CFO Firm Benefits vs. Independent CFO

If you have decided to outsource strategic financial help for your company, you still have an important question left to answer. Will you contract a CFO Firm or an independent CFO?

Both the consulting firm and individual consultants have their advantages. When it comes to something as business-critical as financial health and strategy, making the right choice is of the utmost importance. Lucrum has taken the firm approach so we’re disclosing that bias up front. We’ve put together six key considerations when hiring an outsourced CFO, or any finance position.

1. Breadth of expertise across resources.

   Partnering with a CFO Firm gives companies access to more than one expert on the team, meaning they aren’t just hiring a single person’s knowledge. Rather, hiring a broadly experienced team of CFO’s, controllers, and bookkeepers who work together allowing information to be shared among all the team members. It would be impossible for small businesses to afford this broad insight individually. When the unexpected happens (and it will), having a readily available team of experts from multiple disciplines can be the difference between a speed-bump and a catastrophe.

2. Scalability.

   Companies often need a fair amount of bookkeeping help and strategic insight on key decisions. As the company grows, the need for strategic input grows as well. A well-staffed CFO Firm will cover all the finance bases, giving business leaders access to an entire suite of skills and knowledge, custom fit to their growing company. At Lucrum we have had clients who started with Bookkeeping services only, added CFO, then cut out the Bookkeeping when they hired a FT person for that role, and then finally brought on a Controller/CFO level person. In this situation the client was able to leverage our services and we helped them scale with an affordable solution while keeping the risk of making a bad hire during those formative years to a minimum.

3. Cost / Reliability.

   It’s no surprise that a firm has overhead an individual does not. However, it’s worth considering what that higher investment gets the business. At Lucrum, we make sure every client has at least two points of contact within the firm. So if Jason is out of the office on vacation, Kurt or Jeff might pick up the slack. If one of our Accounting Specialists is ill, Stephanie is able to respond to emails or phone calls. Everyone gets sick or needs some time off; a business choosing the individual CFO option might be faced with not being able to contact their CFO for a period of time if he/she is sick or at the beach.

   It would be impossible for small businesses to afford this broad insight individually

4. Industry Knowledge.

   Some individual CFO providers are generalists while others specialize in one industry. Lucrum has a great relationship with a sole practitioner CFO provider who specializes in land development and homebuilding. He’s focused his business and has been successful exploiting that niche. We have similar experience but we also have experience in other industries like service businesses, manufacturing, breweries, and contractors. So when Kurt’s service business had some technical questions about potentially buying the real estate under their existing locations, he asked Jeff for advice. Being able to leverage different experience and expertise within the existing relationship is an important aspect to consider when choosing an individual or a firm for Fractional CFO services.

5. One invoice, one vendor.

   Small business leaders are understandably hesitant to share financial data with strangers. The vulnerable feeling of opening your books is not an enjoyable experience. Vetting and hiring a CFO Firm gives leaders a single source option, and the simplicity of a known cost for the entire finance department. In most cases, that cost is less than a single fully burdened employee.

6. Business continuity.

   Assuming the part-time or freelance CFO hired was a good fit, what happens when they change careers? We’ve experienced turnover here and we do our best to minimize it. It’s disruptive internally but having a firm allows us to mitigate the disruption to the client. If a business opts for the individual model they are faced with a total do-over. Few areas of a business are as vulnerable to continuity hiccups as finance and bookkeeping. Mitigating that risk is always a wise decision.

Few areas of a business are as vulnerable to continuity hiccups as finance and bookkeeping

At Lucrum, we have a unique team of CFO’s, controllers, and bookkeepers who are ready to help you grow your business confidently. Don’t hesitate to reach out for a free consultation. Making the wrong hire is a mistake that can haunt you for years to come.