Running a commercial contracting company is no easy feat. You’re great at winning bids and getting projects completed on time and on budget. But how confident are you in your company’s financial health? This is where outsourced CFO services can be a game changer.
Many business owners in the commercial contracting world excel at what they do, but may lack the time or financial expertise to manage accounting, cash flow projections, and financial strategy. In fact, research indicates that a surprising number of businesses struggle with financial challenges. Many find that hiring an outsourced CFO team is one of the best decisions they make for their business.
Table Of Contents:
- How Outsourced CFO Services Work
- What Services Does an Outsourced CFO Provide for Commercial Contractors?
- Addressing Common Concerns About Outsourced CFO Services
- Outsourced CFO Services: An Investment, Not an Expense
- FAQs about outsourced CFO services
- Conclusion
The True Cost of Financial Mismanagement
Construction business owners often find themselves wearing multiple hats, and financial planning often takes a backseat. This can have disastrous consequences. A study found that a staggering 82% of small businesses fail due to cash flow mismanagement.
Let that sink in for a moment. The majority of small businesses that fail cite inadequate cash flow management as a primary factor. Imagine having an experienced financial professional on your team who could help you avoid those pitfalls. That’s where outsourced CFO services come in.
How Outsourced CFO Services Work
An outsourced CFO is a financial professional who provides guidance and support to businesses on a contractual basis. Think of it as having a highly skilled CFO on call, ready to tackle your specific financial needs without the overhead of a full-time employee.
Here’s the best part: With the rise of remote work and cloud-based technologies, accessing these services has never been easier or more affordable.
What Services Does an Outsourced CFO Provide for Commercial Contractors?
An outsourced CFO is more than just an accountant or controller: they can tailor their services to your company’s specific needs, offering assistance with tasks such as:
Cash Flow Management
A dedicated accounting expert can significantly contribute to your financial success by helping with cash flow management. They will prepare accurate and timely cash flow statements, forecasting future cash flows and developing cash flow strategies. This is crucial to maintaining a healthy financial status in the dynamic construction industry. With the insights of an outsourced CFO, you can gain a clear perspective on your company’s financial liquidity and proactively plan for potential cash flow gaps.
Financial Reporting and Analysis
Ever feel like you’re drowning in a sea of spreadsheets, unsure of what numbers actually matter? You need comprehensive and easily understandable financial reporting to know where your company stands. This empowers you to make informed decisions based on concrete financial insights.
An outsourced CFO analyzes your financial data, prepares key financial statements (2013 U.S. GAAP Financial Reporting Taxonomy, 2014 US GAAP Financial Reporting Taxonomy), and presents them in a way that is easy to understand. This will help you to easily spot trends, strengths, weaknesses, and areas for improvement.
Job Costing and Profitability Analysis
Commercial contracting is a project-based business. Knowing whether your bids are profitable is critical. An outsourced CFO will guide you on where costs can be optimized, and how to price your bids competitively.
An outsourced CFO can help you implement robust job costing systems to track project expenses, labor costs, and overall profitability. By having accurate job cost data, you can make informed adjustments to your bidding and project management processes.
Financial Planning and Budgeting
Do you know if your business is on track to achieve its long-term objectives? An experienced financial partner can guide you in creating practical and comprehensive budgeting and financial planning solutions tailored to your circumstances.
An outsourced CFO collaborates with you to develop realistic budgets, financial forecasts, and growth plans aligned with your business goals. This includes forecasting revenue, expenses, and cash flow to guide your company toward a financially secure future. They can also advise you on strategic tax planning.
Addressing Common Concerns About Outsourced CFO Services
Many contractors have questions about cost and effectiveness when considering outsourced CFO services. Let’s address some of those concerns:
Cost
Hiring a full-time CFO can be costly. The average CFO salary in the United States can easily exceed $300,000 annually. This figure doesn’t include benefits, bonuses, and other associated costs, such as providing office space and equipment. You’ll find that opting for outsourced CFO services can be a more cost-effective way to access high-level financial expertise without the burden of a full-time salary.
Expertise
When you engage with an outsourced CFO firm, you often gain access to a team of experienced professionals with diverse skill sets, not just one individual. These firms typically specialize in working with businesses in your industry, meaning they already understand your unique financial challenges. It is highly likely that an outsourced CFO firm will already have a deep understanding of your market and can provide tailored solutions to help your company grow.
Control
Some business owners worry about losing control when they outsource. You retain complete control over your company’s finances with outsourced CFO services. The outsourced CFO acts as a trusted advisor and partner, providing insights, recommendations, and support to enhance your decision-making processes, not dictate them.
Outsourced CFO Services: An Investment, Not an Expense
Think of it this way: by allocating funds to an outsourced CFO, you’re making a strategic investment that will pay you back over the long run. Having a team of outsourced financial consultants in your corner is invaluable.
FAQs about outsourced CFO services
What is the primary role of an outsourced CFO?
An outsourced CFO’s primary role is to provide financial guidance and support to businesses that may not need or can’t afford a full-time CFO. They handle various financial tasks, including financial planning, budgeting, cash flow management, and strategic decision-making. An outsourced CFO can provide a wide array of controller services, giving you back time to focus on running your business.
What types of businesses can benefit from an outsourced CFO?
Various businesses can benefit from outsourced CFO services, from startups and small- to medium-sized enterprises (SMEs) to larger companies looking for specialized financial expertise on a project basis. If you find yourself frequently thinking about hiring a full-time CFO but hesitate due to the costs, or not needing one year-round, then an outsourced CFO might be an ideal option.
How much do outsourced CFO services cost?
The cost of outsourced CFO services varies depending on the provider’s experience, the scope of services required, and the complexity of the engagement. You can choose between a fixed monthly retainer, hourly rates, or project-based fees. When considering the cost of outsourced CFO services, it’s helpful to think about it like this: you are gaining an entire financial team versus hiring a single full-time CFO.
Is it worth getting an outsourced CFO?
If you’re considering how outsourced CFO services would fit into your existing team, consider what you might do with more free time if you delegated these financial tasks. Strategic financial planning is essential. The expertise and strategic guidance of an outsourced CFO can help you make better financial decisions, optimize cash flow, and focus on your core business operations, ultimately leading to increased efficiency, growth, and, of course, profitability.
Conclusion
Outsourced CFO services provide commercial contracting businesses access to the financial expertise they need without the expense or commitment of hiring a full-time CFO. By leveraging their experience, you can focus on what you do best—managing projects—while ensuring your finances are in capable hands.
Interested in learning more about outsourced CFO services? Contact us today to learn how DAAXIT can help you build a growing and thriving business.
