Outsourcing a CFO can be a great way for nonprofits to get the financial expertise they need without having to hire a full-time employee. However, it’s important to make sure that the outsourced CFO has the right skills and experience to meet your business’s needs. Here are 10 things to look for in an outsourced CFO.
Risk Assessment Skills
CFOs should be able to identify possible risks in advance and put a plan in place to prevent them. This includes cash flow risks, interest rate risks, timing risks, etc. CFOs should also be able to take the lead when it comes to planning and implementing risk mitigation strategies and avoiding risks that may arise from unplanned events.
With the financial world’s technology age in full force, CFOs must be at the cutting edge of advanced financial technologies. This means keeping up with technology trends, leveraging new technologies to aid in data-capturing processes, such as cloud-based ERP systems, mastering technology implementation, identifying process areas where technology can streamline processes, and developing a seamless implementation strategy for financial softwares.
To be an impactful and effective CFO, you’ve got to step into the roles of not only leadership, but the role of coach, motivator, collaborator, and team player. Effective execution and delivery in the CFO capacity requires emotional intelligence and being able to work with a large range of team members.
CFOs should be able to analyze financial data and use it to make informed business decisions. It is important to remember that financial statements should not only be used for retroactive analysis but they should also be used for planning and strategic decision making. Financial statements should be able to communicate financial information to non-financial stakeholders in an easily digestible manner.
While an effective CFO can explain financial statements, use them for retroactive reflection and future planning a true CFO has the ability to understand the current business climate, economic conditions, and general business environment, This means an effective CFO can intertwine their analysis of the current business environment with your customized financial statements for the most effective strategic decision making, resource planning, and risk mitigation.
Expense Reporting/Management Skills
CFOs should be able to manage expenses effectively and efficiently. This includes developing and implementing expense management policies, monitoring expenses, and identifying areas where costs can be reduced, understanding the reasoning behind expense trends, and being able to forecast future expenses to aid in planning, net income maximization, and waste elimination.
Balance Sheet Management Skills
CFOs should be able to manage the company’s balance sheet effectively. The Balance sheet (or Statement of Financial Position) is a snapshot of your organization’s financial health. Effective CFOs are able to readily identify any issues with the organization’s financial health and come up with ways to minimize those risks. What do the banking failures of 2023 say about Balance Sheet management!?
Revenue Management Skills
CFOs should be able to manage your organization’s revenue effectively. Similar to expense management, CFOs should be able to forecast future revenue performance, identify revenue trends, identify risks related to outsized revenues from any particular funding source, and the timing of revenue recognition does not adversely impact the organization.
Cash Flow Management Skills
Cash flow management is one the CFOs most important roles. Although some organization’s revenue may appear healthy, the cash position may tell a different story. It is imperative for a CFO to manage cash flows to ensure enough liquidity for ongoing operating costs, ensure a healthy reserve fund, ensure the timing of cash flows is properly forecasted, and ensure that the cash requirements of the organization align with the annual budget.
CFOs should have a strong background in accounting, finance, and economics. CFOs should have the experience needed to perform their duties. This includes experience in financial reporting, strategic planning, resource allocation, applying generally accepted accounting principles, and technical areas such as forensic accounting, balance sheet management, leadership and keeping up with new rules and regulations.
In addition to these skills, it’s important to look for an outsourced CFO who has experience working with companies in your industry. They should also have a track record of success and be able to provide references from previous clients.
Work with our Outsourced CFOs at Goldin Group CPAs
When outsourcing a CFO, it’s important for both parties to be clear on the CFO duties needed for your organization’ success. This includes defining the scope of work, setting performance metrics, defining the type of strategic advice needed, and establishing clear communication channels. It’s also important to establish a clear pricing structure and to make sure that the CFO’s fees are aligned with the value they provide to your business.
When looking for an outsourced CFO, it’s important to look for someone who has the right skills and experience to meet your organization’s needs. Goldin Group CPAs CFO team extensive experience in providing CFO services to a large range of clients across several industries. The outsourced nature of our services help drive down costs of hiring, training, and retaining a full-time CFO. Call us today to see how we can help your organization succeed.