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The Power of Perspective: How An Outsourced CFO Can Benefit Your Business

October 10, 2021

Perspective is most powerful when it’s supported by experience.

We find that the best advice we provide our outsourcing clients is drawn from our own experiences as business leaders from private industry. Among our outsourcing partners are former CEOs and CFOs with a depth of background and expertise that allows them to put their perspectives into practice.

Perspective also means seeing the whole picture. Again, as outsourcing advisors, we are first and foremost business generalists with years of experience across many different industries. This insight allows us to see further and more clearly than many of our clients who, these past two years, have understandably had their heads down managing not only day-to-day affairs but the future of their companies. What we often see is that their ability to diagnose problems is often compromised by lack of time – even if they are the most dedicated leaders. In these scenarios, the immediate value of outsourcing can come from deploying an outsourced professional to independently find the facts from among conflicting stories; someone who can decipher the clues more dispassionately, and who can bring forward recommendations based on experience and perspective rather than relying on the old rote way of doing things.

Here’s an example of what we mean. Our client, a well-known and respected not-for-profit with revenues of around $10 million, had a well-established financial structure in place, with an excellent board of directors, including a treasurer and an audit committee. It had a full-time CFO, a President, and a controller in charge of the internal books and records. The CFO’s salary was nearly $200,000 at the time of his retirement, which was right before the onset of COVID. Mindful of their current vacancy, our client’s initial instinct was to search for a CFO replacement, but soon discovered that the pandemic had changed almost everything, including hiring.

During a routine discussion of the client’s financial controls, we learned of their pursuits and proposed outsourcing as a cost-effective alternative solution. The client’s financial controls were in good shape, and there was strong, effective communication between the treasurer and the controller. Filings were accurate and on time. We identified CFO-level activities, including bank loan issues, complex modeling, and financing demands such as lease/purchase evaluations, and the fact there was a much more cost-effective way to handle them. The remedy was to fill the position with an outsourced professional of equivalent or better talent, offering more targeted skill sets as they were required. The flexibility to access the right skills at the right time had direct cost savings of more than $100,000 and was a timely solution that both the senior leadership and the board understood and soon became comfortable with.

When considering an advisor for outsourcing solutions, it pays to find a balance of both a broad scope and personalized service. For instance, business and industry today almost always feature an international component with all the corresponding intricacies of currency, taxation, and the related challenges of shipping, receiving, and inventory. Finding the right mix of talent in these circumstances can often be daunting and time-consuming. But import-export is a prime example of where an outsource CFO solution can make real sense. An accounting and advisory firm with a network of international connections, combined with local knowledge and rock-solid financial credentials in the client’s home markets and industry, can be the best bet in the long term.

Although differing in needs, small and medium privately held businesses and family-owned firms can benefit from having an experienced outsourced CFO at their side. It is often the complexities of accounting, reporting, and internal controls that trip up owner-operators; and it is also where the right fit of expertise can make all the difference between confused decision making and finding the right way forward. Whether it is controller-level work like bank reconciliations or the basic blocking and tackling of payroll, expense categorization, and general ledger, or the more complex CFO-level challenges of audit readiness and creating GAAP compliant financial statements, we find that the right outsourced financial advisor can help smaller to mid-size enterprises. The extra payoff comes when that right person can help reduce costs or implement strategies to streamline one’s business. That outsourced individual may also help to break down silos and begins to instill the teamwork needed to help management remain focused on what they most need to accomplish.

Using capital wisely means being aware of and willing to explore options like outsourcing. Speak with a Schulman Lobel advisor and see where the conversation may take you.