Knowledge and Insights
The Ultimate Guide to Outsourced CFO Services
Financial management is one of the most challenging aspects of running a business, regardless of its size. When you’re in the weeds with bookkeeping, payroll, and tax filing, it can feel near-impossible to proactively plan future financial strategies and design the systems required to scale your organization.
Even if your business has accounting staff, it might lack the financial leadership required to provide the right level of oversight. Employees may handle the day-to-day financial tasks of the organization, but when it comes to strategic financial planning, many businesses have a blind spot.
Strategic financial planning is generally the responsibility of a Chief Financial Officer (CFO). However, full-time CFOs are expensive and may not be a scaling business's primary focus and priority. CFO salaries average from $250,000 to $400,000 or more depending on the size and type of business – making hiring this executive a substantial undertaking for most companies.
If this sounds familiar, it may be time to look into an outsourced CFO. Working with an outsourced CFO service is a popular way to employ a proven finance leader at a fraction of the cost. Based on your needs, you agree to the amount of time you think you need from the CFO and then they will set aside ample time to meet your needs.
They provide leadership to your existing finance team, help flesh out the weaknesses of the department, and then create a plan to enhance the reporting and planning for the business. This enables business leaders to gain strategic insights into their business’s financial health and forge a path toward growth.
Mercadien offers outsourced CFO services to companies of all sizes, in many industries, and at any point in their financial journey. Read on to learn more about Mercadien, when you should consider an outsourced CFO, the value outsourced CFOs bring to your business, and to get answers to your most pressing CFO outsourcing questions.
MEET MERCADIEN
Mercadien was created by two entrepreneurial CPAs in 1963. Together, they were determined to provide exceptional financial reporting, tax, and advisory services in central New Jersey, providing much-needed services to our clients “under one roof”. Half a century later, that goal remains foundational to everything we do.
At Mercadien, we believe in leading with passion and commitment. We take our client’s goals and dreams to heart and work tirelessly to help bring them to fruition.
Over time, we noticed many of our clients could benefit significantly from the insightful sounding board CFOs provide, but weren't necessarily ready to take on the cost of a full-time CFO. When an organization is in a period of rapid transformation and growth, an outsourced CFO provides experienced strategic leadership, connecting business operations and finance to help the executive team better understand the business’s financial health.
Mercadien’s forward-thinking, relationship-driven services are designed to help you achieve and exceed your goals. Reach out today to learn more about our outsourced CFO services.
WHAT IS AN OUTSOURCED CFO?
An outsourced CFO is a financial leader who is not on your payroll full-time. They generally provide a certain number of hours of service commitment on a monthly basis, and as such, many people refer to them as a fractional CFO. As a member of your team, they can work with your in-house staff to ensure that issues are addressed proactively and swiftly as they arise.
If your staff struggles to produce financial reports in a timely, accurate manner, an outsourced CFO can oversee them as coaches or mentors to help bridge the gaps in your finance department. Once they get your team on track, outsourced CFOs then work with the CEO and corporate leadership team to tackle larger corporate issues, compliance matters, financial planning, projections, and strategic growth. They provide an objective outsider’s view into your organization, offering feedback and insights that you or your employees may miss.
An outsourced CFO can be an individual consultant or a service provided by a full team Outsourced CFO services provided by a team of accountants offer business leaders more resources, scalability, and proven frameworks for success.
WHAT DOES AN OUTSOURCED CFO DO?
An outsourced CFO typically performs the same functions and tasks as full-time CFOs, including financial reporting, short- and long-term financial forecasting, cash flow analysis and management, risk management and compliance, and providing support in raising debt or equity financing.
THE ROLE OF A CFO IN BUSINESS GROWTH
A CFO is critical in business growth. They’re far more than number-crunchers: CFOs are strategic partners that play a pivotal role in the success of a business.
DEFINING THE CFO'S ROLE
A CFO is a top-level executive who handles everything related to financial planning, budgeting, reporting, and forecasting. Cash flow is usually at the top of the list and often this task is key to meeting loan obligation covenants, meeting vendor demands, and maintaining inventory and supplies necessary to keep operations moving forward. They oversee the financial operations of the company, managing all accounting and bookkeeping staff. Outsourced CFOs work shoulder to shoulder with the CEO, serving as a strategic partner.
Let’s take a closer look at the key responsibilities of a CFO.
