The Benefits and Considerations of Outsourced CFO Services

March 12, 2024

Introduction

Hiring an outsourced or virtual Chief Financial Officer (CFO) can provide significant benefits for many small and medium sized businesses in Canada. This article will examine the advantages of outsourced CFO services, considerations for choosing a provider, typical pricing models, and best practices for establishing an effective working relationship.

Benefits of Outsourced CFO Services

Compared to hiring a full-time CFO, key benefits of outsourced services include:

  • Cost Savings - Hourly or project-based fees are often 30-50% less than a salary and benefits for a full-time employee.
  • Objectivity - An outsourced CFO has an independent perspective vs being an internal employee.
  • Flexibility - Services can scale up and down as business needs change.
  • Expertise - Gain access to high-caliber talent and specialized expertise on an as-needed basis.

Evaluating and Selecting a CFO Services Firm

Key criteria to consider when choosing an outsourced CFO provider include:

  • Industry experience and credentials - Look for CPA, MBA, or CMA qualifications.
  • Personality fit - Ensure your management styles align.
  • Technical expertise - Proficiency in accounting software, financial planning & analysis, etc.
  • Communication skills - Responsive and able to explain financial data clearly.
  • Scalability - Ability to flex services up or down as needed.

Outsourced CFO Pricing Models

Common CFO outsourcing pricing models include:

  • Hourly - Ranges from $150-$300/hr for on-demand fractional support.
  • Monthly Retainer - Fixed fee each month for defined services.
  • Project Basis - Price per project or deliverable.
  • Percentage of Cost Savings - Fee based on performance and savings achieved.

Working Effectively with an Outsourced CFO

Best practices for success when partnering with an outsourced CFO include:

  • Clear expectations - Align on scope of duties, deliverables, timelines, and metrics.
  • Open communication - Schedule weekly or monthly check-in calls.
  • Strategic focus - Leverage CFO for high-level strategic insight.
  • Defined metrics - Establish KPIs to track financial performance.
  • Documented processes - Codify systems for accuracy and continuity.

Conclusion

An outsourced CFO can be a strategic asset for Canadian startups and small businesses seeking to improve their financial management and performance. Defining the role and optimizing the working relationship are key to realizing the benefits of on-demand CFO expertise. With thoughtful planning and clear communication, outsourcing the CFO role can provide valuable financial leadership and guidance without the full-time costs.

Alyssa Huizenga
Director, Business Development
[email protected]

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