The effectiveness of an outsourced CFO substantially depends on how well he or she is aware of the business’s operational and financial situation. The CEO’s and CO’s may understand the financial position, but still, being away from the financial front line for so long, it might be challenging to evaluate and re calibrate like a CFO objectively.
CFO services and consultation can show faster results, as they customize their job description or their strategy, as they understand how the business works and what its competitive advantages are based purely on the previous and current numbers. Hence, it is imperative to follow the right onboarding process for CFOs that can enable them to play their part right the first time.
How To Get An Outsourced CFO On-Board
We know how significant hiring the right CFO services are for the long-term success, growth, and financial health of a business. Still, the effectiveness of your onboarding process also impacts how well the outsourced expert can help the organization. Being a part-time resource and having one of the most sensitive jobs of dealing with financial data, it is imperative that as an organization, you do your part in facilitating the specialist to perform.
Let’s have a look at a thorough guide on how to engage and get an outsourced CFO on-board:
Handover The Knowledge
When hiring CFO services, you have to be careful about transferring knowledge. Your outsourced CFO can help you as much he or she knows about the business’s operations and finances.
It is ideal for providing the expert with all the data and information they need and letting them absorb the existing procedures and organizational goals and priorities. This will enable the CFO to thoroughly review the systems and better understand how the company functions.
Let The Expert Understand Your Business Finances
Now is the right time to schedule meetings with the business executives, finance team, and other major business stakeholders, team members, as well as investors. Now that you have transferred all the knowledge about the organization to the part-time CFO, it’s time to sit down and make an extensive and objective assessment of businesses’ cash flow position. The key performance indicators for the finance team and company, cash conversion cycle, balance sheet strength, growth opportunities, and overall profitability.
However, the key aspect of assessment will vary from organization to organization. Manufacturing companies will also re-evaluate the production processes.
Create An Action Plan
Once the part-time CFO knowledge of the business’s financial situation, how the systems work, and after they have communicated with executives about the goals and objectives, it’s time to come up with an action plan.
A detailed action plan includes a list of measurable actions, recommendations, any additional support or resources required by the team, and an estimated date of completion.
Moreover, CFOs also cover the action plan with a budget and cash management model that efficiently guides the team to drive operations.
Overview Of The Implementation Process
Even though the outsourced CFO is not entirely responsible for the implementation of the action plan, they do keep an overview of how the plan is progressing. Businesses should be expecting and asking for regular feedback on the progression and helping manage the financial team if the need arises. However, a lot is discovered once the plan is in action. The CFOs assist with making revisions and modifications in the project. Besides, they can even revise their job description based on what the business needs and with the agreement of the executives.
Analyze And Re-evaluate
Once you start seeing some results, it is going to give you a better understanding of what is working and what is not. A lot of the action plan is based on predictions and forecasts of the CFO and other experts. Hence, as some time passes and you collect actual data, it is a good idea to make adjustments based on the facts.
Overall, the business industry is constantly changing, whether it is the expectation of customers or the introduction of new technology or the economy. This means the CFO, along with business executives, has to not only stay up to date but they also have to keep the action plan responsive to the changes.
Why Businesses Need To Fill The Financial Gap
A lot of business executives have some degrees of knowledge about financial operations, and it can be anywhere between having a basic understanding of the financial system and a strong background in finance. However, even when they have a lot of knowledge of the market, it is probably not possible for them to completely manage the finances, as they haven’t been at the front lines for a while.
Besides, small businesses may find it to be a bigger challenge to grow operations, obtain investments, and manage finances without CFO services. Moreover, having a small workforce also means that there is no one within the business with the necessary level of expertise to take on the job. If you mix situations like launching a new product, modifying the capital structure, and being in the middle of a business merger or acquisition, the need for financial leadership becomes even more explicit, regardless of the size of the company.
At the different phase of the business cycle, you are going to feel the knowledge gap and lack of financial leadership. This means missing out on expert guidance is also going to have its consequence of business performance in different degrees. Hence, executives must take notice of their limitations and identify what they need for overall desired performance and growth and timely acquire the right resource.
We all know whether you are hiring outsourced CFO services or an in-house resource, a financial expert like this can make a big difference in the overall efficiency and profitability of the business. Therefore you need to ensure that you are collaborating with the resource in the right way, giving the CFO space and time to understand the procedures, working with it to by creating an action plan, and ensuring that the entire onboarding process, are steps that will go a long way towards making the CFO’s tenure at your workplace more productive and outcome oriented. Outsourced CFO services are cheaper than onsite, full time specialists so make sure that take full advantage of their presence and increase your ROI from this engagement by following the guidelines mentioned in five step plan presented above.