If you’ve been thinking about hiring a full-time CFO to oversee your growing company’s finances and strategic financial direction, but are afraid you can’t afford it, there might be a better option.
You can rent a CFO.
There are a growing number of outsourced CFO services firms that provide companies with access to formerly seated CFOs on a part-time basis. This option allows growing small to mid-size companies to gain the financial and operational expertise to take their company to the next level, without the six-figure salary.
Less Risk, As-Needed Access
By engaging the services of an outsourced CFO — or “CFO for rent” as they’re often referred to — you eliminate the risk of hiring a C-level position before your company has the resources to support it. Your company saves money in salary, benefits and the other overhead associated with a full-time C-level hire, while still gaining access on an as-needed basis to the kind of strategic financial expertise that only a formerly seated CFO can bring to the table.
A CFO for rent will usually work closely with you, the business owner, on financial strategy and analysis. Together, you can plan and implement initiatives designed to reduce costs, boost growth and profits and increase stakeholder return. Specific duties that can be performed by a CFO for rent include:
• Provide oversight of your company’s overall financial and accounting functions, including supervision of your staff accountants and/or controller.
• Evaluate your company’s internal controls and help initiate improved controls to reduce the risk of fraud and embezzlement.
• Offer guidance in the areas of financial risk management and overall strategic planning.
• Be the company’s liaison with lenders, investors and other outside financing sources.
Three Engagement Models
A part-time CFO usually provides outsourced financial services to small and mid-sized businesses according to one of these three models:
1. Part-time or temporary CFO services — This is the traditional CFO for rent role in which a business that doesn’t need or can’t afford a full-time CFO engages an outsourced CFO on a part-time basis. The business has the flexibility to retain the CFO for rent for as much or as little time as it needs and can afford, whether this is a few days a month or a few days every week.
2. A project- or transaction-based engagement — In this arrangement, the CFO for rent is engaged to work on a specific financial project or assignment. The project is short-term in nature — when it is finished, the engagement is complete. Financial audit restatements, purchase accounting, M&A integration, financial modeling and revenue recognition are a few examples of these kinds of temporary project-based engagements.
3. Interim CFO services — Here, the business rents a CFO to fill in on a temporary basis when its CFO leaves until a new CFO can be hired. In this situation, the CFO for rent may be able to help in the recruiting and hiring process by recommending candidates, participating in interviews and weighing in on the final hiring decision.
Ideally, your CFO for rent should have business and operational experience, as well as a strong background in financial strategy and planning, financial operations design and management. It also helps if he or she has a strong network of industry and professional connections — including bankers, attorneys and insurance professionals — that can be tapped to meet specific challenges that arise while working with your company.
A Smart Move
If your company is in that in-between space when it comes to hiring a full-time CFO, but you want to benefit from an experienced CFO’s high-level financial expertise — engaging a CFO for rent could be a smart move. Just be sure to vet potential outsourced CFOs carefully before entering into a formal agreement.
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