Financial Strategy & Planning
A CFO is responsible for developing and executing a business’s financial strategy in line with the company’s wider business objectives. CFOs work closely with the CEO and other executives to set clear financial goals and create a sustainable roadmap to achieving profitable growth.
Capital Management
CFOs are critical in managing the company’s capital structure. They advise on decisions about debt and equity financing, manage the business’s working capital, and ensure the organization has the funds to fuel growth while remaining financially stable.
Financial Reporting & Analysis
A CFO is responsible for providing accurate and timely financial reporting and analysis. The leadership team needs these valuable insights into the company’s financial health to make informed growth decisions and identify any business areas that need attention.
Risk Management
Growth comes with many positives, but it also brings increased risk. CFOs must identify and mitigate financial risks that could impact growth and develop risk management strategies to protect financial assets and the company’s reputation. CFOs often work with a range of stakeholders, including:
- Insurance agents to review coverages.
- Internal auditors or compliance departments to manage regulatory compliance or key business cycle challenges and improvement plans.
- The company’s Board, helping them dispense with their fiduciary obligations of being a board member.
Mergers & Acquisitions
If your company is considering mergers and acquisitions (M&A) to fuel growth, your CFO will be heavily involved. A CFO can assist in assessing the financial viability of potential targets, conduct due diligence, and work to structure transactions to create the highest value possible for the organization.
Cost Management
Efficient cost management is essential to create sustainable growth. CFOs identify cost-saving opportunities and drive organizational efficiencies, ensuring resources are used effectively and minimizing wastage.
Compliance & Governance
Maintaining compliance with external financial regulations and internal corporate governance is essential for business growth. CFOs ensure the company adheres to all regulatory requirements to avoid legal issues that could impede growth.
Investor Relations
If your company is publicly traded or is supported by external investors, your CFO will act as a liaison between investors and analysts. The CFO communicates the organization’s financial performance, business value, growth prospects, and financial strategy to build investor confidence and attract new capital.
Technology & Innovation
Embracing technology and innovation is often a driver of growth. CFOs advocate for and oversee investments in financial systems and technologies that bring efficiency, improve data analysis capabilities, and extend financial insights across the organization.
HOW A CFO DRIVES FINANCIAL STRATEGY
Perhaps one of a CFO’s most important responsibilities is to drive financial strategy in an organization. Their financial expertise and strategic mindset mean they can shape and execute financial strategies that align with the company’s overarching goals.
CFOs drive financial planning through forecasting, budgeting, performance monitoring, and reporting.
THE IMPACT OF AN EXPERT CFO ON SMALL & MEDIUM-SIZED ENTERPRISES (SMEs)
The vast majority of Small and Medium-sized Enterprises (SMEs) could greatly benefit from a CFO in their organizations, but many lack the capital necessary to pay a CFO’s salary and benefits.
However, a CFO is a vital partner in ensuring your company is able to grow and prosper. A CFO can assist with expansion, help streamline financial processes, enhance your company’s credibility, and paint a clear picture of your financial position–one you may not see without their expertise. For many SMEs, an outsourced CFO is an attractive option that helps them realize these goals.
WHY OUTSOURCED CFO SERVICES MAKE SENSE
Outsourced CFO services are a cost-effective way to ensure your business is on the right track for growth and sustainability. As a business owner, working with an outsourced CFO enables you to focus on your business instead of being in your business.
Let’s look at some benefits of outsourced CFO services.
COST-EFFECTIVE FINANCIAL EXPERTISE
Hiring a full-time, in-house CFO is expensive. With the right candidate, their expertise might be worth the financial commitment, but this doesn’t change the fact that not every business can afford this high-level executive hire.
Outsourced CFO services are available at a much lower cost than a full-time CFO, and your organization will receive the same level of service and expert advice – and in some cases, better advice. This cost-efficient approach allows companies to allocate their economic resources more strategically, directing them instead toward growth initiatives, investments in new products and services, as well as operational needs.
FLEXIBLE SOLUTIONS TAILORED TO BUSINESS NEEDS
An outsourced CFO offers businesses flexibility that an in-house CFO may not. You can tailor the scope and duration of your outsourced CFO services to your needs, whether that’s a short-term project, ongoing financial management, or assistance during a growth phase. This flexibility enables you to scale your financial leadership up or down as circumstances change.
ACCESS TO A DEPTH OF INDUSTRY EXPERIENCE
An outsourced CFO service often brings a wealth of industry-specific experience to your C-suite. Experienced vendors will have worked with various businesses across different industries and can leverage their knowledge to offer insights and best practices that align with your goals and industry standards.
