‘Fractional’ CFO or Controller Can Provide a Broader Perspective for Your Business
Growth of Remote Work and Outsourcing Fuels Trend
The growing complexity of business requires the analytical skills and vision of a chief financial officer (CFO) or controller in increasingly more companies today. Strategizing around ever-changing tax laws or envisioning how to adapt to complex markets, as well as analyzing and adjusting day-to-day operations to contain costs, are as vital for smaller and middle-market companies as they are for large corporations in today’s business environment.
Typically, companies hiring these positions require or prefer candidates with certified public accounting (CPA) licenses. Yet the number of CPAs in the U.S. has declined 20% over the past 25 years to about 665,000 nationwide, creating a shortage of qualified candidates to fill the increasing demand for high-level finance positions within companies. The accounting industry is influenced by the same demographic trends impacting other industries – most notably the retirement of large numbers of Baby Boomer generation accountants and a pipeline filled with significantly fewer young accountants.
As a result, public accounting firms and industry are competing for the same dwindling pool of qualified recruits.
However, a couple of new factors emerging in today’s marketplace may provide added flexibility for companies looking to hire high-level finance personnel.
The first is the sudden growth of remote – or virtual – work, an outgrowth of the COVID-19 pandemic that appears to be on its way to permanent adoption by many companies. Prior to the pandemic many CEOs probably couldn’t imagine such a vital position as a CFO or controller not being in the office day to day, available for ad hoc meetings and for putting out the occasional fire. But the necessity to work virtually during the pandemic – even for C-level professionals – has opened many eyes to the flexibility and efficiency of remote work.
The second factor is the growing use of outsourced services in a wide variety of functions, including marketing, human resources, and increasingly finance.
Outsourced CFO and Controller
This confluence of trends is leading many business owners to a growing solution – outsourced CFO and controller services.
The fractional services of a CPA filling the role of a part-time CFO or controller offers businesses the flexibility of engaging a finance professional for as much time as needed, without the costs of a fulltime salary and benefits. Moreover, in today’s increasingly virtual work environment, an outsourced CFO or controller can allow the company to save on the traditional fixed costs of office space.
Added benefits of an outsourced CFO or controller include:
- Objectivity and independence. An outsourced professional is more likely to question “the way we’ve always done it” and bring a fresh perspective to help make better business decisions.
- Similarly, an outsourced professional who works for other businesses and nonprofits besides yours brings perspective on what works in those organizations.
- The right experience. An outsourced professional who works with other businesses in your industry can bring depth of knowledge and an understanding of your operations with no ramp-up time.
- If you want your fractional CFO or controller to be present in your office a certain number of hours or days each month, that can be built into the agreement.
Typical Relationship
On a regular basis, the typical relationship with your fractional CFO or controller would involve daily, weekly or biweekly meetings, usually by video call, to discuss how business is going, review the current profit and loss statement, and ensure that the balance sheet is up to date, among other items.
Meetings also would focus on keeping financial statements current, analysis and communication about business or operational issues, ad hoc reporting about special issues, discussions about cash flow management, AR/AP management, and preparation for the financial statement audit or tax filings.
Big picture functions also would be discussed as they come up, including special projects, acquisitions, business combinations, divestiture, business planning, analysis of new product or service lines, and review of pricing structures, to name a few.
As your needs become more complex and you seek high-level finance professionals who can help guide your business through an ever-changing marketplace, an outsourced CFO or controller should be part of the discussion. Contact your Adams Brown advisor to get the conversation started.