There are some definite advantages to using a Contract CFO (chief financial officer) and this article will seek to discover them for companies wishing to take advantage of the option.
The benefits of a contract CFO will have a ripple effect throughout all the departments of a company and it will be fascinating to discover just what value they add.
The Outside Perspective
It can be useful to have that outside perspective when it comes to deciding just how a company is performing in reality and compared to the competition. Contract CFOs will generally have vast amounts of experience working with a range of businesses and so will have a good understanding of how to fix things that are not working. This will be because they have more than likely come across such problems before.
A CFO not so close to a company can approach a subject with less bias when it comes to making the kinds of decisions that may not prove popular but be essential to the financial survival of a company.
Introduction of Unique Sets of Skills and Experience
Experienced Contract CFOs will often possess a unique skill set. The skills and experience they have picked up will tend to span many different sectors of business. They know how to save on costs and how to achieve greater efficiency through changing processes. It is the kind of expertise that will mean that a company cannot just pay the bills but can grow to new heights using that kind of knowledge.
Contract CFOs will, for instance, know about logistics and supply chain management. This can be applied to a struggling business to change its success. Even businesses doing well can always do better too, so it pays to hire someone with all this knowledge and expertise to assist existing staff in their work, who all have the common aims of seeing a business succeed.
Better decisions will tend to be made when there are higher levels of skills and experience in existence within a company. This will primarily be because Contract CFOS knows how to make decisions that are based on solid data as well as research. They will be skilled in collating all kinds of business and financial data so that they can give the best possible suggestions to a business in how they can change things for the better.
Pay As you Go
From an expenses point of view, Contract CFOs are only hired when they are needed and so can prove more effective when it comes to the wages bill. It is also cheaper to employ freelance workers that do not come with all the other costs associated with employing someone, such as employer contributions to pension schemes and sickness pay.
Companies will save on wage costs by having the option to pay monthly or hourly retainers as opposed to a full-time salary for someone. Our research has revealed that a Contract CFO will cost between $1,200 and $2,500 per day but only need to be hired on an as-needed basis. They might cost more for the time they provide but then there are lots of times a full-time employee in that position would not be working to their full capacity. Conversely, a full-time equivalent of a CFO would cost in the region $225,000 per year. This allows us to see the savings that could be made. Where salaries are lower, this can be proportioned out for a similar comparison.
We can, therefore, as a business, look forward to these advantages if we decide to hire on contract a CFO rather than employ one. The work that they do will be the same but in the long term cost less. This work might include generating monthly or weekly financial reports, preparing financial projections as well as budgets, and working with financial controllers and bookkeepers to ensure that accurate financial records are kept.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin