External CFO: When and Why CFO Outsourcing Makes Sense?
Are you growing your business and need support in managing your company’s finances? Do you want to make decisions based on solid data instead of hunches and emotions? An external CFO on a subscription model may be the perfect solution, offering both cost-effectiveness and high efficiency.
What is the External Financial Director service in practice? It involves a comprehensive analysis of the company’s situation, insightful interpretation of data, and delivery of detailed reports with recommendations from an experienced specialist. The goal of this cooperation is to manage the company’s assets effectively, enabling managers to make informed and accurate decisions with the support of seasoned experts.
In what form is the External CFO employed?
At Cafe Finance, the External CFO service is offered as a subscription, providing ongoing support rather than a one-time engagement.
The cooperation begins with the Cafe Finance Group Team analyzing your company’s situation. Based on this analysis, we create a financial plan and provide recommendations for future actions. Together, we define the responsibilities of the External CFO and their team, which may include analysts, controllers, and accountants.
The subscription price covers the agreed-upon tasks and includes several hours for current, unforeseen tasks. The use of these additional hours depends on your company’s specific needs, allowing for flexible support.
This employment system allows the External CFO to perform their tasks effectively based on established plans, while you can flexibly utilize the hours within the subscription.
What Types of Companies Would Benefit Most from the Services of an External CFO?
Outsourcing a CFO, or External Financial Officer (OFO), is an ideal solution for companies that do not need a full-time CFO or lack the budget to hire a whole team of specialists. For these reasons, family businesses, market entrants, sports clubs, and small businesses with high turnover but few employees often turn to us.
These companies face many challenges. They may have significant turnover but often suffer from unorganized finances.
- They do not know the exact margins on their products or services.
- They do not know which clients are profitable and which are simply unprofitable.
- They have liquidity problems and do not know how much their company really earns.
- They want to find out which projects and products require better management and what steps to take to develop the company further.
As part of the subscription package, they can rely on preparation and monitoring of the budget and cash flow, full control and monitoring of revenues and costs for individual products or services, support for sales departments in calculating sales margins and maximizing profits, collaboration with owners and management boards on business profitability.
The Financial Director of Cafe Finance, along with specialists in financial analysis and accounting, ensures the company’s financial aspects are well-managed. The entire team of experts is available for a predefined number of hours per month.
Even with the lowest hourly package, companies can see improved profitability thanks to specific data. This model increases the sense of security for both business owners and employees.
Why Hire an External CFO?
Cooperating with an external CFO offers numerous benefits, including high competence, objective assessments, and extensive experience. However, three key advantages stand out: time savings, cost savings by avoiding the expense of a full-time CFO and a large internal finance team, expertise of consultants and specialists.
Saving Time
After thoroughly understanding your company’s problems and goals and conducting an in-depth financial analysis, the Cafe Finance team creates a tailored financial plan. We begin implementing this plan almost immediately. Our External Financial Director is familiar with companies similar to yours or even your specific industry, so there’s no time wasted on learning new sectors.
In the initial months, we develop a matrix of financial and operational indicators. We then set clear goals and start executing the plan while continuously monitoring both internal and external factors. If necessary, we adjust the plan in real-time to account for any variables that might affect its original framework.
Our subscription package covers completed tasks and hours, accelerating the achievement of results. We often reach goals within 6 months—goals that clients may have been pursuing for years—thanks to the experience of our experts, our internally developed procedures, and the collaborative efforts of the entire Cafe Finance team. By trusting our advice and following our recommendations, companies can establish an ideal cooperation model in just a few months.
Cost optimization
The average monthly salary of a good financial director in Poland is approximately PLN 21,500 gross (data from wynagrodzenia.pl). A good full-time chief accountant earns an average of PLN 13,000 gross. A financial controller (excluding employer costs) receives a salary of around PLN 9,780 gross. An analyst’s salary ranges around PLN 8,420, and an accountant’s PLN 6,280 gross. An assistant accountant’s salary is around PLN 5,320 gross.
In total, maintaining a full financial team costs approximately PLN 55,880 gross per month. When including employer costs, the total expense can rise to around PLN 76,000. This amount does not account for additional expenses such as bonuses, company benefits, and training, all of which can further increase the cost. Additionally, these expenses remain constant regardless of the actual workload in a given month.
In contrast, opting for the External Financial Director services from Cafe Finance Group allows you to establish a fixed scope of monthly activities. You can choose a subscription package starting from PLN 6,765 gross, which provides flexibility and access to specialized support as needed.
While this package may cover fewer hours than a full-time team, it is worth considering whether your company has sufficient tasks to justify the expense of maintaining a full team of financial specialists on a full-time basis.
Expertise and Experience
The External Financial Director and their team are seasoned experts who are well-acquainted with the challenges your company faces. We have a deep understanding of the specific needs within various industries. Our experience includes analyzing numerous cases, conducting hundreds of audits, and providing ongoing training in asset management.
Years of experience and developed competencies have enabled us to establish procedures and standards that consistently deliver successful outcomes for our clients. Achieving such effectiveness with an internal team—composed of new hires with varied backgrounds who are still familiarizing themselves with your company—can be challenging.
Scope of Duties of the External CFO in the OFO Service from Cafe Finance
The responsibilities of an External CFO may include controlling, managing receivables and cash, and optimizing your company’s finances. What does this mean for your company’s operations?
Controlling
This area encompasses cash flow management, calculating sales margins, forecasting the break-even point, budgeting, evaluating the ROI of marketing projects, and monitoring financial indicators.
Accounts Receivable and Cash Management
It involves more than just overseeing payment execution. It includes regular analyses of liquidity and credit risk, ensuring optimal cash levels, monitoring receivables and controlling their inflow, and maximizing profits from financial surpluses.
Finance optimization
The external CFO assumes complete control over the company’s costs, meticulously monitoring how they impact profitability. Through detailed analyses, the CFO identifies opportunities for cost optimization and develops strategies to implement these improvements within the company.
When Are the Services of an Outsourced CFO Not the Best Choice?
The decision between hiring a permanent CFO or outsourcing the CFO role depends on the specific needs and capabilities of the company. Larger organizations might opt for a full-time CFO due to the scale of operations and the need for continuous, in-house financial management. Such a director is always available to management, gaining an in-depth understanding of all aspects of the company’s operations. They actively participate in strategic discussions and make direct financial decisions.
By hiring a CFO and their team, a large company can directly oversee the department’s activities and receive immediate feedback. This setup allows for rapid responses to changing market conditions and facilitates real-time decision-making. For larger organizations, where the scale of operations demands constant oversight and supervision, this approach can be more effective and convenient.
How to Choose the Right CFO for Your Company
The decision to hire a CFO should be based on your company’s specific needs. Start by defining the type of support required by you and your management team. Consider whether you value the flexibility and expertise of an external CFO team or if you prefer a full-time CFO who will be constantly available at your company’s headquarters.
At Cafe Finance, we prioritize open communication about the services we provide. Our goal is to ensure that both parties are fully satisfied with the terms and outcomes of our cooperation.
Don’t hesitate and schedule a free consultation.
Discover if our OFO service is the right fit for your business. Rafał Jankowski, the founder of Cafe Finance, is eager to assist and offers free online consultations. Sign up here.