MITIGATING RISKS & ENHANCING FINANCIAL PERFORMANCE
Outsourced CFO services don’t only help companies seize growth opportunities but also mitigate financial risks. Experienced outsourced CFOs are well-versed in identifying potential threats and implementing strategies to proactively address them.
By conducting thorough financial analysis, developing risk management strategies, and enhancing internal controls, outsourced CFOs are vital in safeguarding your company’s assets and reputation. Often CFOs make recommendations for improving task efficiencies and spearhead the efforts to make the changes.
OUTSOURCED CFO VS. IN-HOUSE CFO
Like most situations, there are pros and cons to outsourcing your CFO versus hiring an in-house CFO.
Let’s look at both options.
PROS & CONS OF HIRING AN OUTSOURCED CFO
The pros of an outsourced CFO are:
- Cost-effectiveness compared to in-house CFO salary
- Financial expertise at a lower cost
- Flexibility as your business evolves
- Risk mitigation due to CFO presence
- Leadership of your finance department
- Business partner to your CEO
The cons of outsourcing a CFO are:
- Potential availability issues when working with other clients
- Less company-specific knowledge than a full-time CFO resulting in a learning curve
- Limited on-site presence due to remote work or other priorities
- Risk of finance department staff not seeing them as a direct report
PROS & CONS OF HIRING AN IN-HOUSE CFO
The pros of an in-house CFO are:
- Full-time presence and availability
- Deep company knowledge of operations, history, and culture
- Immediate response due to no competing priorities
The cons of in-house CFO are:
- Higher cost when compared to outsourcing if they have excess capacity
- Less diverse industry experience
- Limited scalability when business needs change
WHEN OUTSOURCING MAKES SENSE
Working with an outsourced CFO is almost always a good call, but it really makes sense when your business is in a transition or growth phase. Perhaps you know you need expert guidance but cannot justify a CFO salary yet.
An outsourced CFO’s financial acumen and strategic insights can enhance overall economic performance, helping you make informed decisions that lead to sustainable growth and success.
DO YOU NEED AN OUTSOURCED CFO?
Whether you need an outsourced CFO depends on your current circumstances and business goals. Here are some factors to consider.
- Budget and Size: SMEs may find outsourced CFO services cost-effective compared to hiring a full-time CFO, mostly due to the salary requirements of in-house CFOs. In general, scaling companies with less than $25 million in revenue would benefit most from an outsourced CFO.
- Growth Stage: If your business is in a growth phase or undergoing significant changes, an outsourced CFO can provide the specialized expertise needed during these critical times. This is particularly important for fast-scaling startup businesses.
- Financial Complexity: The complexity of your financial operations could determine your need for an outsourced CFO. If your company deals with complex financial transactions, compliance requirements, or industry-specific issues, an experienced CFO can be invaluable.
- Flexibility: If you need flexibility that allows for scaling up or down the work of your CFO, outsourced CFO services offer that adaptability.
HOW MERCADIEN ELEVATES OUTSOURCED CFO SERVICES
At Mercadien, we understand how valuable the right growth strategy is for your business. Many business leaders struggle with their strategic planning process or simply don’t have time to work on their business due to working in the business.
While growth brings excitement to the organization, it also brings new challenges. Whether you need outsourced CFO services to streamline processes, implement new accounting technologies, or assign a quarterback for special projects, we are ready to step in.
MERCADIEN'S OUTSOURCED CFO EXPERTISE
Our outsourced CFO services cater to leaders who need financial guidance. Perhaps your accounting department’s figures are complex or you aren’t sure which metrics or benchmarks your organization should focus on. Maybe your financial reporting is inaccurate or you think it's time to make operational changes for more optimized processes.
Mercadien’s outsourced CFO services make our team your strategic partner–we pride ourselves on being proactive, forward-thinking, responsive, and focused on consistent communication and support.
OUTSOURCED CFO SERVICES FOR NONPROFIT & HUMAN SERVICE ORGANIZATIONS
We’ve worked with over 300 organizations spanning social and human service organizations, religious institutions, trade associations, private schools, health and welfare entities, long-term care facilities, non-profit foundations, and healthcare providers.
We deeply understand the inherent risks and intricacies involved in running a mission-driven organization. The increased demand for accountability, transparency, and governance means you are under greater pressure. Our outsourced CFO services analyze operational gaps and address critical financial, strategic, and structural needs so you can focus on doing great work.
