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Secrets of Business Success: insights from an outsourced 21st Century CFO

By Lachlan Grant, CEO of Australian financial management expertise company Vital Addition.

Remember video shops? Or popping a roll of film out of your camera at the chemist for developing (and paying double if you wanted your images back within the hour)? Many of you won’t, and with good reason. Technology advances and markets and consumer behaviour changes – and fast. But just as some businesses can’t (or simply won’t) keep up as their product or services are rendered obsolete by the pace of change, many others will evolve successfully, adapting to the needs of their audiences. How? Because effective methodologies and essential business practices will always stand the test of time. 

The role and nature of the chief financial officer (CFO) has changed a lot, even in the past couple of years. Once, the CFO had three essential tasks: upkeep of a company’s books and records, financial reporting, and statutory or regulatory compliance. CFOs were number crunchers, the final ‘sign off’ on approved purchases and expenditures. Historically, strategy and decision-making were strictly the domain of the rest of the C-Suite. 

While finance skills are still fundamentally important, the CFO’s role has evolved to take on a much broader commercial remit, incorporating many of the other demands that business leadership places on them. More and more, they’re being integrated into – and relied on for – the development of whole-business strategy. In the start-up environment in particular, in which new business models are still being fleshed out, the CFO’s skills and perspective are vital to business success.

So, what’s the solution for any small business lacking the resources or cash flow to warrant the engagement of a full-time C-level advisor? Outsource.

ALSO READ – You don’t have to do everything; the power of outsourcing in small business

Outsourcing into the 21st Century

There are a myriad benefits to a company outsourcing its CFO function. Engaging the right outsourced adviser could make (or break) a company’s bottom line; someone to do the financial heavy lifting without the ongoing expense of maintaining an in-house person or team.

Outsourcing the functions of a CFO allows any business access to financial expertise and financial services without incurring the costs associated with CFOs (and their six-figure salaries).

At Vital Addition, if I may, we firmly believe the 21st Century CFO should be governed by four principles we describe as the ‘four i’s of finance:

  • Information: the provision of accurate, timely, and relevant reporting to management
  • Insights: What are the reports and information telling us about the business? Forecasting, understanding, and communicating industry trends, laws, regulations, and evolving methodologies to drive conversations around key issues and opportunities
  • Ideas: making recommendations and being part of the ongoing development of the business
  • Initiatives: thinking outside the box to assist management in executing ideas more quickly and cost-effectively

These principles, when applied to a company’s financial management, will inevitably inform how well an outsourced CFO will get the job done.

Resistance is futile…or is it?

There is residual resistance from companies in some industries when considering outsourcing any key business roles or functions, including that of CFO. But outsourcing is now commonplace across most industries, especially in fledgling technology companies or start-ups where organisational structures are generally less formal and more fluid. 

The key opposition is the ‘unknown’ element. If someone’s not sitting next to me doing the finances, what is being missed? Is placing the financials in the hands of someone who isn’t on-site too risky? 

Fortunately, it’s not a massive issue to resolve; via a commitment to education of staff and management, and effective leadership. Some industries are more (or less) open to the changing nature of workplaces than others. Potential knowledge gaps, especially if caused by organisational changing (such as the outsourcing of a historically full-time role) will take time to repair, even at a conceptual level. So, becoming better informed about how the new outsourced role will function and the end-benefits to staff and the organisation as a whole, will definitely impact how smoothly any transition of this nature takes place. 

Technology (digital technology, RegTech, and FinTech) has revolutionised the needs and the capabilities of most businesses and industries, including that of the CFO. Cloud accounting has made outsourcing possible. IT and tech are now fully integrated with the accounting function, so it’s now vital that CFO’s have a broad and full understanding of how they can be integrated to improve and benefit their company’s or client’s bottom line.

ALSO READ – Let’s Talk: Automation – To be or not to be for your business?

Strength in mobility – the year that was

The onset of the coronavirus pandemic and the immediate need for companies to establish themselves remotely has demonstrated the power of commercial mobility and agility. Knowing what we do now, that legions of businesses can function with key staff working remotely, it’s easy to see how having outsourcing can be just as effective long-term. At the end of the day, it’s outcomes rather than time in the office that are the most important measure. 

Through embracing the idea of outsourcing a CFO and Finance function, business owners have the potential to focus their energies on the day-to-day running of their business, while employing someone who is more across the specifics the modern role requires. If the function is being handled off-site, C-suite salary costs are reduced, the role is being better serviced, and the business is taking its next bold steps into the marketplaces of the future (video shops not included!)

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Lachlan Grant

Lachlan Grant

Lachlan Grant is the CEO of Vital Addition, a fast-growing Australian company providing fresh, honest, and reliable accounting, financial, and tax advice. He believes in ‘strength in numbers’, empowering SMEs to make business decisions with confidence, and face the challenges associated with growth with informed optimism.

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