Pro’s and Con’s of an Outsourced CFO

For a full review of Internal CFO, Outsourced CFO and Tax Accountant doing CFO work refer to our full article and video on this.

PROS:  

#1 Outsourced CFOs Are Most Likely Cheaper

Simply put, outsourced CFOs are unlikely to cost the same or cost higher than internal CFOs. Outsourced CFOs are cheaper, due to the fact your business is not burdened with their cost on a full-time basis.

#2 Outsourced CFOs have broader perspectives to your business

Outsourced CFOs are most likely working with a diverse group of businesses. They can take ideas and experiences from different scenarios and bring these to your business.

Outsourced CFOs may bring ideas that work at a particular business or industry they have been involved in and bring the same winning principles and concepts to your own business. The assumption here, of course, is that they're not working for a competitor and there's no ethical problems to deal with.

By the same token, they can ensure that your business will not have to go through the same pain of failure by avoiding challenges (or trying to avoid!) they have experienced from previous clients and engagements.

#3 Outsourced CFOs Should Be Motivated to Give Their Best Now

Outsourced CFOs should be motivated to give their best because they're a not an employee with a contract. Unlike an employee where there are far more restrictions in place to remove them for failing to perform. They are compelled to provide value and high-quality work because if they fail to do so, you as business owner can quickly end their engagement, unlike in the case of an internal CFO whose contract is more bound by employment laws and processes.

Cons:

#1 You Unlikely to Not Be Their Only Client

Because they serve as an advisor, it is highly likely you are not their only client. The downside is they may not be able to respond to you immediately should you have pressing concerns. An internal CFO may just be one quick phone call away or even just a room away in your office for easy access. You don’t enjoy easy access with an outsourced CFO compared to an internal CFO. You may both have to work around certain schedules as well which works for both parties.

#2 They May Not Be as Familiar with Your Industry Lingo

Outsourced CFOs may face constraints or challenges in knowing your industry and not as familiar with the industry lingo. Although, this is under the cons, financial information though is very consistent. So, it wouldn’t matter if your business deals with haircuts or selling cars, principles and concepts of financial information remain the same.

#3 Feeling Like You Are Always on the Clock

Outsourced CFOs can charge by the hour. That is most likely how the outsourced CFO business model works. Usually, outsourced CFOs stick to being fair to with their clients. There are times when you aren’t talking about work and financial matters and may feel like you are being charged to have a conversation about the weather or the game on the weekend.

#4 Outsourced CFOs Can’t Always Be There

Outsourced CFOs are not always there so they can’t always push your team. Your team can smile at an outsourced CFO, give their agreement on what needs to be done, but consciously or subconsciously they know they won’t be there all the time following them up.  An internal CFO has easy access to your team. They are always there to push your team. An outsourced CFO simply does not enjoy this same benefit an internal CFO has in this circumstance.