Why hire a contract CFO?

It is common for entrepreneurs or start-ups to find themselves unable  to make progress in their business plans due to their financial  situation. The internal accounting processes not being optimal, or the  financial data collected and analysed being irrelevant may be some  issues you are facing in your business operation. You want to address  them, but you cannot neither afford all your time and energy to the  issues, nor the money to hire a full-time executive to do so. What  option do you have?

Chief Financial Officer (CFO) — An asset instead of a liability

First, let us explore how a CFO can actually be an asset to your  business. Typically, a CFO is responsible for activities which involve  financial controlling & management at a firm, namely:

  • Budgeting and forecasting
  • Cash flow management
  • Corporate planning
  • Fundraising
  • Operational support (Financial reporting, audit preparation)
  • Transaction support (M&A, IPO, due diligence)

On a more relevant and specific level, the CFO will be able to help  optimise your accounting processes, and ensure complete visibility of  your accounts and ledgers. Moreover, you can receive much-needed  insights into your business from proper cost allocations, tracking of  revenue sources and expenses, and more importantly, improve  profitability. With the CFO’s accounting knowledge and experience, you  can eliminate problems that stem from inefficient processes and data  which provide little to no value. Consequently, you can then channel  more time into growing your business, while the CFO takes care of your  financials for you.

Of course, the question of whether you can afford the services of a  full-time CFO will naturally arise. You are looking at S$15,000 to  upwards of S$40,000 a month for the services of a full-time CFO, a  substantial sum that cash-strapped companies simply cannot afford, and  comes at too high an opportunity cost for developing businesses.  Furthermore, the value you get out of this may not justify the costs you  have to incur; the cost of having a CFO around will become a liability  to you instead. Fortunately, you are not out of options, as this is  where a contract CFO can step in to help.

Full CFO services at a fraction of the cost

With a contract CFO, you are effectively paying for full CFO services  at a fraction of the cost that you would otherwise normally incur. How  so, you may ask. A contract CFO is similar to a full-time CFO in terms  of his/her responsibilities, and possesses the necessary expertise to  carry them out. The main difference, however, is the flexibility and  potential cost savings you will have if you were to hire a contract CFO.  You can engage the services of a contract CFO as and when you require  the relevant expertise, and terminate them when it is unnecessary. You  will thus only incur costs for the period of time the CFO is hired for,  and the type of work that is carried out. Consequently, you will reap  cost savings since you will not have to pay the high fixed costs that  come with a full-time CFO for the same amount of work done.

Reducing opportunity costs to open doors

The cost savings you reap from hiring a contract CFO to resolve your  problems opens doors for you to grow your business. Since you avoid  having pay the exorbitant price of a full-time CFO, you are essentially  making additional financial resources available for other purposes.  These include investing back into the business itself to grow it  further, or for an additional headcount that is necessary for your  operations in another department. This may then result in more  investment returns generated for your company, on top of the returns you  are likely to receive from engaging CFO services. Hence, not only do  you reduce the opportunity cost associated with engaging CFO services,  you are also generating new opportunities to develop your business  further.

Access to a wider range of skills

Hiring a contract CFO service is akin to hiring a company to help  your business. Since a contract CFO service provider usually includes a  team of CFOs and operational support staff, you are not just hiring an  individual, but a dedicated team of experts to help your business.  This  means that you may actually be tapping on all the talents available in  the company, and extracting more value out of every dollar you have  paid. If you were to contrast this with hiring an individual full-time  CFO, not only are you limited to the knowledge and skills that  particular individual has, you may even receive less value per dollar  paid. As such, a contract CFO service may actually be better.

A contract for who?

Contract CFO services come at a substantially lower cost than the  conventional full-time CFO role, and with higher value through more  possible investment opportunities and wider range of skill sets.  However, you still have to take some considerations into account before  making your decision, mainly:

  • Do you require a full-time commitment or dedication from your CFO to your business?
  • Do you require a CFO to help you grow your business for the long-term or execute a long term strategy?

Depending on your answers to the above, a contract CFO service may or may not be what you need.

A contact for you…

If you answer “no” to the questions above, and are in need of CFO  services to improve your business operations or explore near future  business growth opportunities, have a look at our contract CFO services  that we offer.

Alternatively, if you require CFO services that will help you in  developing and executing long term strategies, here are some services  that we offer which can assist you in achieving your goals.

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