- Topline Valuation Group
The Benefits of Outsourced Corporate Financial Planning & Analysis
Corporate financial planning and analysis (FP&A) individuals/divisions supply executive leadership teams with the qualitative and quantitative information they need to make critical strategic, tactical, and operational decisions that will affect a company’s future. If an executive leadership team makes decisions on a new product, sales initiative, or acquisition without first consulting their FP&A team, then they may be putting the company at risk. However, not all companies have the resources needed to support a true CFO let alone a FP&A division, as this can become quite costly. So what should a business do if it wants to engage in these analyses, but its finance director or CFO can’t handle any more projects, and standing up a FP&A division isn’t feasible? Consider an outsourced business solution.
Outsourced CFOs and FP&A options are a novel concept that affords business owners the resources and expertise of larger organizations at a significantly reduced rate. These outsourced solutions tend to be far more cost-effective than a traditional in-house CFO and FP&A division because it allows the owner to:
Have a strategic analysis of cost-cutting and profitability maximization opportunities
Increase internal controls based on review and segregation of duties
Reduce office space, payroll dollars, taxes, and other fringe benefits
Benefit from diverse experience and specializations across numerous industries
Eliminate timing conflicts associated with sick days and vacation
Access the most advanced technology systems available
Participate in constant business monitoring
Although employing a full-time outsourced CFO and FP&A solution may be ideal, some business owners will find these solutions far exceed the needs of their business. That’s okay. True outsourced CFO and FP&A solutions will flex to the needs of the business and are capable of being structured anywhere from a one-off project basis to a comprehensive suite of services. Consider the following scenarios:
In the first scenario, a company generates roughly $20 million a year in revenue and employs a full-time CFO, but lacks the capacity and/or expertise to support the strategic acquisition activities envisioned by the executive leadership team. The CFO can bring on an outsourced FP&A service that will work with him to develop valuation and merger models on acquisition targets, and has the ability to support financial and operational due diligence processes. As a result, the CFO is able to focus on normal day-to-day business activities, review and approve all valuations and merger models, and examine the results of due diligence without foregoing other business activities, and without having to bring on full-time staff to support these activities, thereby saving the company money.
In the second scenario, a company generating roughly $10 million a year in revenue doesn’t employ a CFO (and has no desire for a full-time outsourced CFO) but wants to better understand the profitability of the business and engage in forecasting and budgeting activities – something it has never done before. In this case, an outsourced FP&A service could work with the owner on a quarterly basis to develop its analyses of the business, prepare multi-year forecasts and budgets, and present the information during quarterly reviews. As a result, the owner better understands the return on investment from specific business activities (i.e., promotions or new product offerings) and financial trends and opportunities for improvement in the profit and loss statements.
At Topline Valuation Group (TVG), we launched the outsourced CFO and FP&A service offerings in order to support the unique needs of current and prospective clients, since no two businesses are the same. This allows us to customize the services we are providing to each individual client, and help them maximize the profitability in their business. For those interested in exploring an outsourced CFO and FP&A service offering, we recommend that you consider the following points:
Are you comfortable with the idea of not having someone in an office and, instead, communicating with them over the phone, through video chat, or some other remote function? If not, then this service offering may not be the best for you. At TVG, we want our clients to feel comfortable with the dynamic of a these functions since it can be a new experience for some.
What qualifications do you want in your outsourced CFO and FP&A provider? The TVG team is comprised of Certified Public Accountants, Certified Valuation Analysts, Certified Fraud Examiners, strategic consultants, transaction advisors, and much more. We recommend looking for an outsourced CFO and FP&A provider with comparable credentials.
Do you have a specific business need or just a nagging feeling that “something” could be better? You should always schedule a meeting with the outsourced CFO and FP&A service provider before formally engaging in a specific service offering. TVG will never try to sell you on a specific service without understanding your specific business needs.
Overall, an outsourced CFO and FP&A service offering is a great resource for companies big and small that want support with their strategic business activities, but don’t want to commit the resources to a full-time CFO, let alone an entire FP&A division, so long as you are comfortable with the outsourced dynamic and engaged in proper due diligence on the company selected to provide this service offering.