Before we dive into this topic, let’s define what an outsourced CFO firm is. An outsourced CFO (or Controller) will provide the same functions as a full-time CFO, but the relationship is that of a vendor as opposed to an employee. Typically, as a vendor, there are no payments for vacation, no year-end bonuses, no stock-based compensation and no severance payments.
In addition, the company will only typically be billed for the amount of time the outsourced CFO provides. For smaller companies, this could be an attractive option. Many smaller companies need the thought leadership and execution skills of a highly competent full-time CFO, but don’t need someone five days a week, thereby saving money.
For midsized companies, an outsourced CFO is generally needed to fill a gap between a departing and arriving CFO. Further, for companies looking for an exit, hiring a full-time CFO may not be a viable option as the acquirer may already have a CFO.
Finally, for companies of all sizes, an outsourced CFO firm may provide all of the above and senior-level consulting services. For instance, company management may need help with work paper preparation for an upcoming audit, may need help in exit readiness, may need to stop declining profits, may need better decision-making reports, may need a new accounting system and may need almost anything else that requires highly experienced accounting and finance skills.
Firms consisting of mostly CFOs and Controllers should have the depth of talent to address many of the above in a quality and timely manner. But there is one more factor. Experience. Some firms may have hundreds of years of collective experience. That may prove very valuable when addressing complex, time sensitive projects.
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