How an outsourced CFO helps construction firms grow
Every construction firm faces strategic challenges like long-term budgeting, managing labor costs and planning future growth. But many smaller and midsized firms lack a CFO to tackle such responsibilities, putting them at a significant competitive disadvantage against larger peers.
An outsourced CFO can help your firm overcome this barrier. CFO outsourcing services give you the forward-thinking analysis and decision-making capabilities your current finance team may lack, but in a fractional capacity that won’t blow up your budget. Critically, a CFO can also help you implement a modern digital strategy to upgrade legacy systems and processes that are holding your business back.
Keep reading to learn more about why construction firms are turning to outsourced CFOs and how to assess if outsourcing makes sense for you.
Why construction firms need the strategic support of a CFO
Lack of long-term financial leadership and outdated systems can block growth for construction firms.
If you own a small or midsized firm, you may have a small in-house accounting team (and perhaps a controller) to handle your basic financials. But who is navigating financial uncertainty, modeling future revenue scenarios, thinking about how to make your organization run more efficiently, planning for labor and skills challenges and considering how to maintain profitability as you grow?
Too often, the answer is no one.
At the same time, many smaller firms have no modern digital strategy and still rely on the legacy accounting and financial systems and processes they’ve used for a generation. This isn’t just a bookkeeping problem but a barrier to growth that squashes efficiency, rattles potential investors and makes it harder for leaders to make data-driven decisions.
From a strategic perspective, these two problems boil down to one big question: Where are you going and what systems or resources do you need to get there?
You may already be asking this question, but don’t have the internal capacity to fully answer it. That’s where an outsourced or fractional CFO comes in.
How do outsourced CFO services help construction firms succeed?
An outsourced CFO gives your construction firm executive-level financial leadership and strategic planning capabilities without having to stretch your budget to accommodate a full-time C-suite hire. For firms looking to grow or operate more efficiently, this can often be a great fit.
Here are some of the major benefits of hiring an outsourced CFO:
1. Keeping eyes on the horizon
Your in-house accounting team is largely focused on the rearview mirror, keeping your books up to date and handling financial reporting. This is essential work, but on its own, it doesn’t give you the visibility you need to plan for what’s next.
By contrast, a CFO looks forward to the future, helping you implement your long-term vision for your construction business. Consider labor costs as an example: your existing team can tell you how much you spent last quarter, but do you have a sense of what that number could look like a year from now?
Working with an outsourced CFO means that someone on your team is watching this and other key areas that affect your business’s long-term stability. This helps you make more proactive decisions rather than spending too much of your time putting out fires or navigating from crisis to crisis.
2. Unifying accounting, finance and operations
These three teams are essential to your success as a business. They also often struggle to maintain alignment, which can amplify costs, slow your response to challenges and weaken your ability to stand up against larger, more systematized competitors.
A CFO can serve as a bridge to help all three operate more cohesively and effectively. This often boils down to communication and sharing information between teams, efforts that a CFO is ideally positioned to oversee by taking steps like implementing standard operating procedures (SOPs).
3. Developing your digital strategy
You might not think of a CFO as someone to help bring your firm into the modern era of technology. But given that many construction firms still use analog or paper-based accounting and finance systems, a CFO who knows how more modern alternatives operate is essential to helping your business run more efficiently and effectively.
Your CFO can help you develop a digital strategy to move you away from spreadsheets and disconnected software onto a cloud-based platform that integrates data from multiple systems to give you better visibility into your financials. This approach also allows you to access or update financial data directly from job sites.
Just as important, your CFO can also help ensure that your digital strategy is aligned with your overall goals, clarify the financial impact or ROI of digital investments and mitigate financial risks in areas like compliance and cybersecurity.
4. Choosing and optimizing software systems
As you look to implement a digital strategy to make your business more efficient, you’ll need to upgrade your technology. In addition to helping you map out the overall strategy, an outsourced or fractional CFO can also provide guidance on selecting new tech.
Fractional CFOs bring a critical outside perspective to your organization, giving you guidance that is unbiased by existing internal or vendor relationships. For example, where an internal team member may lean towards maintaining the status quo as much as possible, an outsourced CFO can bring a fresh perspective and a willingness to change things for the better.
They can also apply their broader experience and knowledge of existing accounting and finance solutions to help you decide which systems best meet the specific needs of your business. And once in place, your CFO can monitor the performance of your new systems, assessing outcomes and making adjustments when appropriate.
5. Scaling alongside your business
Outsourced CFO support scales alongside the needs of your business, giving you greater flexibility.
To start with, you might benefit from as little as 10 to 15 hours of support per week. However, if your business starts to expand, you can dial up that support to 25 to 30 hours, without having to commit to a full-time hire unless or until you’re ready to do so.
How should you decide if an outsourced CFO makes sense?
If you’re considering onboarding an outsourced CFO for your construction business, talk to an advisory firm that offers CFO outsourcing services. Look for a firm that has experience working with construction businesses and understands not just accounting and finance, but also digital strategy.
An advisor can help you:
- Assess and develop your goals or vision for your business.
- Decide if and how an outsourced CFO can help you meet them.
- Provide an outsourced CFO, along with any additional support you need to modernize or supplement your systems.
How Wipfli can help
We help construction firms become more productive and profitable. Let’s talk about your vision for your business and how we can provide solutions like an outsourced CFO to help you get there. Start a conversation.
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