Childcare Business Financial Strategy: Benefits of Outsourcing Your CFO

Have you considered an outsourced CFO for childcare business operations? In this guide, we’ll walk through the role of a Chief Financial Officer in your childcare company’s structure. Then we’ll dig into the benefits of outsourcing that role rather than hiring a full-time, in-house CFO. Read on to find out more.

The Role of a Chief Financial Officer

Your childcare business needs a qualified expert to oversee its financial processes. According to the U.S. Bureau of Labor Statistics, a CFO sits at the top of the financial leadership chain. In a childcare company, a CFO typically:

• Oversees work performed by bookkeepers, CPAs, and accounting staff and provides leadership for the financial team
• Manages financial processes from forecasting to budgeting to reporting
• Provides strategic recommendations to the CEO to maximize short- and long-term profitability
• Assesses financial well-being — risk management, fraud prevention, systems, cash flow, and inventory control
• Offers expertise during major milestones like mergers and acquisitions

Do You Need a CFO Right Now?

Every childcare business is unique. As a result, you may be wondering whether a CFO is right for yours. For example, ask yourself the following:

• Is your childcare company growing fast? Do you need a high-level expert to steer your finances and avoid the common mistakes that come with rapid growth?
• Are your financial processes complex or unwieldy? Could your team benefit from stronger leadership? Could your budget, cash flow, and inventory use a deep-dive review to cut waste and boost profitability?
• Do many outside parties shape your finances — lenders, stakeholders, customers, or suppliers? Do you operate multiple locations, franchises, or affiliate centers?

If you answered “yes” to any of the above, it may be time to consider a CFO. However, smaller childcare companies often do well with just a bookkeeper and an accountant. To go deeper on those roles, read about the benefits of outsourcing your accountant.

Why Hire an Outsourced CFO for Childcare Business Growth?

An outsourced or fractional CFO is a financial professional you hire on a contract basis. In other words, you don’t bring a full-time employee onto your payroll. Investopedia describes the fractional model as a way for small and mid-sized companies to access executive-level expertise without enterprise-level cost.

So why might you outsource the CFO role at your childcare business? Here are five clear benefits.

1. Outsourcing the CFO role saves money

A traditional CFO is a major investment. Average CFO salaries run well into the multiple six figures — before benefits and bonuses. For most childcare owners, that’s not realistic.

An outsourced CFO works on an as-needed basis. For example, if you only need CFO duties two or three days a week, you only pay for that time. Most fractional CFOs charge an hourly or monthly rate with no benefits attached.

2. Outsourcing the CFO role saves time

An outsourced CFO is a seasoned expert. As a result, they can dive straight into your finances to assess, strategize, and move you forward. Meanwhile, your bookkeepers and accountants keep handling the day-to-day work. The result? Less time getting from where you are now to where you want to be.

3. An outsourced CFO offers objective, unbiased strategy

An outside CFO brings insight that isn’t shaped by internal politics. They simply call your numbers as they see them. This is especially valuable for risk management, fraud detection, and systems audits. Deloitte CFO Insights consistently flags objectivity as a top reason finance teams bring in outside expertise.

4. An outsourced CFO scales with your needs

You can lean on a fractional CFO more heavily during certain seasons of growth. For example, you may need their guidance during a merger or acquisition. Once the deal closes, you can dial back the engagement without ending the relationship.

In other words, you keep the function without paying full-time wages for services you don’t always need.

5. Outsourcing gives you top-tier expertise on a budget

Let’s face it — hiring a full-time CFO isn’t realistic for many childcare companies. However, an outsourced CFO is a true win-win. For example, you can test the waters on an as-needed basis before you commit long term. As a bonus, you’ll likely build out a stronger financial dashboard and clearer KPI tracking in the process.

For more on the broader fractional model, the AICPA publishes ongoing guidance on outsourced finance and advisory services for small and growing businesses.

Find the Right Financial Partner for Your Childcare Business

Finally, finding the right financial experts to assess, manage, and strategize your childcare business finances is no small task. We hope this guide gives you a clearer picture of when an outsourced CFO makes sense.

At Honest Buck Accounting, we partner with dedicated childcare business owners who want to grow their company and take their finances to the next level. Schedule a discovery call to learn how we can help with your childcare business accounting needs.