A Comprehensive Guide to Outsourcing CFO Support Services
Outsourcing CFO support services is a smart move for chief financial officers (CFOs) who aim to find qualified accountants while keeping their budgets under control. Here's what you need to know to succeed in this initiative.
Head straight to the information you need by clicking any of the items below.
What is CFO support outsourcing?
CFO support outsourcing is the practice of hiring an external service provider to assist in an organization's finance- and accounting-related functions.
This solution aims to ease the growing accounting duties of the finance chief. Corporate CFOs can also use it to expand the capacity of their in-house accounting team while remaining within their budget constraints.
Since it serves as the CFO's right-hand support or an extension to an organization's accounting department, outsourced CFO support encompasses a wide range of services.
It includes, but is not limited to, the following:
- Financial planning and budgeting
- Cash flow management
- KPI preparation and analysis
- Financial modeling
- Group consolidation
- IFRS reporting and review
- Other ad-hoc requirements (e.g., bank relations)
- Business analysis and reporting
- Organizational benchmarking
- Dashboard set-up and real-time reporting
- Audit assistance and preparation
- Robotic process automation
Note that unlike CFO outsourcing, CFO support outsourcing focuses on assisting finance chiefs and their in-house accounting team.
CFO outsourcing, on the other hand, provides actual CFO services to businesses that cannot afford to hire a full-time finance chief yet.
How does it work?
This setup lets you work with outsourced accountants in completing administrative or technical accounting tasks. It also requires you to identify the functions you can entrust, and which ones should remain in-house.
Take note that the amount of work an outsourced accountant can do for you depends on the agreed-upon terms stated in the outsourcing contract.
If you need to increase the work capacity or headcount of your outsourced team, all you need to do is inform your service provider. By doing so, they can take care of the rest. This includes the internal allocation of tasks, recruitment, payroll, HR, IT and admin requirements.
Benefits of outsourcing CFO support services
As accounting support outsourcing continues to prove its superiority in delivering quality services, many business executives have started using it as a strategic solution to fill in operational gaps like specialist skills, technology, service delivery, and data security.
Below are more reasons why you should consider outsourcing CFO support services.
1. Cost-effective extension to your in-house accounting department
Outsourcing helps you expand your in-house team's capabilities for a lower price.
Offshore locations like the Philippines, for instance, have affordable labor costs compared to its Western counterparts. The country also offers competitive tax incentives to outsourcing companies, making the overall costs even lower.
On top of labor costs and taxes, outsourcing also allows you to cut costs in recruitment, equipment, utility costs and office space, among others.
2. Access to qualified talents
If you're having a difficult time finding qualified talents in your area, offshore outsourcing can be a viable option.
With this option, you can increase your reach in terms of recruitment. This is especially helpful when there's a skill and talent shortage in your location.
Moreover, most service providers offer end-to-end solutions. This means they'll take care of the entire process of recruiting, hiring, training, employee management and talent development on your behalf.
3. More focus on high-impact activities
Being a CFO comes with huge responsibilities. Think of your company's ESG requirements, digital transformation initiatives, new market trends, changing accounting regulations and more.
With a right-hand accountant, you can focus on doing high-impact activities. Your outsourced support, meanwhile, will take care of your time-consuming admin duties.
4. Industry-standard solutions
Established outsourcing companies deliver services to their clients based on recognized industry standards and certifications. They also follow internal procedures for continuous service quality monitoring and talent development.
5. Readily available resources
In most cases, specialized accounting outsourcing companies already provide the resources you need. This includes accounting tools like Xero and QuickBooks and business analytics software such as Power BI.
6. Scalable solutions
When your company is undergoing rapid business growth, outsourcing helps you scale your operations. It provides the necessary assistance to hire new talents and acquire the equipment you need to start operations.
On the contrary, your chosen service provider can also assist you in scaling down. This way, you can lower your operational costs when your company is going through financial difficulties.
7. Business continuity
Reliable accounting outsourcing companies also have business continuity plans (BCP) to guarantee uninterrupted delivery of finance and accounting support to your company.
Among the common BCP measures are setting up flexible working arrangements and appointing a backup contact person in case your main contact is unavailable.
You might also be interested: D&V Philippines' Business Continuity Plan
8. Enterprise-level data security
Specialized accounting outsourcing companies implement strict data security measures. This way, you can rest assured that your sensitive business and financial data are safe from threats.
Working with qualified providers
Finding the right service provider and establishing a good working relationship with them are two main ways to succeed in your outsourcing journey.
To further prepare you for this initiative, consider these pointers:
Before the engagement
a. Tips on choosing a service provider
1. Outsource accounting support to a specialized provider
Not all outsourcing companies are the same. Some providers offer a wide range of back-office services such as customer service, lead generation and data entry. Other providers, meanwhile, only focus on a single area.
To ensure you'll get quality service, we recommend working with a company with a hyper-focus on the field of accounting. Through this, you'll be assured of working with accountants who are properly supported by the management.
