Article:

The key things you need in a Virtual Outsourced CFO

28 May 2020

Andres Reith , National Leader, Real Estate & Construction
Partner, Business Services
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Why more Australian businesses are considering a local virtual outsourced CFO

Since the outbreak of COVID-19, there has been considerable discussion and media coverage of its impacts on businesses globally, with a strong focus on the now apparent vulnerabilities and risks of global supply chains. However, one area that has received less attention is the topic of offshored outsourcing, notably the impact of COVID-19 on businesses who have offshored aspects of their finance functions.

The rise in offshored professional services in Australia

For many businesses, outsourcing their finance functions can be an effective and efficient way to receive the benefits of an internal finance function without the cost and risks associated.

However, while offshoring your finance function can provide several benefits, it isn’t without risk. Some of the common and well-known downsides of offshoring include language barriers, time differences, not necessarily knowing who is handling your work as well as being dependent on the stability of the country and business environment that the service has been offshored to.

But for many Australian businesses, the low wage cost of offshoring has historically outweighed these risks. Until now, where an unprecedented global crisis – in this case, a pandemic - has left many businesses who have offshored their finance function in a challenging situation. Offshore providers affected by COIVD-19, may be no longer able to deliver the service completely or instead are delivering a service which may be delayed or lacking in quality.

This, in turn, can cost a business more than if the service was outsourced locally or in some cases completed internally. It is only in times such as what we are facing today, that the severity of the vulnerabilities of offshored services is apparent. Moreover, as businesses begin to factor in this impact into their cost-benefit comparison, onshored outsourced finance functions may be more favourable.

“…In the case of an unprecedented global crisis such as a pandemic, businesses who have offshored their back-office may find themselves in a challenging situation if the service can no longer be delivered…”

As a result, many Australian businesses are looking to bring their finance function back onshore to reduce uncertainty and risk when it comes to the delivery and quality of their outsourced accounting services. So, to help Australian businesses who may be looking for a local provider to assist with their accounting needs, I’ve put together a short guide outlining:

  • Who would benefit from the services of a virtual outsourced CFO?
  • What are the benefits of a virtual outsourced CFO?
  • The top five qualities you should be looking for in a virtual outsourced CFO
     

Find out about our BDO Virtual Outsourced CFO services

 

Who would benefit from the services of a virtual outsourced CFO?

Depending on your business or organisation size and scale, a virtual outsourced CFO can provide the financial expertise and support you need to allow you to focus on what’s important to your business. To illustrate this, below we’ve highlighted some examples of how different businesses can benefit from virtual outsourced CFO services.

  • A CFO of a large business who needs to focus on their core business, but needs support to look after smaller investments. For example, a technology company which has a core business but has invested in several smaller start-ups at various stages of development. Being able to outsource the finance function of these start-ups to a virtual CFO provides similar processes and attention to detail as well as identical reporting across all subsidiaries and joint venture projects without needing the parent company CFO to take the eye off the main business more than necessary. 
  • A company that is not yet large enough to employ a full-time CFO, but requires the assistance of a CFO on a one-off; regular or semi-regular basis.
  • An International company with the full finance function in the home jurisdiction but who requires on-the-ground advice relevant to the Australian subsidiary.
  • A Private Equity firm who needs someone to manage their investments and report back on an independent and consistent basis across the portfolio. This is especially effective in the case of a niche industry roll-up.
  • Businesses experiencing rapid growth and as a result, are finding that their finances are becoming more complex and time-consuming. Moreover, sudden and rapid growth can result in the business quickly outgrowing its accounting capabilities resulting in the need for urgent support to manage this.
  • Businesses that may not have strong financial reporting functions that are necessary to support informed financial decisions.
  • Businesses that need additional support during specific times of the year such as to meet audit requirements or financial reporting requirements

What are the benefits of a virtual outsourced CFO?

