CFO Services in China
Just like the CEO, the role of a CFO is vital to a company’s success. Their expertise in business finance and economics provides a better performance overview of the company. If you plan to establish a business and be successful in the Chinese market but do not have enough budget to hire a full-time CFO, an alternative method is to outsource CFO services.
What is the Role of a CFO?
A Chief Financial Officer (CFO) is the senior executive responsible for managing the finances of the company. Their duties include financial planning, tracking cash flow, and analyzing the financial status of the corporation. Their responsibilities are similar to that of a controller or treasurer, but with the added responsibility of overseeing the overall income and expenses of the organization.
What are CFO Services?
CFO services make the roles of CFO available to micro, small, and medium-sized businesses. It is a cost-effective solution that can help you achieve the financial targets set by the company.
A CFO service usually provides the following expertise to companies:
- Generate easy-to-digest financial reports so everyone can fully understand the business’s trajectory.
- Oversee bookkeeping activities and ensure the accuracy of checks and balances.
- Recommend the best tools to use to help in business operations.
- Ensure business compliance with financial regulations in China.
- Provide financial plans and projections to help the board make more informed financial decisions.
- Develop KPIs that will help make accurate reports on the financial status of the company.
There are different CFO services you can make use of to help you find the right fit for your business setup.
Perfect for short-term work, consultant CFOs can help your company set up reporting, bookkeeping, and other financial procedures. They may also serve as the interim CFO for specific projects.
Single Source CFO
With this type of service, you will be one of the clients that the CFO will handle. The CFO will be responsible to make sure they are familiar with your industry and have the capacity to attend to the needs of your business, especially on urgent matters.
This type of CFO service is the best for long-term work. You will have a CFO that can oversee day-to-day operations even when they are not on the location.
These firms provide the cheapest CFO service. You will be provided with an available CFO which may not be industry specific but has a well-developed understanding of financial procedures.
Why Would A Company Outsource a CFO?
1. Lack of Expertise in Finances
You know the ins and outs of your product, but you lack the aptitude and in-depth experience to make sure that your business finances do not go sideways. You may also have accountants and bookkeepers, but do not fully understand the information presented on financial statements.
Hiring an experienced CFO will give you peace of mind that someone more knowledgeable on the financial aspects of the business handles financial data and processes. The CFO can present financial data in a form that is easier to digest.
2. Focused on Other Tasks
If you are running a small to medium-sized business, you may already be handling too many responsibilities and challenges. Having a dedicated CFO to handle your company’s financial matters affords you more time to focus on strategy and growing the business.
3. Business is Not Performing Financially
You might find that your business is not doing well financially, but you cannot pinpoint which area to improve. A CFO can help you understand the possible pitfalls in your business that are draining your finances and point you in the right direction in growing the company.
Controlling costs, analyzing pricing strategies, and improving productivity through automation are some of the ways the CFO can help the company achieve its desired profitability.
4. Limited Budget
For SMEs, the cost of hiring a full-time CFO might be too expensive. Outsourcing CFO services is significantly cheaper. Additionally, your business will still benefit from the expertise of an experienced CFO.
When Do You Need To Outsource CFO Services?
Here are the situations where having the expertise of a CFO will help your business grow:
1. Business is Experiencing Rapid Growth
As your business grows, your need for processes to be more efficient and cost-effective. A CFO is well-suited to handle the increasing complexity of operations. They can help introduce the best tools for automation, interpret investment deals, present plans for capital and financing, improve cash flow and profits, and implement the best financial strategies for the company.
2. Developing New Products or Expanding Markets
Constantly changing market dynamics requires quick adaptability. A CFO can help identify opportunities and present business cases that will help the company capitalize on the ongoing changes in market demand. CFOs can help assess when it is time to expand or release new products to acquire maximum profits.
3. Handling Investors and Mergers
When your business is preparing for a merger or acquisition, you need to perform the necessary financial and regulatory due diligence. A CFO can do this for you to make sure that transactions run smoothly.
4. Complex Tax Planning
Your business is responsible for submitting accurate financial statements and upholding tax obligations. However, tax regulations in China can be complex, and you don’t have the time or expertise to handle this side of the business. A CFO can help analyze the tax benefits of investments, improve your tax position, maximize corporate tax benefits, and ensure compliance with tax rules to avoid penalties.
Benefits of Outsourcing CFO Services
1. Cost-efficient Solution
Hiring an experienced CFO is not cheap. The cost of employing a CFO can be too high if you are running a small to medium sized business.
A CFO service presents an alternative way to bring a CFO’s expertise into the team at a significantly reduced cost of hiring a full-time CFO. Your company will also save resources on training because you will be getting an experienced professional who already knows how to deal with complex financial matters.
2. Expertise and Experience
Since you are hiring a CFO on-demand, you can switch anytime to someone who has a higher level of expertise in the field as your business expands. You can also expand the scope of responsibilities as you build trust over the long term.
When employing a CFO service, you are sure that you are hiring an experienced professional who has handled a diverse client base over a period of time. Their expertise in financial data can help you find the best investments and methods to maximize profitability.
3. Remote Availability
There are no geographical limits to getting a CFO service given the versatility and reach of online platforms. You can engage their services anywhere without the need to meet in person.
4. More Time on Your Hands
With a CFO on board, you will have more time dedicated to optimizing your business and steering it towards the intended direction. The CFO will handle the financials so you can focus on maintaining investor relations, planning and executing project ideas, and managing comprehensive resources and services.
5. Improve Financial Awareness
As you work more with your CFO, you will gain a deeper understanding of business finance that can be used to make more informed decisions for the company. You will learn the basics of economics essential to every business owner.
6. Bridge Communication Gap
Doing business in China means you should be able to communicate in Mandarin Chinese and Cantonese. Employing CFO services in China ensures you are given an experienced CFO who is proficient in the Chinese language.
Serving Foreign Businesses in China
MSA has been dedicated to serving foreign businesses in China and Hong Kong for over a decade with all their accounting, financial advisory and business-setup up needs. We deliver on our mission of transparency, compliance and sustainability, while enabling our clients to have full control of their finances to drive strategic success for business in China. Get in contact with us so that our local professionals can help develop effective solutions for your business.
Disclaimer: all articles and its related content are the property of MSA Consulting Company Limited and may not be reproduced either in part or in full without prior consent.
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