2. Dig deeper using client reviews and testimonials
The company website is a rich source of information about a provider's services and unique selling propositions. However, it's often one-sided.
Reading client reviews and testimonials on third-party sites such as online forums, search engines or social media channels can give you clearer insights into the provider's quality of service.
3. Learn more about their company culture
Another way to know if a provider is the right fit is by looking into their company culture. If you share similar values and goals, it could be a sign that they're the right provider for you.
4. Ask about their programs for employees
Service providers with excellent employee development programs are considered green flags. When they care about the welfare of the employees, it only means they know how valuable the latter are in bringing top-notch accounting support to clients.
5. Stay away from companies with rates below the market standard
Good quality service is non-negotiable. As a CFO, what you want is to receive excellent performance from your outsourced accountants. If you opt for companies offering their services below the standard rates, you’re running the risk of receiving sub-par, headache-inducing service. It may even cause higher financial losses than gains in the long run.
b. Signs to watch out for
Meanwhile, try to avoid service providers that display these red flags.
1. High attrition rates
Be wary of companies with high attrition rates as it could mean poor employee development programs and bad corporate culture.
It could even translate to working with different accountants in a short period because the ones before them keep resigning from their posts.
Even if the provider gives you a tempting option, never sacrifice your company’s long-term goals for short-term cost-cutting opportunities.
2. Lack of transparency
Stay away from providers that don’t want to disclose critical information. Make sure to be inquisitive enough about their business so you can build an outsourcing partnership that’s grounded in trust.
3. Bad financial standing
Lastly, avoid providers with bad financial standing since they’re more prone to bankruptcy and stopping their operations.
During the engagement
Best practices in managing your right-hand accountants
To have a long-term meaningful working relationship with your chosen service provider, check out these best practices:
1. Set realistic expectations
Let your outsourced accountants know what you expect of them right from the start of the outsourcing engagement.
2. Understand the limitations of your outsourced CFO support service
Be familiar with the scope and coverage of your outsourced service, including the strengths and weaknesses of your team.
3. Keep your communication lines open
Always maintain open communication to avoid delays and misunderstandings.
Whenever necessary, set aside time to meet with your team, even if it’s only through video conferencing.
Keep in mind that they’re the extension of your in-house department. By staying in touch, you can build a strong rapport with them and resolve underlying concerns immediately.
4. Assess your outsourced team’s performance
Provide feedback on your team’s performance so they’ll be aware if they’re performing based on your expectations or if there are areas they need to improve.
5. Celebrate and reward good performance
As an extension of your team, you can motivate your outsourced team to do better by recognizing those who go above and beyond your expectations.
When should you outsource?
When is the right time to outsource CFO support services? Here are some signs to look out for:
- Your company is growing fast
- Your finance and accounting department needs to scale up in a cost-efficient way
- Sourcing local talents with the right skills and enough experience is difficult
- Administrative activities are taking too much of your time
- The focus of your in-house team shifts from basic bookkeeping and accounting tasks to higher-level accounting duties.
- Your company is NOT going through major restructuring activity.
Conducting a thorough business assessment can also reveal if your company needs to outsource or not, and if you're ready to do so.
Factors affecting the costs of outsourced CFO support services
The cost of outsourced CFO support services depends on several factors. An outsourcing company, for example, prices their services differently from another company. The labor costs are only a single component. In addition to the actual salary of your staff, here are the other factors affecting costs:
- Job title and skill level of the accountant. The role and the skill level of the accountant has a huge impact on the cost of the service you plan to outsource.
- Number of hours and contract length. You should also consider the number of hours (hourly, part-time, full-time) an accountant needs to render for your company. The contract length (short-term, long-term, project-based) also matters.
- Location of the service provider. Deciding where to outsource can also affect the final cost of the outsourced service because the labor market rate per country or region differs.
- Team size. The bigger the team is, the higher the costs will be.
- Service fees and add-ons. If you require add-on services or tools that are not included in the packages offered by your chosen provider, you may also need to pay additional fees.
When asking about prices, you should also examine potential hidden charges. As much as possible, find a provider with transparent pricing so you'll only pay what your company is due.
Make sure to research the average market price of outsourced accounting services in a certain country. Stay away from companies with skyrocketing prices and those with too cheap services.
Remember, the quality of the service you'll receive should always be your priority while ensuring it remains within your budget constraints.
Right-hand accounting support for the growth-driven CFO
If you’re looking for qualified talents who have the necessary skills, experience and industry knowledge, consider D&V Philippines. Our accountants have an extensive background in supporting CFOs and other executive-level professionals. Armed with regular training and powerful accounting software, they can help make your accounting processes more accurate and efficient.
Find out more about our accounting solutions for CFO — schedule a call with our team today.
Not yet ready for a call? Feel free to download our Premium CFO Solutions whitepaper instead to discover if we’re the service provider you’re looking for.