  • Customised deliverables to better meet your needs
  • Consistent reports and KPIs from one firm
  • Pay for what you need and when you need it – keeps costs down
  • Don’t have to employ a full-time resource
  • A service that can grow with your business
  • Peace of mind that your financial and reporting needs are taken care of
  • Supervision and training of finance staff is maintained by the outsourced CFO provider

The top five qualities you should be looking for in a virtual outsourced CFO

  1. Flexibility – The business environment can change rapidly with sudden events such as the COVID-19 health pandemic resulting in significant disruption to your business and ways of doing things. As such, your virtual outsourced CFO must be adaptable and flexible to support your needs as they change, no matter how sudden or drastic that change is.
     
  2. A good communicator – The role of a virtual outsourced CFO is to support your business by providing you with the financial information you need to make informed and timely decisions. While your chosen level of service may differ depending on costs, a good virtual outsourced CFO will ensure open lines of communication, respond to questions or calls for assistance promptly and inform you of any changes or issues that may arise. Good virtual outsourced CFOs assure you that your business’s needs come first and that deadlines are met on time.
     
  3. Forward-looking – A virtual outsourced CFO is more than just a bookkeeper, but a specialist who takes an active role in understanding and supporting your business’s financial position. As such, a good virtual outsourced CFO will take a forward looking approach to your finances, helping you to identify potential opportunities and trends your business can capitalise on as well as potential risks down the track. In some cases, virtual outsourced CFOs can even play an active role in strategic business planning sessions and act as a sounding board when it comes to making important decisions.
     
  4. Provides varying levels of support – Every business is different with different goals, budgets and needs. A virtual outsourced CFO service, therefore, must be bespoke to meet these differing needs whilst still providing the same quality of service. One of the ways providers can cater to the different needs of businesses is by providing the same quality services at different levels of supports – from junior through to partner level. This ensures that quality solutions and support can meet business needs while satisfying cost and budget constraints.
     
  5. Understands your local business environment -  As compliance laws and regulations differ from country to country, it is critical that your virtual outsourced CFO has an in-depth understanding of the laws in which your business operates in as this gives you quality control and assurance. Moreover, as local legislation and rules can change suddenly – such as the introduction of COVID-19 stimulus measures for Australian businesses – a locally based virtual outsourced CFO with on the ground experience may be better able to adapt to these changes.

Our Virtual Outsourced CFO services

At BDO, we understand that there is no such thing as a one-size-fits-all virtual outsourced CFO, and as such, work collaboratively with our clients to provide a service that meets their specific needs and goals. Below we’ve outlined some of the ways our virtual outsourced CFO team can help you.

  • We provide a full suite of CFO services that are packaged in a bespoke offering to suit your specific needs. Whether you’re looking for day-to-day accounting, one-off high-level advice, management reporting or payroll support, we match the level of our client’s needs to the experts who are the best fit for the job based on seniority.
  • We give you certainty and confidence in your supply chain. The current circumstances have seen many companies needing to review their supply chain risk given offshoring sites being forced to shut down or otherwise impacted their effectiveness. This is in addition to general risks associated with having a part of your supply chain based in a foreign jurisdiction - not to mention data security issues. When you hire BDO, you can be assured that the work is being executed by staff who are on the ground in Australia and who have the local business acumen and knowledge of local compliance laws.
  • We are accessible, collaborative and care about how we communicate with you. As we have a whole team based in Australia, we are local and easily contactable to assist you with any questions or assistance you may require.
  • We take a tiered and cost-effective approach to our fees. This tiered access model is reflected in our approach to fees, fixed fees for agreed deliverables plus ad-hoc services to ensure you only pay for what you need (rather than having a full-time resource).
  • We embrace advanced technologies, systems and processes, with a strong focus on efficiency and effectiveness. At BDO, we have long had to compete against low-cost alternatives from offshore jurisdictions, and as such have improved our efficiencies and developed new systems that make the most of locally-based teams with local knowledge.
  • We ensure that all quality control measures are being met and pride ourselves on delivering our virtual outsourced CFO services to a high standard of quality.

For more information about our Virtual outsourced CFO services, please contact Andres Reith or your local BDO office for a complimentary discussion today.