What Are CFO Firms? What Do They Specialize In?

Likely, if you’ve come across the term CFO firm, you’re a small business owner or entrepreneur looking for a trusted financial expert. In this blog post, we will help you determine what a CFO firm does, and if this type of accounting firm might be the right fit for your business.

What Is a CFO Firm? — The Basics

A CFO firm is a type of accounting firm that specializes in outsourced CFO services (also referred to as virtual CFO, fractional CFO, or part-time CFO services). Learn a bit more about these specialized services below.

Essentially, you can expect a CFO firm to offer the same kinds of financial strategies and services that a Chief Financial Officer would. They will take care of the “basic” bookkeeping tasks that you’d expect:

• accurate financial record keeping

• cash flow management

• payroll processing

• bill pay (accounts payable and receivable)

• financial statements and financial reporting (balance sheets, budgets, etc.)

• payroll processing

• business tax returns and planning

• month-end close

• revenue recognition

However, the bread and butter of what a CFO firm does comes down to advisory services. An outsourced CFO focuses on how to help their clients reach business goals. As you can imagine, the goal of many business owners is to scale their business.

To help you achieve this goal, an outsourced CFO will use financial and non-financial drivers to create a dynamic forecast. This forecast is then used for financial modeling. Modeling allows clients to see what will happen if the best, and the worst, case scenarios were to happen. Business owners can use this information to plan ahead to mitigate any financial pitfalls that could come their way, reducing these pitfalls from boulder-size to perhaps just an annoying pebble in their path.

Financial modeling can also be used to determine what changes need to be made to achieve future goals. For example, to meet certain revenue goals, a CFO might tell their agency clients that more staff will be needed to complete projects. Or maybe another coffee house location will be necessary for a cafe owner if the current market is tapped out.

What other advisory services does a fractional CFO offer?

• cash flow forecasting

• industry KPI comparisons

• bank relationship management

• customized department reports

• department performance evaluations

• performance by project

• incentive plans

• financial analysis and financial planning

  One of the major advantages of working with a full-service firm is that they provide other, related advisory and accounting services that your business may need in the future: valuations, in the case of a sale; in-depth tax planning; retirement and wealth planning; and 401k audit. When adding these additional services, they integrate seamlessly into your financial planning.

How Do I Know Whether I Need a Full-Time CFO, Bookkeeper or a CFO Firm?

The answer to this question is much simpler than you might think. Here’s the guideposts we always give potential clients to help them make the decision on what type of financial expert to hire:

First, pay attention to your annual revenue. If your annual revenue is under $2 million, you would benefit most from a bookkeeper. If your business is over $2 million, but you don’t have the funds to hire an in-house Chief Financial Officer, you’re going to see the most benefits from a CFO firm. Virtual CFOs are often a fraction of the cost but still provide your business with the financial expertise your business needs to grow and scale.

To find out more about how a virtual CFO can benefit your small business, book a free consultation with one of our virtual CFOs.