Is It Better To Hire an Outsourced or In-House CFO for Your Business?

As your business grows, the complexity of your financial needs often outpaces your internal resources. This is where deciding to outsource accounting services or hire an in-house CFO becomes crucial.

Each option offers distinct advantages, depending on your company’s size, budget, and strategic goals. Making an informed decision requires understanding the benefits and drawbacks of both approaches.

In this article, we will explore the benefits of using outsourced CFO services compared to hiring an in-house CFO. You’ll discover key tasks an outsourced CFO can handle, situations that warrant outsourced accounting services, and top companies offering these services. 

5 Benefits of Partnering With an Outsourced CFO

Outsourced CFO services involve hiring an external financial expert or firm to handle your financial management and strategic planning. These services are particularly beneficial for small to medium-sized businesses that may not have the resources to employ a full-time chief financial officer (CFO), but it can also be a smart move for larger companies.

Here are some key advantages to this strategic move:

1. Cost-effectiveness

In-house CFOs command high salaries, with an annual average total cost of $326,989, including an average salary of $201,875, according to Glassdoor. Outsourcing reduces these costs, providing access to top-tier financial expertise at sometimes a fraction of the price, especially if you hire from a region with lower salary expectations.

This shift significantly reduces overhead costs associated with hiring a full-time employee by eliminating the need to provide a range of benefits (health insurance, pension, gym membership, etc.) and bonuses. 

2. Specialized expertise

Outsourced CFO service providers offer a diverse pool of talent with experience across various industries and financial disciplines. This ensures you get the right expertise for your specific needs, whether it’s fundraising, mergers and acquisitions, or financial restructuring.

3. Scalability and flexibility

As your business evolves, your financial needs may change. Outsourced CFO services offer a flexible solution for businesses looking to adapt to these changing needs.

Outsourced CFOs can easily scale their services up or down to match your requirements, offering flexibility that in-house hires might not provide.

4. Objectivity and fresh perspective

An external CFO brings an unbiased viewpoint to your financial situation, free from internal politics or preconceived notions. This can lead to innovative solutions and strategic insights that might not be apparent to someone embedded in the company.

5. Focus on core business activities

By delegating financial responsibilities to experts, you and your team can focus on what you do best—running and growing your business.

5 Benefits of Hiring an In-House CFO

Hiring an in-house CFO brings its own unique advantages that can be crucial for certain business needs. Here are five key benefits:

Deep company knowledge

An in-house CFO develops an in-depth understanding of your business’s financials, culture, and long-term goals. This intimate knowledge allows them to make more informed strategic business decisions that align with the company’s goals, driving growth.

Immediate availability

Having an in-house CFO means immediate access to financial expertise whenever needed. This can be particularly beneficial during critical decision-making periods or financial crises where quick responses are crucial.

Strategic leadership

An in-house CFO can take on a strategic leadership role, actively participating in executive meetings, shaping business strategy, and fostering a cohesive leadership team. Their consistent presence helps ensure alignment across all levels of the organization.

Tailored solutions

With a thorough understanding of your company’s specific challenges and opportunities, an in-house CFO can develop tailored financial strategies and solutions that are perfectly aligned with your business needs and goals.

Stronger relationships

An in-house CFO can build strong relationships with other departments, stakeholders, and external partners. These relationships can enhance collaboration, streamline processes, and improve overall business operations.

Tasks an Outsourced CFO Can Handle for Your Business

Outsourced CFOs bring a wealth of experience and can tackle diverse financial responsibilities, allowing you to streamline operations and make informed decisions. Here is the list of core tasks and subtasks that an outsourced CFO can handle for your business: 

Financial reporting

• Preparing accurate and timely financial statements (balance sheet, income statement, cash flow statement)
• Analyzing financial data to identify trends and areas for improvement
• Providing insightful reports to management and stakeholders

Budgeting

• Developing comprehensive budgets aligned with your company’s goals
• Monitoring budget performance and identifying variances
• Implementing cost-saving measures and optimizing resource allocation

Cash flow management and monitoring

• Tracking cash inflows and outflows to ensure liquidity
• Forecasting future cash flow needs
• Implementing strategies to improve cash flow and working capital management

Cost evaluation

• Analyzing cost structures to identify inefficiencies
• Implementing cost-reduction initiatives
• Negotiating with vendors and suppliers to secure better terms

Legal liaison

• Collaborating with legal counsel on financial matters
• Ensuring compliance with financial regulations and reporting requirements
• Providing financial expertise during contract negotiations

Risk control

• Identifying and assessing financial risks
• Developing risk mitigation strategies
• Implementing internal controls to safeguard assets and prevent fraud

HR monitoring

• Collaborating with HR on compensation and benefits strategies
• Providing financial analysis for staffing decisions
• Ensuring compliance with labor laws and regulations

Customer contract review

• Analyzing customer contracts to assess financial implications
• Negotiating favorable terms and conditions
• Ensuring contracts align with company policies and financial goals

Fundraising and crowdsourcing

• Developing fundraising strategies and identifying potential investors
• Preparing financial projections and pitch decks
• Negotiating funding terms and managing investor relations

When Does a Business Need Outsourced Accounting Services?