THE OUTSOURCED CFO PROCESS AT MERCADIEN
Our outsourced CFO process is streamlined so we can get to know you, your pain points, and what you need from outsourced CFO services.
INITIAL CONSULTATION & ASSESSMENT
Our process begins with an in-depth consultation and assessment. During this phase, we take the time to understand your unique financial needs and business goals. We’ll discuss current financials, pain points, and objectives to create a plan that aligns with your vision. We gain an understanding of what you do well and where you have challenges. Our focus will be on your challenge areas.
CUSTOMIZED FINANCIAL STRATEGY DEVELOPMENT
Following the initial consultation, we develop a customized financial strategy, tailored exclusively to your organizational needs. Our team will work closely with you to craft a comprehensive plan that addresses your most pressing challenges and opportunities, ensuring a roadmap for sustainable growth and financial success.
Most importantly, we develop a check-in schedule and stick to it. Communication with our clients is key so we take seriously the job of creating effective and efficient meeting agendas, meeting follow-up protocols, accountability measures, and debriefs. It’s our goal to understand the good, the bad, and the ugly.
IMPLEMENTATION & ONGOING MONITORING
Once the strategy is in place, we get to work on implementation. Our team of accountants assists in executing the new, planned initiatives, streamlining existing processes, and implementing any necessary tools or systems. At the same time, we provide continuous monitoring and oversight, including an annual debrief of our engagements, so we know your financial strategy is on course and remains adaptable to changing circumstances.
MONTHLY REPORTING & STRATEGIC ADJUSTMENTS
Transparency and accountability are key elements of Mercadien’s outsourced CFO services. We provide regular, detailed financial reports and KPIs to keep you informed. These reports serve as the foundation for strategic adjustments, allowing us to fine-tune as needed to optimize results and respond to evolving situations.
FREQUENTLY ASKED QUESTIONS ABOUT OUTSOURCED CFO SERVICES
In this section, find the answers to our most frequently asked questions about outsourced CFO services.
HOW DO OUTSOURCED CFO SERVICES DIFFER FROM A FULL-TIME CFO?
An outsourced CFO differs from a full-time CFO in a few ways, especially in commitment and engagement. A full-time CFO is an employee dedicated to serving your company’s financial needs every single day, whereas an outsourced CFO is an external partner.
Outsourced CFOs often serve many clients simultaneously. This can provide cost savings to your organization as you only pay for the services you need, rather than paying a full-time salary for a seasoned executive.
WHAT ARE THE TYPICAL RESPONSIBILITIES OF AN OUTSOURCED CFO?
An outsourced CFO service’s responsibilities are similar to those of a full-time CFO. Outsourced CFO responsibilities include strategic financial planning, financial analysis and reporting, budgeting and forecasting, managing costs, and ensuring regulatory compliance.
WHAT ARE THE BENEFITS OF HIRING AN OUTSOURCED CFO?
Outsourced CFOs provide high-level financial expertise and leadership tailored to your specific needs. The benefits of an outsourced CFO include cost savings, top-tier financial advice, scalability, and flexibility without the financial commitment of a full-time executive.
Outsourced CFOs often bring a fresh perspective, specialized skills, and years of experience to your business so you can make informed decisions and drive economic growth effectively.
WHEN DOES A BUSINESS NEED TO CONSIDER OUTSOURCED CFO SERVICES?
Your business should consider outsourcing CFO services when you know you need strategic financial leadership but don’t yet have the resources or need a full-time CFO. This scenario is typical for startups, small businesses in a period of growth, or companies undergoing transition.
HOW CAN AN OUTSOURCED CFO HELP WITH FINANCIAL STRATEGY?
An outsourced CFO has the same financial expertise as a full-time CFO. They bring extensive financial knowledge to the table, assisting in the development of and execution of a sound financial strategy. An outsourced CFO will analyze your data, identify growth opportunities, and align financial goals with your company objectives.
WHAT INDUSTRIES CAN BENEFIT FROM OUTSOURCED CFO SERVICES?
Fractional CFO services are versatile and can help a wide range of industries. They are particularly valuable for any company experiencing rapid growth. Private SMEs, nonprofits, and companies requiring strategic financial management can all leverage outsourced CFO services.
HOW IS THE COST OF OUTSOURCED CFO SERVICES DETERMINED?
