When you hear of outsourcing, you might think of India since outsourcing to India has become commonplace. Outsourcing is also alive and well in the United States. A service commonly being outsourced locally is CFO (chief financial officer) services. With the introduction of the Sarbanes-Oxley Act many small public companies have no choice but to outsource CFO services; however, non-public companies are outsourcing CFO services as well.

Why outsource CFO services? For small public and privately held companies with sales of less than about three million dollars per year it sometimes makes economic sense to outsource CFO services. Companies that need seasoned accounting professionals but may not have the financial resources to employ these professionals on a full-time basis are candidates for outsourced CFO and accounting services. Under the outsourcing model, the company only purchases those services that are necessary. Rather than employing accounting personnel for 40 hours per week, the company utilizes the personnel on an as needed basis.

With outsourcing, companies benefit from having seasoned professionals on their team. The downside of course is that the professional services are purchased at a higher hourly rate. The upside is that these professionals are available as needed at a lower overall cost. Outsourcing is not appropriate for every situation, but in certain cases it makes a perfect fit.

A number of firms in the tri-county area provide outsourced CFO services. Many are staffed by experienced CPA’s (Certified Public Accountants) trained by national accounting firms. Many of these individuals have worked in accounting for 20 plus years and are highly competent.

Examples of outsourced services include:

• A company or professional practice might outsource bill paying, check signing, payroll and accounting services. Outsourcing these tasks allows the business owner to avoid hiring at least two full-time employees, frees up or eliminates the need for office space previously dedicated to the accounting department and gives the business professional the peace of mind knowing that the accounting function is being supervised by qualified individuals.
• A real estate property management company may outsource billing and collection services. Many health care professionals and health care organizations make real estate purchases. A separate corporation or partnership is typically established to own and manage the real estate. Such ventures are ideal candidates for outsourcing. The company could outsource billing and rent collection, payment of sales tax, preparation of financial statements and tax return preparation services eliminating the need for the owner to perform these tasks.
• A large organization may need qualified staff to assist with a project lasting several months. In such cases, it might be impractical to hire full-time employees. Outsourcing the entire assignment or a portion of the assignment often makes sense.
• A small public company may require outsourced CFO services. Small public companies commonly utilize outsourced CFO’s to prepare documents to be filed with the Securities and Exchange Commission (SEC) and to help prepare financial statements for audit by external accountants. Post Sarbanes-Oxley, auditors are careful not to become too involved with their clients’ internal accounting. In essence, the public company now must either hire a full-time CFO or outsource the position.
• A business may wish to acquire bank or equity financing. Many business owners outsource the process of obtaining financing. The outsourced services might include contacting appropriate funding sources, preparation of loan underwriting documents and preliminary discussions with lenders.

Outsourced services can bring a higher level of sophistication to the business. Outsourcing gives businesses access to highly qualified financial executives on an as needed basis often at an overall cost less than that of hiring full-time employees. Any business owner facing time or resource constraints should consider the outsourcing solution. Outsourcing is alive, well and expanding in South Florida.