Wed Jul 28, 2021 | | Business, CFO Services

How Big Does My Company Need to Be to Contract CFO Services?


contract cfo services

Accounting is one of the most important aspects of running a business. For many businesses, working with a part-time bookkeeper is enough to stay on top of their financial situation, gather insights from financial reports, and make changes to optimize profits.

However, successful businesses often reach a stage at which they have outgrown basic bookkeeping services and need a qualified, professional CFO service instead. Often, businesses that are considering upgrading to a CFO wonder whether they are big enough to warrant this level of financial management or if hiring an outsourced CFO would be a waste of their money.

Many companies proceed with hiring a CFO after they reach $2 million in revenue. In most cases, though, a business’s size is not the only factor in its eligibility for contract CFO services. Other variables, such as its specific financial needs, play a bigger role.

To help you understand whether your business could benefit from contract CFO services, read on to learn a few specific factors that could indicate that it is time to hire a contract chief financial officer.

You Have a Revenue Stream in Place

Generally, a CFO will need to analyze your existing revenue streams to provide financial insight and guidance. If you do not already have a reliable sales stream in place, you may not need an outsourced CFO yet.

However, the exact turnover you need to reach before hiring a finance officer can vary depending on your type of business. For example, some companies hire an outsourced CFO once they get to $2 million while others take advantage of these high-level finance services once they reach the $500,000-to-$750,000 range.

Additionally, if your company has exceeded a specific sales range, you may want to hire a full-time CFO rather than a part-time, fractional, or interim financial manager. Organizations that have reached $50 million in annual sales, for example, may require an in-house, long-term finance officer to provide ongoing expertise.

You Have Sophisticated Financial Needs

Some clients hire a CFO when they have complex financial needs that a traditional accountant cannot handle. Hiring an upper-level accountant is an excellent way to ensure that your financial data and reporting are accurate, no matter how simple or complex your company might be.

The industry your business is in may warrant a more experienced financial team simply because your finances and sales streams are complex. For example, an agency in the healthcare industry may need help with complicated financial reporting for insurance companies or managing tax payments.

If you have complex accounting needs, hiring an outsourced CFO could take some weight off your current accountant’s shoulders and provide more tailored, professional guidance.

You Need Help Developing a Strategic Business Model

Some professionals only suggest hiring a CFO once you meet a specific sales goal. However, your company may need help achieving the growth necessary to reach your goals. As a result, you may want to hire a finance officer to rewrite your company’s strategy and maximize profits.

A finance officer can provide the following benefits to help your cost strategy:

  •       Turn your finance reports into insights
  •       Guide you in strategic business decisions
  •       Help you connect your goals to your current circumstances
  •       Provide objective guidance and analysis

 

All in all, an outsourced CFO can do more than just provide financial statements. They can also create a strategic solution to improve your profits and support your growth.

If you need help creating a profitable business strategy, CFOs can give you the necessary guidance and knowledge.

You Are Unsure How to Analyze Your Financial Data

A basic accountant can provide you with financial reporting that shows your profits, costs, and tax information. However, you may not know the best ways to interpret these numbers and use them to your advantage.

CFOs can help you break down your pricing systems and perform a detailed analysis of your books. They can then use their expertise and experience to advise you on what strategy to follow to maximize growth and reduce costs.

Paying an accountant to manage your books without knowing how to review those books is a waste of your money and time. If you do not feel confident analyzing your finances yourself, adding a CFO role to your team could be the perfect solution.

You Need Assistance with Cash Management

Cash flow administration is the process of reviewing all of the money coming into and going out of your company. Unfortunately, many firms struggle with this process once they reach a specific sales bracket. Reviewing the flow of money on a weekly or even monthly basis becomes too time-consuming for them to handle on their own.

If you are struggling to manage your cash flow and costs, it may be time to hire a financial officer to take this responsibility off your shoulders. CFOs can help you with:

  •       Getting funding
  •       Forecasting profits
  •       Cost-benefit reviews

 

Better yet, the best CFOs can help you make changes to cover the extra cost that adding a CFO to your team requires.

Schedule an Outsourced CFO Services Consultation Today

Looking at the variables above within your own business can help you determine how an external CFO team can help you. However, you know your business better than anyone. Hiring an outsourced CFO may help your firm even if you do not meet the traditional requirements.

The best way to understand how an outsourced CFO can help you is to schedule a consultation. During your consultation, our team will review your business’s accounting needs and break down the specific services our fractional CFO can provide you.

Whether you are looking for interim CFO services, ongoing contract CFO services, or something in between, CFO Strategies LLC can help. Our full-service accounting firm offers all of the financial management and accounting services you need to stay on top of your finances and optimize growth.

Contact CFO Strategies at 732-236-4454 to learn more about taking your business to the next level.