The question arises for organizations as to whether hiring a 3rd party Chief Financial Officer (CFO) for their organization maybe a good decision or not. In todays’ era, small businesses are faced with unique challenges that were non-existent previously. For example; the global financial crunch of fiscal year 2008 and 2009 created a catastrophic event in the market.
During circumstances like these, small businesses are very prone to suffer from the financial crisis since they heavily rely on leadership skills and creativity. These small businesses are struggling not just to stay in the market, but to manage some earnings out of their ventures. One of the prevailing ideas in the growing sector, is the idea of acquiring financial services from qualified professionals for cost-cutting and to seek efficient financial advice.
The outsourcing of financial services has been used by Fortune 1000 companies since a very long time to manage the operational costs of the department. We have been through stories where outsourcing has been helpful for many companies and fatal for the others. This has also been discussed by Thomas Friedman in his book, The World is Flat, a Brief History of the Twenty-First Century.he discusses that the technological advancements have benefitted companies at large where they have outsourced almost all their operations to low cost and budget effective countries. Examples of this may go up to call centers, IT operations, HR management and as far as total accounts management half-way across the globe. Many times, the employees on payroll risk their jobs to the contractual positions which serve better and for lower costs to the company.
After a proven success record from the Fortune 1000 companies, has the time really come for smaller-sized companies to outsource their financial operations? For this, we need to evaluate all possible solutions for outsourcing for small and medium companies. We can start off with the IT department of a company which is not needed full-time at the company head office, since they can only be contacted when needed. To cut down on costs, it is now easily possible for IT staff to be hired on an hourly basis through 3rd party providers. Next, we can move to the Human Resources department. Their need arises when hiring, firing and during appraisals time. Therefore, keeping a human resource department throughout the year would hurt the company’s financial and operational performance, whereas outsourcing can help a great deal.