Typically, outsourced CFOs work with you to negotiate an hourly or monthly rate.
The price depends on many factors, including the scope of services required and the duration of the work.
ARE OUTSOURCED CFOS AVAILABLE FOR SHORT-TERM PROJECTS?
Yes, outsourced CFOs are available for short-term projects and can be retained for a few hours a month or on a project-by-project basis. This flexibility is a significant advantage in choosing outsourced CFO services: you gain access to expertise without a long-term commitment. However, many outsourced CFOs have minimum contract lengths and monthly billables that smaller projects may not qualify for.
HOW DO OUTSOURCED CFOS WORK WITH EXISTING FINANCIAL TEAMS?
Outsourced CFOs can complement your financial team by providing leadership, specialized expertise, and additional bandwidth. An outsourced CFO will collaborate with your in-house accounting and finance teams to enhance existing capabilities and guide them toward specific goals.
CAN AN OUTSOURCED CFO HELP WITH FUNDRAISING AND INVESTOR RELATIONS?
Yes, outsourced CFOs generally have experience in fundraising and investor relations. They can prepare financial documents for investors, conduct due diligence, and create compelling financial narratives to attract investors.
WHAT IS THE PROCESS OF HIRING AN OUTSOURCED CFO?
The process starts with assessing your company’s financial needs, ensuring you know what responsibilities the outsourced CFO will be tasked with. From there, you should identify suitable candidates or firms, conduct interviews or consultations, and negotiate the terms of engagement. Once you’ve selected the right candidate, you will work closely with them and collaborate in defining the goals and expectations of the contract.
ARE OUTSOURCED CFOS EXPERIENCED WITH SPECIFIC ACCOUNTING SOFTWARE OR TOOLS?
Most outsourced CFOs have experience with various accounting software and tools. They can adapt to the systems in use at your organization or recommend appropriate solutions for efficient financial management.
HOW DO I FIND THE RIGHT OUTSOURCED CFO FOR MY BUSINESS?
The right outsourced CFO is out there. You should consider their experience, industry expertise, track record, and compatibility with your company culture. Referrals and professional networks are excellent resources for finding potential candidates.
WHAT MEASURABLE RESULTS CAN I EXPECT FROM OUTSOURCED CFO SERVICES?
The quantifiable results will depend on your goals, but some examples could include improved financial stability, increased profitability, improved cash flow, significant cost savings, and successful fundraising processes.
HOW DOES CONFIDENTIALITY WORK WITH AN OUTSOURCED CFO?
Confidentiality is a top priority for most outsourced CFOs. They will sign confidentiality agreements and uphold ethical standards to protect your sensitive financial information.
ARE OUTSOURCED CFO SERVICES SCALABLE AS MY BUSINESS GROWS?
Yes, outsourced CFO services are scalable. The engagement can be adjusted to meet any changing needs, whether you’re scaling up, downsizing, or facing new financial challenges.
CAN AN OUTSOURCED CFO ASSIST WITH FINANCIAL CRISIS MANAGEMENT?
Yes, outsourced CFOs can help you navigate financial crises by assessing the situation objectively, developing crisis management strategies, and implementing measures to stabilize the financial situation. These experienced financial professionals are proven problem solvers and have likely dealt with situations similar to yours previously.
ARE THERE ANY POTENTIAL DOWNSIDES OR LIMITATIONS TO OUTSOURCED CFO SERVICES?
One potential limitation is that outsourced CFOs are not full-time employees, which may require effective communication and remote collaboration. Their availability may be limited due to other client commitments, so planning accordingly for this in your working relationship is essential.
HOW CAN I ASSESS THE ROI OF HIRING AN OUTSOURCED CFO?
You can evaluate the return on investment (ROI) by measuring improvements in financial performance, cost savings, profitability, and goal achievement. Comparing financial outcomes before and after outsourcing your CFO role is valuable for evaluating ROI.
HOW TO GET STARTED WITH MERCADIEN’S OUTSOURCED CFO SERVICES
Mercadien’s outsourced CFO services offer a cost-effective, flexible, expertise-driven solution for high-growth companies seeking financial management and optimization.
By tapping into our vast knowledge base and decades of experience in outsourced CFO services, you can save on costs and make strategic financial decisions that enhance your financial performance, mitigate risks, and position your company for long-term success in today’s competitive business landscape.
Contact us today for a consultation on our outsourced CFO services.