When you’re working on a passion project, it can be easy to overlook the technical details. This is often the case when growing your startup. When you’re just finding your feet, you probably don’t need a full-time CFO. Every startup has different back-office needs, and it can be difficult to determine whether or not you need to bring on a part-time CFO or if you should look into outsourced CFO options.
Either way, you’ll need a guiding hand that’s familiar with the financial professionalism expected of a growing business. There are benefits that come with working with an experience outside source, and others that come with part-time assistance. It’s essential to weigh those pros and cons against one another so you can make the best financial decision for your company.
What Is an Outsourced CFO?
Outsourced CFOs are also known as interim CFOs. These financial advisors usually work full-time positions under contract. Often, they will be with your company or an affiliate for a set period of time, during which they’ll be given full control over the preparation and management of a business’ financial exploits.
There are many situations in which an interim CFO can come in handy. If you’re just starting your business, you may find guidance from someone with more experience in your industry useful in finding your feet. Alternatively, if you’re in between CFOs or looking for help navigating a financial crisis, an outsourced CFO can give you the concentrated advice and management that you need to make it to your next safe harbor.
Pros of Working With an Outsourced CFO
Why should you consider bringing an outsider into your office for financial advice? Interim CFOs can provide your business with a number of benefits, including:
Interim CFOs aren’t new to the world of finance. As a result, they’re able to bring GAAP comprehension to your business, where a new or part-time CFO might not have the same level of experience.
Interim CFOs will lay the foundation of your business’ finances for any CFOs that come after them. This means that you’ll be able to rely on their expertise long after they’ve stopped working for you.
A Plethora of Experience
Most interim CFOs will have worked with other startups or businesses before yours. As such, they can bring an additional level of expertise to your business, boosting your progress along the way.
Cons of Working With an Outsourced CFO
Outsourced CFOs do come with their downsides. You should know that, when working with an outsourced CFO, you may run into the following obstacles:
Sharing is Caring
Interim CFOs are effectively the gig workers of the finance world. They’ll likely be working with a number of clients at one time. While you won’t have to worry about your financial information’s safety, you won’t be able to access your interim CFO at all times. You’ll instead need to work out a schedule in advance and comply with that schedule, no matter what accounting problems may arise.
Your in-house employees may also be slow to trust an outside resource with their financial data. While this reputation is generally erroneous, interim CFOs are short-term additions to your business. Unless you can integrate them into your office environment quickly and easily, you may find yourself struggling with a social tension that a part-time CFO could alleviate.
What Is a Part-Time CFO?
Depending on your company’s needs, you could work with a part-time, or fractional, CFO. Unlike outsourced CFOs, part-time CFOs work with your business for an undetermined amount of time, meaning that you can consistently rely on them to be in the office. However, part-time CFOs are not obligated to work with your business for a full eight hours a day, five days a week.
This doesn’t mean that they won’t be able to tend to all of your financial needs. Rather, part-time CFOs have different boundaries assigned to their positions than outsourced CFOs. In breaking down the pros and cons, you’ll get a better idea of how part-time CFOs change the feel of your office space and financial management.
Pros of Working With a Part-Time CFO
If you’re not ready to hire a full-time CFO, why should you consider adding a part-time CFO to your team? Part-time CFOs can provide your business with a number of benefits, including:
Part-time CFOs are typically in it for the long-haul with your business. You can reliably see them at work and develop a relationship that benefits your financial growth.
A part-time CFO will likely have more time to grow familiar with your business’s financial trends than an outsourced CFO. Part-time CFOs will be able to reliably report on your business’s growth and detriments as they change over the course of your business’ first several years.
Cons of Working With a Part-Time CFO
Depending on what your company’s needs are, your business may not benefit from the influence of a part-time CFO. The downsides to this hire include:
Too Quick To Hire
Part-time CFOs are a long-term investment. If you’re still in the early stages of running your business, you may want to hold off on hiring a part-time CFO for the sake of internal growth.
Any part-time CFO you onboard will have to understand your start-up objectives and, at a bare minimum, cooperate with them. If you hire a CFO who doesn’t agree with your ambitions, you may find that a long-term partnership does your business more harm than good.
While outsourced CFO services and part-time CFO services don’t differ in the extreme, and both will be able to help you with bookkeeping responsibilities and accounting responsibilities as you grow your startup, the two positions are notably different. If you’re not looking for a full-time CFO but still need someone to fulfill a CFO’s responsibilities, then consider bringing on someone from the outside or someone only part of the time. You’ll need to consider your business’s needs carefully, but once you do, you should be able to identify the right person – and commitment – for the job.
Not sure what your back office needs? Not a problem. Click the button below to schedule a free consultation with our team of experts. We’ll help you unpack the ins and outs of what it’s like to work with both part-time and outsourced CFOs, and we’ll help you understand which is best for where your company currently is and where you want your company to go.