There are many tasks and responsibilities involved with running a company that can add up to create a logistical nightmare for small business owners. One of these tasks is usually managing company finances and checking in on the bookkeeping. With team member salaries, overhead costs, and taxes, it can be challenging to get a clear picture of company cash flow and profit margins. This will, in turn, make it difficult to plan out company growth with eCommerce accounting and sound financial reasoning.
In order to combat the challenges of managing company finances, many small business owners will choose to look into outsourced accounting services. Outsourced accounting means hiring a CPA (Certified Public Accountant) on a monthly or quarterly basis to balance the books and get a company prepared for filing taxes. However, many business owners may be seeking additional assistance with things like financial planning, reporting, and decision-making. This is where an outsourced CFO (Chief Financial Officer) can step in and make a long-lasting impact on the economic structure of a company.
An outsourced CFO helps small business owners find financial opportunities, maximize profitability, and eliminate unnecessary spending. The outsourced CFO also provides major decision-making support with comprehensive reporting services and monetary risk analysis. Hiring outsourced financial support also provides the straightforward opportunity to save time and stop worrying about fiscal health.
As you can see, there are numerous reasons why a small business owner should consider outsourced financial support. Let’s take a more in-depth look at the benefits of an outsourced CFO for your business.
1. Internal Financial Improvements
When a company first brings on outsourced financial services, the first major area of fiscal development is within the business. Think of this operation as an extended health check-up for a business. There are many internal assets, receivables, loans, and costs to consider when performing this check-up.
For any business that does not have dedicated financial support services available, there are sure opportunities to cut costs. To identify these points of opportunity, an outsourced CFO must develop a systematic process for financial record-keeping in order to optimize spending. This process often involves assigning a monetary value to every aspect of company operations, even if it’s only as an estimate.
Once a business can keep track of its optimized spending, additional opportunities will arise to improve the business’s efficiency and profitability. Setting internal finances in order is the key to unlocking the other potential services offered by an outsourced CFO.
2. KPI and Benchmark Reporting
Every business has goals and objectives for its future. Perhaps this is to increase the number of clients or customers, or maybe it is to scale up the business and hire a few new people to keep up with demand. To achieve any of these long-term goals, there must be specific and measurable objectives for the short term. This process essentially breaks down company growth into specific weekly or monthly assignments.
In order to measure the success of company goals, set up KPIs (Key Performance Indicators) to help focus on the specifics. Setting up objectives and KPIs is a time-consuming process that is often sped up with the assistance of an outsourced CFO. An outsourced CFO can give straight answers regarding what a company can and cannot afford and estimate the financial risk of any plan for business growth going forward.
Providing sound financial advice during any decision-making or goal-setting process is one of the primary responsibilities that an outsourced CFO can handle. To provide this advice, the CFO will consider your KPIs and set up a reporting system that measures change over time. The CFO can also set benchmarks for improvement that are attainable, realistic, and worth the work. The entire reporting process completed by an outsourced CFO can help develop additional strategies as the size and complexity of business operations increase.
3. Identify Business Growth Options
Outsourced financial assistance can also take stock of your company’s competitive market to find new opportunities for increasing cash flow and business profitability. If you are a small business owner, then chances are you are already aware of who your competitors are. What they do can have a direct effect on how you manage your business and the choices you make in marketing your product.
Hiring an outsourced CFO allows small business owners to delegate this market evaluation task to better manage internal processes. In many cases, the experience and training that comes with an outsourced CFO will improve this market evaluation process, which in turn can help you identify new opportunities for raising capital and expanding profitability.
What new investments are available to improve company finances and cash flow? How can the sales and marketing spend of the company be improved based on consumer expectations and desires? An outsourced CFO will find answers to these questions for your business.
4. Save Time
The ability to save time is perhaps the most critical of all benefits to outsourced financial help for small business owners. The time of any CEO is unquestionably valuable, and there are many ways in which this time can be quickly spent. Financial evaluation and management is always necessary for any company, and without hired economic assistance, this process takes up significant time that could otherwise go towards other business improvements. Luckily, hiring an outsourced CFO is not time-consuming, particularly when compared to hiring and training internally.
Hiring an outsourced CFO is the easiest way to improve the financial well-being and decision-making process for small businesses seeking to grow. The effect of hiring outsourced monetary assistance is nearly immediate, with most business outsourcing companies offering CPAs and CFOs who already have substantial experience and training. Improving the cash flow and profitability is just the beginning to sustainable business growth based on sound financial tactics, reporting, and market analysis.