Traits of a Successful Outsourced CFO

Traits of a Successful Outsourced CFO

For many entrepreneurs, turning business dreams into a profitable reality requires deeper strategic and financial proficiency than they currently possess. Yet, for many small businesses, hiring a full-time CFO is just not possible. That kind of expertise typically comes with a six-figure salary, benefits and other overhead. 

Meanwhile, accounting firms are using technology to streamline workflows and automate their core compliance services. That shift frees up time and resources to focus on offering strategic advisory services to their clients. This intersection of client need and increased capacity means outsourced CFOs are a win-win for small businesses and accounting firms. Whether the outsourced CFO services are performed over an extended period of time, or just to see the company through a crucial phase, firms that offer these services realize deeper client relationships and increased revenue.

But being a CFO isn’t for everyone. There are certain characteristics that accountants should focus on to successfully shift to this new service offering. Here are key traits of a successful outsourced CFO.

Patience and Understanding

A successful outsourced CFO takes the time to know a company’s leadership and develops a clear grasp of who the client is and what they want to accomplish. Unlike some tax and audit engagements, this is not about getting the job done quickly, but rather about taking the time to hear their concerns and developing a clear picture of where they are now and where they want to go.

A traditional accounting firm may initiate contact only when a deadline is looming and ask about what has changed since last year. An outsourced CFO will have much more frequent contact with clients, ask probing questions and listen to answers to identify strengths, risks and opportunities.

Ability to Communicate

A good outsourced CFO needs to be able to communicate with bankers, investors, attorneys, IT professionals, accountants and tax preparers. A big part of their role involves not just delivering data, but also providing meaningful context for that data to multiple stakeholders. Some of those stakeholders may have financial backgrounds, and others do not.

Honesty and Forthrightness

As an experienced professional, you’ve already laid the foundation of trust with your clients by handling confidential personal and financial data, so honesty and forthrightness should be a given. But, consider this: are you comfortable saying no, or being the bearer of bad news? A good outsourced CFO must be able to speak candidly and tell clients when something the client wants is not practical or a bad business decision.

Other times, the CFO’s role might involve difficult conversations, such as admitting that projections were off or certain initiatives weren’t as profitable as expected. Being able to communicate the bad news, as well as the good, can be a difficult skill to master, but it is essential.

Ability to Build a Good Team

There will be times when the expertise your client needs is beyond your capabilities. In these times, it’s helpful to have a network of professionals who can enhance your services or knowledge base. Your client may need to consult an attorney for legal advice, obtain financing from a lender, bring in outside information technology consultants, or even consult with other accounting and tax professionals with niche expertise. A successful outsourced CFO does not need to have expertise in all areas, but they should develop relationships with others who do possess these skills. This way, they’ll have a network of professionals to call on when client needs arise. In other words, you don’t need to have all of the answers; you just need to know where to find them.

Negotiation Know-How

Many CPAs have experience with the accounting and tax side of mergers and acquisitions (M&A), but an outsourced CFO will need to know how to negotiate M&A terms, bank financing or other contracts. Skillful negotiations require making your needs clear and not being afraid to ask for what you want. Some people find negotiations stressful and will avoid them at all costs. To be a successful CFO, negotiation will need to be a part of your skill set, so don’t overlook it.

For successful outsourced CFOs, having accounting and compliance skills is a given. You should have a deep understanding of balance sheets, profit and loss statements, and cash flows, but being a CFO today is about more than numbers. It’s about connecting business performance to strategy, communicating results to stakeholders, and helping them develop and carry out forward-looking plans. Combining your in-depth financial knowledge with leadership and character will make you a true, value-added business partner for your small business clients.