Does Your Business Need a CFO?

Kirsch CPA Group

Jun 01, 2021

Most business owners recognize a chief financial officer (CFO) as the financial steward of an organization who can free them up to focus on growth and other areas. Yet, many small and medium-sized business owners do not have one. They attempt to handle finances themselves or delegate the role to employees. 

Keeping the CFO Role In-House: Pros & Cons

Having a CFO in-house is the traditional way for businesses to structure their financial management. Depending on the size of the company, there may be a full-time, salaried CFO on staff or the duties may be split up among multiple people. In many cases, the owner is doing the job themselves.

There can be a comfort level with keeping important financial planning and bookkeeping decisions in-house. However, when CFO duties are split up or delegated to someone without the right experience, the CFO role may not be as effective as it should be, leading to mistakes and missed opportunities. 

The Case for CFO Outsourcing

A growing number of businesses choose to outsource their CFO needs to CPA firms and CFO outsourcing firms for reasons that include increasingly complex financial needs, to better manage growth and acquisition plans, and to provide lenders, investors, regulators, and other stakeholders with more sophisticated financial reporting.

Also referred to as “virtual” or “fractional CFO services”, CFO outsourcing provides you with the combined knowledge and experience of an entire team for strategy recommendations and implementation. A financial outsourcing partner can help you cut waste, deploy cash efficiently, and identify opportunities for greater production and expansion.

An outsourced CFO usually includes some combination of the following services:

  • Accounting Staff Management: from the controller to bookkeepers to AR and AP, an outsourced CFO can ensure you get the most out of the department and the best financial data for your management team
  • Management Consulting: an outsourced CFO can be an important voice in your budgeting, strategic planning and decision-making processes to ensure that all financial impacts are considered
  • Increased Profitability: outsourced CFOs bring the experience of having worked with other companies and in other industries – a tremendous asset for identifying and reporting on key performance indicators (KPIs), interpreting financial results, working more efficiently, optimizing cash management, and identifying opportunities to expand and grow that might otherwise be overlooked
  • Obtaining Financing: outsourced CFOs can work with banks, investors and other sources of debt or capital funding for your business
  • Accounting & ERP Guidance: outsourced CFOs can help you identify new accounting software or ERP systems, oversee implementation and training, and help you get more out of an application

Outsourcing to a CPA Firm for Additional Business Advisory Services

With a growing number CFO outsourcing options, many ask, “Should I hire an accounting firm that provides CFO services, a CFO outsourcing firm and/or a business coach?”

While most CFO outsourcing firms and business coaches provide monthly guidance to facilitate strategic financial decision-making, a CPA firm provides you with a single-source solution that includes strategic monthly advice, accounting, tax, and audit services.

Many CPA firms offer other business advisory capabilities in addition to ongoing strategic CFO services, including:

  • Monthly revenue analysis
  • Fixed asset listing maintenance
  • Tax position based on year-to-date results
  • Cash flow needs for taxes and potential shareholder distributions
  • Audited financial statements
  • Business valuations
  • Merger and acquisition planning
  • Owner compensation reviews

Why Kirsch CPA for CFO Outsourcing

In addition to providing CPA services and all the CFO services described above, Kirsch CPA Group provides the business advisory services you need when you need them. This includes month-end accounting, tax preparation, reviewing financial statements, QuickBooks expertise, payroll, and bookkeeping.

3 Kirsch CPA CFO Engagement Examples

For a local manufacturer, we coordinate the month-end close by the second day of the following month – all accounts are reconciled, and all the necessary adjustments made. Additionally, we generate a performance report with graphically displayed key metrics to understand the profitability of each of the manufacturer’s three plants, including revenues, payroll, and overhead costs. This enables a more efficient use of resources with the cross-training of employees so they can be moved among locations as needed.

For a software developer, we work closely with a less-experienced internal accountant, reviewing their work and providing financial statements. This helps ensure that financial data is captured properly and gives a deeper picture of performance. We monitor the gross margin on jobs to ensure profitability, especially on multimillion-dollar projects. We help the company find ways to increase gross margin, from pricing to payment terms. We also monitor overhead costs to ensure spending is adequate for employee retention but does not inhibit expansion into different geographic markets.

For a construction company that recently experienced a major downturn, we created a plan that kept the company profitable even as revenue dropped by 75%. We help ensure they know all fixed and variable costs when bidding on multimillion-dollar jobs in other states. We also helped them obtain two rounds of PPP funding and its forgiveness by looking beyond their current banking options.

Get Started Today

If you think outsourced CFO services could be a good fit for your business, let’s talk.

We can tell you more about our virtual CFO services and perform one of the following services at no charge to provide a sample of how we work:

  • Option 1 – Balance Sheet Review: we will examine your reporting and make suggestions
  • Option 2 – Tax Structure Review: we will look at your tax return and give you feedback on the ideal tax structure for your business
  • Option 3 – Initial Profitability Analysis: we will review how your company’s performance compares with others in your industry

 

Contact us to learn more about CFO outsourcing

 

About The Author

Kirsch CPA Group is a full service CPA and business advisory firm helping businesses and organizations with accounting,…

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