Childcare Business Financial Strategy: Benefits of Outsourcing Your CFO

June 30, 2021

Have you considered outsourcing the role of CFO for your childcare business? In this article, we examine the role of a Chief Financial Officer (CFO) in your childcare company’s organizational structure and explore the benefits of outsourcing your CFO, as opposed to hiring a full-time, traditional CFO position for your organization. Read on to find out more.

The Role of a Chief Financial Officer

Your childcare business needs a qualified expert to oversee the financial processes of your company. A CFO provides the following essential functions to your business:

  • Oversees financial functions performed by bookkeepers, CPAs, and accounting professionals, providing leadership and guidance for the company’s financial team
  • Manages financial processes from forecasting to budgeting to financial reporting
  • Provides strategic recommendations to the company CEO or executive leader in order to maximize profitability with both short-term and long-term plans
  • Assesses financial well-being of the company, including risk management, fraud prevention, systems management, and cash flow and inventory control
  • Offers expertise and oversight for major company financial milestones, like mergers and acquisitions

Since the needs of every childcare business are unique, you may be wondering whether enlisting the expertise of a CFO is right for your business. Here are a few questions you can ask yourself to assess whether it may be time to hire a CFO:

  • Is your childcare company experiencing rapid growth? Do you need the professional oversight of a high-level financial expert to steer your company’s financial processes and avoid the common mistakes that companies sometimes make when rapid growth is poorly managed?
  • Are the financial processes at your company complex and unwieldly? Could your financial team benefit from strong leadership? Could your current financial systems, budget, cashflow, and inventory use a deep-dive assessment to cut waste and maximize profitability?
  • Are there a lot of people groups outside of your company that have a financial impact on your childcare business? Think lenders, stakeholders, customers, suppliers, etc. Do you operate multiple locations, franchises, or affiliate childcare facilities that contribute to a complex financial situation?

In general, if you can answer “Yes” to any of the above questions, you may want to consider the possibility of adding a CFO to your childcare business. While some smaller childcare companies may find a bookkeeper or an accountant will serve the financial needs of their business well, others need the high-level financial leadership of a CFO.

Why Outsource Your Childcare Business CFO?

An outsourced, or fractional CFO, is a financial professional you hire on a contractional basis, as opposed to bringing onboard a traditional, full-time employee of your company. Why might you consider outsourcing the role of CFO for your childcare business? Here are several benefits of outsourcing your CFO:

  • Outsourcing the role of CFO saves you money. For a high-level position like a CFO, you are looking at a major investment if you go the traditional route of hiring a full-time employee. Average CFO salaries run in the multiple six-figures, and that’s before you add benefits and bonuses. A traditional, full-time CFO may be a great asset to your leadership team, but the position itself could be tying up too much company money. Outsourcing the role of CFO means you can work with a CFO consultant on an as-needed basis, so if your childcare company needs the duties performed by the CFO only two or three days per business week, you are only paying for what you need, usually an hourly rate with the exclusion of traditional employee benefits.
  • Outsourcing the role of CFO saves you time. An outsourced CFO is a financial expert with the know-how to get right into the thick of your business’s financial processes to assess, strategize, and move your company forward without wasting time getting bogged down in the tasks that your company’s financial team, including bookkeepers and accountants, can handle. This means less time for your company to get from where you are financially right now to where you want to be.
  • An outsourced CFO provides objective, unbiased financial management and strategy. Working with an outsourced CFO can provide your childcare company with invaluable insight that isn’t necessarily influenced by internal interests as it might be with a more traditional employee role. A financial consultant role is going to benefit you by helping you uncover what you need to know about your business’s financial status without compromise. This factor is especially helpful for duties like risk management, fraud detection, and financial system analyses, which can be inherently subject to errant behavior or practices from an internal perspective. An outsourced CFO is there to benefit your company with their professional, unbiased assessment.
  • An outsourced CFO is there when you need them, for as long as you need them. Contracting the role of CFO benefits your childcare company because you can rely more heavily on your outsourced CFO during different seasons of your business’s growth. For example, maybe you need the professional expertise of an outsourced CFO to guide you through a merger or acquisition. Once the transition is complete, you may decide to dial back the role of your outsourced CFO without breaking off the relationship. This way, you retain control of the functions that your outsourced CFO is filling for your childcare organization without continuing to pay a full-time employee for services you don’t need for the long haul. Your outsourced CFO isn’t going anywhere if you don’t want them to yet isn’t a drain on your company’s financial resources either.
  • Outsourcing the role of CFO gives you access to the highest level of financial management and strategy you can afford. Let’s face it, hiring a full-time CFO is simply not a viable option for all childcare companies. Outsourcing the role of CFO to a contractor or consultant can be a win-win situation for companies looking to maximize their access to financial expertise on a budget. This may be a great place to start if you need an experienced CFO to help move your company finances forward. You can test the waters on an as-needed basis before you invest in a long-term relationship.

Finding the right financial experts to assess, manage, and strategize your childcare business finances is not an easy task. We hope this article provides insight into the benefits of outsourcing the role of CFO for your childcare company. Here at Honest Buck Accounting, we are committed to partnering with dedicated childcare business owners who want to grow their childcare company and take their childcare business finances to the need level. Schedule a discovery call to learn how we can help you with your childcare business accounting needs.

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