An outsourced CFO?

September 27, 2022

An outsourced CFO? But what is it? Who is it? Why do it? From when? Many questions to which I will try to provide some answers.

To make the question easier, there are 2 main roles in an administrative and financial department:

An office manager role
A CFO role

The first exists in all companies, large or small. The second starts to appear at a certain size.

Both roles have to be held anyway. When the company is smaller the CFO does everything. When it grows, he will start to surround himself…

The office manager

Even the smallest structures have administrative tasks:

Customer management (invoicing, payment follow-up)
Supplier management (purchase entry, payment preparation, expense report processing)
Bank management (movement tracking, account reconciliation, document tracking)
Office management (monitoring of materials, archiving of documents)

That’s it: all this work must be done. The chartered accountant if he does the bookkeeping for you, will do the accounting and grumble if there are missing parts (every chartered accountant likes to grumble about parts it’s our life) but he will not manage these elements. So who will? Yes you, the manager.

When you are alone or with one employee and little flow it poses few problems. But let’s say that beyond 4/5 employees and 300kEuros of turnover, you reach a volume where it becomes a part-time job (at least) and especially it becomes very time-consuming if it is not done regularly (every day).

The right person is the accounting (or administrative) secretary: she manages this part, prepares the documents, follows the requests, manages the grumbling accountant, etc. You can do it but is it an optimal management of your time?

The Financial Director

If your company grows, so does the job of your office manager. It becomes a whole position. Then one person on the customers and one on the suppliers etc. The volume to be processed grows and so does your department.

But a second set of problems starts to appear. Problems that are much more technical and that the office manager will not be able to manage. And that’s where the CFO comes in:

Cash flow management: setting up a forecast and monitoring. Management of the balance sheet and WCR
Digitization and optimization of processes: identification of tools and implementation, implementation, monitoring of internal control
Activity and performance management. Key part that will include forecasting, performance monitoring (analytical accounting and reporting), partner management (customer, supplier, accountant and auditor), monitoring of technical problems (closing, taxation)
HR management. As your company grows, so do the social issues (conflicts, representative body, regulations, optimization of personnel costs). It is also necessary to animate and develop the accounting and administrative team (training, coaching, etc.).

It’s harder to quantify and it’s difficult to give a rule but let’s say that when you enter the SME category (more than 10 employees 2M euros) these issues are definitely there. When you go from VSE to SME the need appears gradually (the border is porous).

A full-time CFO is expensive. Let’s say that beyond 5/6 M euros and / or 50 employees you will have a full-time CFO. A shared CFO can be interesting when you are no longer a small business but do not yet have the financial basis to have someone full time.

It is an intervention that will start periodically (often it starts 1 day a week).

Which professional?

There are different profiles. Two main ones can be distinguished.

It may be a former CFO who has decided to switch to this way of working (they often have experience which allows them to take things in hand and have an impact more quickly). The question then arises as to their financial, tax or social knowledge.

A chartered accountant can also manage this kind of problem. He will be more at ease with all the technical tax and social issues, negotiations with banks. However, he may lack the business knowledge of your sector (figures are not everything either). In short, it will be a question of arbitration according to the specificity of your activity.

They can intervene at different times:

When your company is in the start-up phase, to set up an office manager. This will be a one-off assignment. This step is key because it will allow you to absorb the activity and the growth “properly” and to know better when to move on to the next step.
In a growth phase. We are in a real mission of outsourced CFO. Your company has grown and the CFO will help you to monitor and manage your activity, to better analyse your cash flow and your value creation with you. He will manage technical issues and will take care of the technological watch.
In a turbulent phase (it happens): implementation of a restructuring plan, collective proceedings, search for financing. In the latter case, it is often crisis managers who have specific experience in this type of situation.
They can also intervene for an audit of your administrative function (in particular in case of efficiency problems or fraud etc.)