The Hidden Costs of Not Hiring a CFO: What Businesses Need to Know
A chief financial officer (CFO) can not only unlock new advantages for your company but also protect it from several serious downsides. However, many business owners fail to consider the importance of hiring one. Read on to explore the four main drawbacks of not hiring a CFO for your business.
Operational Inefficiencies
A CFO can help you maximize your company’s resources. Without a CFO, you may be leaving money on the table and not even realizing it. For example, an inefficiency in your payment system may be delaying vendor deliveries and disrupting your supply chain. Or, your payroll practices may be overestimating taxes and draining your accounts unnecessarily. Such issues can be hard to find, especially without a dedicated eye looking for them. A CFO fills that gap for your business to verify that it is doing as much as possible with the resources it has.
Missed Growth Opportunities
Without a CFO, your business may miss valuable growth opportunities. In other words, you may believe some avenues are closed to you that actually aren’t. A skilled CFO may help you achieve an acquisition that seems financially impossible and, in some cases, unlock opportunities as valuable as your best-paying clients. CFOs can set the stage for growth also by:
- Identifying profitable expansion options that aren’t obvious
- Helping you invest effectively
- Planning financially for the future you desire for your business
Higher Financing Costs
Not hiring a CFO could lead to many unnecessary costs around debt. CFOs can help your business finance more efficiently, especially if you plan on taking on debt soon. For example, a CFO can help you optimize your debt structure so that you’re paying as little interest as possible. They can also strategically manage your capital structure to reduce the overall cost of borrowing. A CFO service can be particularly useful if you’re looking to restructure existing debt. A new CFO can guide you through that process, verifying that your company gets the best deal possible at every stage.
Increased Risk of Financial Instability
CFOs can increase your company’s financial stability by:
- Optimizing cash flow
- Improving budgets
- Mitigating major sources of financial risks
For example, if a CFO has already improved your company’s financial stability, you’d be better able to handle an unexpected loss of a major client. This can help you avoid the havoc wreaked by the suddenly missing revenue on your financials. CFOs also help reduce costs and generate interest among potential investors. These services can improve the long-term financial stability of your company.
| Insight | Statistic | Source |
|---|---|---|
| Priority on Revenue Growth | 82% of CFOs in Southeast Asia prioritize revenue growth over cost control | Deloitte |
| Impact on Profitability | A 10% increase in revenue leads to an equivalent increase in profit for companies managed by a CFO | Kantata |
| Growth Expectations with Sustainability | 91% of sustainability-focused companies expect increased revenue in the coming years | BDO Survey |
| Collaborative Advantage | Effective collaboration between CFOs and CMOs is crucial for achieving growth | CMO Alliance |
| Strategic Role of CFOs | CFOs are seen as strategic enablers influencing operational and technological decisions | Cowen Partners |
Save Money and Time With Temporary CFO Services
Adding a skilled CFO to your team is a practical way to unlock the full potential of your business. Hiring a full-time CFO may not always be financially feasible. CFO Hub offers instant access to temporary CFOs who can provide your business with as much or as little support as it needs. Check out our outsourced CFO services page to learn more about how we can help.