How to Hire an Outsourced CFO (Chief Financial Officer)
Learn how to hire an outsourced CFO and take your business to the next level.
Your business is growing, and you need the expertise and insight of a CFO (Chief Financial Officer). But the cost of a full-time CFO, on average $300,000 per year, is greater than what your business can afford at this time. The solution? Engage a part-time, contract CFO — get the benefits of a finance expert at a much-reduced expense.
What is an outsourced CFO?
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An outsourced CFO also goes by other names — fractional CFO, virtual CFO, Contract CFO, freelance CFO, and interim CFO. No matter what you call the role, the CFO can help take your company to the next level and improve your financial operations.
What is the role of an outsourced CFO?
The role of any CFO, whether an employee or independent contractor, is to oversee your company’s financial operations. A CFO’s deep financial expertise can be critical to helping you achieve your business goals and optimize your cash flow.
Outsourced CFOs will drive financial strategy, set the right KPIs, and ensure the right financial systems are in place. Partnering with internal teams, they will develop robust financial projections and forecasts. And they’ll also optimize your cash reserve and free cash flow.
Benefits of an outsourced CFO
An outsourced CFO can be the perfect solution for a small business that needs more financial expertise and leadership than an accountant, bookkeeper, or controller can provide but can’t afford a full-time CFO. Engaging an outsourced CFO is significantly less expensive than hiring a CFO. For example, the average cost range of an outsourced CFO is $30,000-$70,000 per year, while the average salary of a full-time CFO is $300,000.
With an outsourced or fractional CFO, your company gains financial expertise and an independent viewpoint. Their extensive experience working with many companies can yield valuable insights to help your company.
Plus, your interim CFO will evaluate your financial operations and ensure you have a complete financial system in place with all the necessary reporting and processes.
And a part-time CFO gives your company greater flexibility. You can adjust the level of support your company needs as things change. Working with the CFO, you can design the scope of services to include exactly what your company needs.
How to find an outsourced CFO
The best way to find an outsourced or fractional CFO is through referrals from your network. You can also do searches for individuals with experience in your industry, for example, “SaaS outsourced CFO” or “SaaS interim CFO”. Some businesses specialize in interim CFO services.
What to look for when hiring an outsourced CFO
When considering outsourced or freelance CFO candidates, you’ll want to consider the following:
- What financial training do they have? For example, does the CFO have a CPA versus other certifications such as business valuation and forensic accounting?
- What do they enjoy the most in the CFO role? Look at how this compares to what your company needs.
- How have they helped their clients grow their businesses? Consider how this matches with your company’s opportunities and challenges.
- How have they helped their clients improve their financial operations?
- What industry experience do they have? While experience in your industry is important, a breadth of industry experience can also provide new insights and perspectives to help your company.
- What experience do they have with your existing financial and accounting systems? While you may want to replace your existing systems, you need to work with someone who understands your current setup — and then can recommend the right go-forward solutions.
- What’s their communication style? What’s their average turnaround time for communications? Your expectations on communications and responsiveness must align.
- How would they partner with you? This question addresses understanding cultural fit – make sure your styles will mesh together.
Always ask for and check references – make sure to probe how the candidate has helped the companies and worked with the teams. Consider starting with a specific project, such as a financial model, to assess mutual fit before engaging in a longer-term relationship.
Get the financial expertise you need
An outsourced or part-time contract CFO can be the right solution to help your small to mid-sized business get to the next stage. Fractional CFOs provide the financial expertise you need at a cost that works for your business. Whether you need to raise capital, optimize cash flow, improve your financial systems/operations, or address other opportunities, an outsourced CFO will help you achieve your company’s goals. And Liquid makes it easy to contract and pay your outsourced talent, while helping you with contractor compliance.
Updated: June 15, 2021
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.