Deciding whether to hire an outsourced CFO for accounting services or hire an in-house CFO depends on several factors. A major aspect to consider is how each option impacts your long-term financial planning and stability.

Here are some scenarios where outsourcing might be the more advantageous choice:

Cost constraints

For many small and medium-sized businesses, hiring a full-time CFO may not be financially feasible. Outsourced accounting services offer a cost-effective alternative, providing access to high-level financial expertise at a fraction of the cost.

Short-term projects

Businesses undergoing short-term financial projects, such as audits, due diligence, or system implementations, can benefit from the flexibility of outsourced accounting services. 

Need for specialized expertise

Certain financial situations require specialized knowledge that may not be available in-house. Outsourced accounting services and CFOs bring diverse experience and skills, ensuring that the business has access to the necessary expertise when needed.

Seasonal fluctuations

Businesses with seasonal fluctuations in their financial operations can leverage outsourced accounting services to scale up or down as required. This flexibility helps manage peak periods effectively without the burden of maintaining a full-time staff year-round.

Focus on core activities

Outsourcing accounting services allows business owners and managers to focus on core activities and strategic initiatives. The delegation ensures that financial management is handled by experts, freeing up internal resources for growth and innovation.

Transition periods

During transitions such as mergers, acquisitions, or leadership changes, outsourced accounting services can provide stability and continuity. CFO service providers like the top CFO executive search firms or freelance CFOs offer expert support to navigate these complex changes smoothly without the need to immediately hire a new in-house CFO.

Top 5 Companies for Outsourcing CFOs

Now that you’ve weighed the pros of in-house CFOs vs. outsourced accounting services and the tasks you can outsource, you might be wondering which companies offer top-notch outsourced CFO solutions. 

Here, we’ll provide a list of reputable firms to help you navigate your search. Keep in mind that this list is not ranked in any particular order and includes companies specializing in outsourced CFOs alongside those with experience sourcing financial executives as part of their broader recruitment services.

1. Near

We know what you’re thinking—of course, we put ourselves on the list. But with results like ours, it’s hard to argue! Near stands out for our ability to provide top-tier financial talent who work remotely during US working hours, ensuring seamless collaboration.

Near specializes in connecting companies with experienced finance professionals from Latin America in under 21 days. Why LatAm? It’s simple. The region boasts a wealth of highly skilled professionals who work in US time zones and have strong English proficiency, all at a fraction of the cost of hiring in the US.

Don’t just take our word for it. CyberFortress, a global cybersecurity firm, partnered with Near to hire 12 professionals, including three accounting and finance managerial positions. They saved an estimated $500,000 in annual salaries and were able to scale their team rapidly to support their business growth.

2. B2B CFO

B2B CFO has been a pioneer in providing outsourced CFO services since 1987, offering a wealth of experience with over 6,000 combined years of accounting among its professionals. The firm is renowned for its proprietary tools and processes, such as the patented B2B Exit® dashboard software, which aids businesses in managing exits and acquisitions efficiently.

With expertise in improving cash flow, obtaining bank loans, and strategic planning, B2B CFO helps businesses grow profitably and increase company value.

3. CFO Selections

CFO Selections caters to small and medium-sized businesses seeking part-time, interim, or project-based CFO services. Their team, composed of experienced financial professionals from diverse industries, is equipped to handle various stages of business development, from startups to complex mergers and acquisitions.

In addition to outsourced CFO services, CFO Selections offers financial assessments, business planning, cash management support, and merger and acquisition guidance. They also provide retained search services for companies looking to hire a permanent, full-time CFO.

4. PARO

PARO takes a technology-driven approach to providing fractional CFO and strategic advisory services. Their platform leverages AI-matching technology to quickly connect businesses with highly vetted financial experts, many of whom hail from top-tier firms like the Big Four, Fortune 500 companies, and leading CPA firms.

PARO serves a wide range of clients, from startups seeking funding to mature companies navigating transitions. They offer various services, including business process consulting, growth strategy development, startup support, and transaction advisory. 

5. CFO Hub

CFO Hub offers comprehensive outsourced CFO services, ensuring your financial data is transformed into actionable insights. Their services include strategic advisory, budgeting and forecasting, financial modeling, staff training, and risk management. 

Located in multiple cities, including San Diego, Los Angeles, and Washington DC, CFO Hub provides support from month-end close to government contractor accounting and audit readiness.

Final Thoughts

While in-house CFOs offer an extensive understanding of your company and full-time availability, outsourced CFOs provide cost-effectiveness, specialized expertise, and flexibility. Consider your budget, growth stage, and specific financial requirements before making a decision.

If you’re leaning toward outsourcing and prefer to work with an individual finance expert rather than a firm, Near is here to help. We specialize in connecting businesses with highly skilled CFOs from LaAm who offer expertise, affordability, and cultural alignment. 

Book a free consultation to explore how we can empower your business’s financial future.