. Are some products or services more or less profitable than others? Is cash flow in and out of the business managed efficiently? Are there areas where the business can cut costs or reallocate expenses in order to improve profitability? The answers to these questions are difficult to decipher from a spreadsheet. Rather, they require a higher level of understanding and knowledge of key performance metrics and the intricacies and interplay of corporate finance, tax efficiency and risk management.
Fraud Detection and Prevention
Both small and large businesses continue to suffer significant losses from occupational fraud committed by their own employees. However, according to the Association of Certified Fraud Examiner’s (ACFE), these losses typically have a far greater impact on smaller organizations that lack sufficient internal controls to prevent and detect fraudulent activities. An outsourced CFO can provide the keen eye and sharp skills required to identify not only red flags that point to fraud but also operational weaknesses that can foster and contribute to criminal mischief. For example, businesses can reduce employees’ opportunities to commit fraud by separating the duties and responsibilities of certain business transactions to different people within the organization.
Whether a business owner is seeking a loan or engaging in other forms of contractual negotiations, it is imperative that he or she fully understand the terms of the agreement, including their personal responsibilities to fulfill certain conditions. However, oftentimes a loan will involve standard covenants that may be difficult for a start-up or growing business with limited resources to satisfy. With the experience of an outsourced CFO, business owners can not only be assured that they understand the entirety of their contractual obligation, but they will also gain the benefit of a qualified and affordable representative to negotiate some of the terms on their behalf up front.
Short-Term Consulting and Long-Term Strategic Planning
The responsibilities of a CFO extend far beyond back-office number crunching and financial transactions. In today’s business environment, their analytic skills can be applied to all facets of an organization, from human resources and operations to sales and technology. Outsourcing these functions on an as-needed basis provides small businesses with a fresh perspective and high-level analysis of their financial, operational and tax efficiency at manageable fees. An outsourced CFO can examine a company’s balance sheet to establish workable budgets and compare them to actual results; identify problem areas; and recommend cost-cutting strategies, new technologies and new processes for improving efficiency. Their level of expertise also ensures immediate feedback to help businesses more quickly and effectively respond to changing market conditions and leverage new opportunities for future growth.
Berkowitz Pollack Brank Advisors and Accountants offers outsourced CFO services to help entrepreneurs run their domestic and international businesses more effectively and profitability. To learn more about these consulting services, please contact me directly.
About the Author: Anya Stasenko, CPA, is a senior manager with the Audit and Attest Services practice with the accounting and advisory firm of Berkowitz Pollack Brant, which has extensive experience helping foreign individuals prepare and implement tax-efficient plans for establishing residency and businesses in the U.S. Stasenko can be reached in the CPA firm’s Ft. Lauderdale, Fla. office at (954) 712-7000 or via email at firstname.lastname@example.org.