The Chief Financial Officer (CFO) is a position of great importance for many businesses who have sizeable assets to manage.
From keeping records to determining risk and outlining the financial status and objectives of an organisation, this is a role where the professional has their finger firmly on the pulse.
He or she carries a great burden when it comes to the performance of a company, and this is where some outlets decide it is best to outsource the CFO role.
What could be seen as a move that threatens the health of a business by entrusting this crucial information with an outside source, there are multiple benefits that supports the move.
To Provide Strategic Development and Leadership Qualities
While opting for an outsource CFO could be seen as diminishing the role in some regards, it actually empowers that operator to craft a strategic development path for the entity. They are able to judge how the financial performance has been tracking and with a number of departments operating simultaneously, the CFO is able to align the processes to ensure that the brand is in sync from top to bottom. That degree of power should be embraced by professionals who exude leadership qualities, setting the standard across the board where each and every employee is working towards the same targets.
Cut Down on Internal Risks
Hiring an internal Chief Financial Officer could be seen as a safe choice, but there are risks that come with that decision that would not be realized if a business opted to outsource the CFO position. An internal candidate might not have the requisite experience or qualifications as they climb the corporate chain, they have pre-established relationships with employees and departments, and having someone embedded into the culture and work environment could backfire if that culture is not in a healthy state.
Makes Financial Sense
One of the central benefits that companies find when they outsource the CFO role is that they cut down on needless costs. The professional relationship lasts only as long as the contract dictates, setting time frames that are determined by the company without committing to an extensive strategy. There is no need to educate employees about procedures, just a straightforward project where the terms have been agreed by all parties. In the open market, businesses can shop around for a CFO that suits their budget as well.
Objective Third Party Perspective
Internal politics and conflicts of interest are just part and parcel of an operating business, no matter how we attempt to shape corporate culture. When an organisation opts to outsource the CFO, they have an objective third party who can study the books and judge performance with nothing other than cold calculation. There are no preferences or predetermined opinions about personalities. This fresh perspective is a great asset to bring to the table.
Faster Decision Turnaround Time
Studies that have examined the results of a business who outsource the CFO conclude that the decision times of a company are faster on aggregate. By having a partnership with an entity whose sole focus is to deliver on the financial objectives of an operation, they are able to feed the information to executives with clarity and efficiency. This empowers those businesses to follow through on procedures and policies that have been advised by the chief financial officer.
Not every organisation will be convinced that the choice to outsource the CFO will pay off in the long run. People feel comfortable knowing that their financial data and strategic decisions are being run by a professional in-house to the process. But the results are speaking for themselves, as companies can secure an experienced operator who analyses and operates independently and with a coherent strategy that benefits the brand.