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Transitioning from In-House to an Outsourced CFO

Whether you’re climbing Kilimanjaro or Denali, a seasoned guide makes the difference between a successful summit and an ill-fated expedition. The same holds true when navigating the challenging landscape of business finance. The Chief Financial Officer (CFO) acts as your seasoned mountaineer, guiding your business towards its financial peak. But what happens when this guide disappears mid-climb? This is where an outsourced CFO (aka fractional CFO) steps in, keeping your expedition moving toward the summit without delay.

What are the Duties of an Outsourced CFO?

An outsourced CFO takes over all the responsibilities of an in-house CFO such as:

  • Manage financial risks
  • Track and manage cash flow
  • Plan the company’s financial strategy
  • Ensure regulator compliance
  • Manage accounting and financial staff
  • Collaborate with executives to ensure the business is growing and profitable.

Additionally, outsourced CFO services provide specialized financial insights based on their broad exposure to different industries and businesses.

What is a Virtual CFO vs In-House CFO?

The in-house CFO is like a permanent guide who knows every nook and cranny of your mountain—your business. They are wholly committed to your cause, always present, and fully immersed in your business culture. In-house CFOs are expensive and often lack peer support to keep them up to date on regulations and technology.

In contrast, an outsourced virtual CFO brings a fresh perspective, external expertise, and a flexible commitment. They can offer high-level strategic advice or tactical cash management without the full-time cost, making them an attractive option for businesses looking to economize without compromising on financial leadership.

Transition to an Outsourced CFO with Minimal Risk

Most small businesses are transitioning from in-house to outsourced CFO services thanks to remote work technology. This transition can feel scary, but with the right steps, this process can be smooth and rewarding. Here are a few tips on choosing the right CFO and transitioning from in-house to outsourced CFO services:

1.      Make a list of your “needs” and “wants.”

How did your last CFO meet and miss your expectations? What holds your business back from growth? Do you want an engaging relationship with your fractional CFO full of discourse, debate, and discussion? Or do you simply want on-time reporting without any hassles?

2.      Look for reputable and established Fractional CFO agencies

Just like you’d prefer a reputable mountaineering company over a lone guide, choose a reputable fractional CFO agency over an individual CFO. Established agencies have reputations to protect and thus follow industry best practices. Individual fractional CFOs may or may not perform, and vetting candidates is challenging for non-experts.

3.      Choose Professionalism over Price

Fractional CFO cost savings is about both salary and the cost of mistakes. A less expensive CFO might seem like a good deal until they create costly errors, financial missteps, or compliance issues that can wreak havoc on your company’s finances. Risk management and cost savings demand investing in a professional and reliable fractional CFO.

4.      Choose a Team Player, Not an Individual Contributor

Like a good mountaineering team, your fractional CFO should work in harmony with business operations, controllers, accountants, analysts, and bookkeepers.

5.      Communicate Regularly

Transitioning CFO duties shouldn’t be chaotic. Maintain open and regular communication with your outsourced CFO to keep your financial journey on the right track. Weekly calls are ideal for the first 2 months, and often scale back to biweekly or monthly once they are done transitioning CFO duties.

6.      Provide Honest Feedback

Just as you would guide your mountain guide based on your comfort and capability, provide your fractional CFO with constructive feedback to improve your working relationship and overall financial performance. A professional CFO will ask you for feedback proactively.

The trail to financial success may seem treacherous without an in-house CFO, but an outsourced CFO can be the experienced guide that helps you reach your summit. Schedule a consultation with us today to equip yourself with the right outsourced CFO services, and let your journey to the peak continue.

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