By Tracy Miller
Feb 02, 2024
| External CFO | News

With technological advancement, shifting paradigms around how we work, and changing business needs, how we structure our businesses has changed dramatically. We no longer employ every function we need in-house, and the CFO role is no different.

Many businesses are now grappling with whether they should employ a CFO in-house or outsource to a virtual CFO or engage a CFO service.

To consider the difference, let’s first examine the role of the CFO.

What is the role of a CFO?

A chief financial officer (CFO) is a senior executive responsible for managing a company’s financial plans and resources. CFOs play a critical role in developing and executing financial strategies, overseeing financial reporting and compliance, and managing risk.

As a business scales and faces more complex challenges, the need for a CFO will emerge. The question is whether to hire an in-house CFO or outsource to a virtual CFO or CFO service.

There are pros and cons to both approaches, and the best choice for your business will depend on a number of factors, including your size, budget, industry, and growth plans.

Let’s consider the advantages and disadvantages:

Benefits of outsourcing the CFO function

Affordability and value for money: Hiring a virtual CFO or outsourcing CFO services can be much more cost-effective than hiring a full-time CFO, especially for small and medium-sized businesses. You only pay for the services you need, and you don’t have to worry about employee benefits or overhead costs.

Access to expertise: Outsourced CFO services will typically have a team of experienced CFOs and other financial professionals with a wide range of combined expertise. Not only does this mean you can get access to the expertise you need, even if you can’t afford to hire a full-time CFO, it also means you get the knowledge and expertise of a whole team, not just one person.

Flexibility and scalability: The ability to scale CFO services up and down is extremely advantageous. When you outsource not only do you only pay for what you access, you can adjust the level of support you receive as your business needs change. This can be especially helpful for businesses that are experiencing rapid growth or those that need to tightly manage costs.

Advantages of employing a CFO in-house

Access: When a CFO is employed in-house, you will have full access to them at all times as they are only working with your business. With a virtual CFO they will be working across many clients. It’s crucial that if you outsource you set expectations early so that you gain the level of access you need.

Control: When outsourcing CFO services, it’s important to choose a reputable firm with a good track record. If you don’t, you may find they’re the wrong fit or don’t provide sufficient value. With an in-house CFO you may find you can more easily integrate the CFO into your company culture and decision-making process. While you may have a little more control over quality, it’s still important to do your due diligence up front.

Communication: Because a virtual CFO won’t be a full-time member of the team, nor in the same office, It’s important to maintain good communication. When a CFO is in-house, communication is usually more straightforward.

Which option is right for you?

When it comes to the question of whether to outsource CFO services or hire an in-house CFO, there is no one-size-fits-all strategy. The best choice for your business will depend on a number of factors, including your size, budget, industry, and growth plans.

Outsourced CFO services are often a good option for small businesses that are not yet ready to hire a full-time CFO. An in-house CFO is usually unaffordable and there may not be the complexity in the business to warrant the need for a full-time CFO.

Medium and large businesses may have the budget to hire an in-house CFO, however, with many businesses trying to keep costs down outsourcing can be a great option. It’s important to balance the investment to ensure your business is getting ROI.

Both outsourced CFO services and in-house CFOs come with advantages and disadvantages. Ultimately the best choice for your business will come down to your unique circumstances, resources and budget.

Looking to engage a virtual CFO or CFO services? We can help. Keeping Company is an award-winning accounting firm with extensive experience in CFO services. Contact us today to find out more.

At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential. 

We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.

1300 533 787

For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.