Hong Kong is a hive of business activity with over 340,000 small- and medium-sized enterprises (SMEs). Do you run one of them?
These companies make up about 98% of all businesses in our fine city and cover so many different industries and sectors.
For these growing businesses, it’s not always possible to find the perfect chief financial officer (CFO), so more and more are turning to outsourced CFO services.
What the “outsourced services” is that now?
If you’re still not sure what on Earth this is all about, fear not! In this article we will explain:
- What CFO services are
- What services you can pass to an outsourced CFO
- Why CFO outsourcing is the boost your company needs
- All the questions that’ll no doubt spring up about outsourced CFO services
- A recommendation for a CFO outsourcing service in Hong Kong
Giving you everything you need to know so that you can choose the right financial strategy for your Hong Kong business.
I cannot wait to share this post with you!
What are CFO services?
CFO services are the activities that a chief financial officer (CFO) is responsible for or is in charge of overseeing.
Which begs the question, what does a CFO do?
If you’ve been running a small or medium business, either as a side hustle or as a full-time role for a while, you’ll probably have looked after your bookkeeping, at least when you started out.
You may still do that now, or you might have brought in a bookkeeper or an accountant who scratches their head and asks you about receipts and details every now and then before settling your accounts.
Suppose you’ve ever thought that you want to understand your financial situation better or are worried that you might not be maximizing your financial position. In that case, you’re already considering a CFO.
The four key roles of a CFO
The services a CFO offers to a business cover a range of tasks that Deloitte breaks down into four key roles:
- A steward whose job is to protect the business and preserve assets
- An operator who takes care of financial operations like paying bills
- A strategist that takes control of or has influence over the direction of the business
- A catalyst for financial leadership to embed best practices
That’s a whole lot of services that you’d expect from a CFO and some functions you can hire an accountant for, in theory.
If you’ve not got the budget or access to the talent to take on such varied tasks, what’s the solution? Outsourced CFO services.
What are outsourced CFO services?
Outsourced CFO services, or virtual CFO services, is when you bring in a company on a contract basis to do all the things you’d expect from a CFO.
Think of it like a step up from your Hong Kong accountant; you get the beautiful, balanced books and payments taken care of, but with a sprinkle of strategy, guidance, and business acumen from a different perspective.
The nuts and bolts of the service look something like this:
- Rather than hiring a CFO, you agree on a contract with an accounting and business services firm
- They look after the books, process payments, and ensure the business is running efficiently
- An eye is kept on tax obligations to make sure that everything your business does is tax-efficient
- Strategic input is given about maximizing revenue, when to look for better banking and payment deals, etc.
- You get outside input from someone who understands business finances and will ensure the decisions being made keep your business working properly.
How does outsourced CFO services work?
It’s all done on contract, with hourly rates or monthly packages with a set remit of activities.
Rather than finding someone who’s an accountant with a strategic mind and a handle on how your business runs, you can tap into the pool of talent in one company to fulfill these requirements on an as-needed basis.
Which is the best CFO service in Hong Kong?
If you know us at SavvyinHK, you know that we love to give a good tip – one that is tried and tested.
There are lots of places that offer the services – advice, functions, and skills – that we’ve outlined here, but we are going to give you one company, whom we’ve found to be extremely reliable and helpful.
Pinetree Accounting Services is based in Kowloon and does the full suite of CFO services your business needs. Not only are the folks there professional, but they also offer great value and a whole range of services you never knew you needed.
If you need a one-off report before a big meeting or want to retain services to get your books and financial KPIs tracked each month, they have the expertise and bandwidth to take the task on.
We believe you won’t go wrong with Pinetree – you get to grow your business without dealing with CFO level salaries: it’s a savvy move for sure.
Reasons your business needs CFO services
If you’re considering starting to scale your business or just want to get a better grip on your company finances, here are eight reasons you should get a quote for CFO outsourcing.
1. Change and growth management
Your business may be your passion project or your life’s work – whichever it is; it shouldn’t stay the same forever.
Being dynamic is what has and will continue to keep your business alive. This requires change – changing your payment processor for a better deal, changing your business model to be subscription-based, or changing your relationship and HR management software.
All these things and so much more that go on in your business needs financial input:
- Does the new card services operator accept UnionPay as well as Visa?
- How can you project your long-term cash flow based on subscriptions?
- What’s the incremental cost of new team members when you take on new software?
Want some strong input from a financial perspective? Reaching out to your outsourced CFO will get a report on your desk.
There’ll also be an ear to bend about the decisions you need to make, which is always useful in a growing business.
2. Working capital management and cash flow planning
If you’re at the point where you’re considering adding a CFO, you’ve done well enough to keep the cash rolling in and your business in capital.
It’s not always easy though, and an accountant won’t always be on top of spotting issues as they come up.
Having a professional eye taking the lead on the long view is vital to a growing business. Outsourcing your CFO needs means a business expert will have your back and be ready to advise you if you’ve got your capital in the wrong place.
You might be adept at spotting the trending hashtags and the Western goods that everyone will be scouring the city for next season, but can you spot the upwards trend in your outgoings?
It’s ok to admit you’re not financially all over your business and bring in outsourced CFO services.
3. Improve and maximize margins
Money is made on the margins in the business.
This means you’ve got to keep an eye on your costs and your outgoings to make sure your pricing is right and you’re using the right suppliers. It’s not something you might notice straight away since you’re managing huge swathes of business decisions, clients, and logistics.
Paying someone to know where you can pick up half a percent or give you a nudge to explore new partners and suppliers can pay off much better returns.
Even if this is your thing and you manage the supply of your large retail store or import business like an absolute boss, having someone else pick up that strain is only going to help you improve.
4. Financial strategy advice
Strategy and planning will have got you where you are now – knowing what you have to achieve quarter by quarter to hit your goals is what drives growth.
When you get to a point where you’ve got cash reserves or bank loans that have financed your new tools, it’s time to think smart about your money too.
If you had a CFO on board, they’d be talking to you about:
- Payment processors with marginally higher fees but faster payouts
- Getting your invoicing optimized for international invoicing
- Whether bringing in a freelancer or a new employee makes more sense
- Which banking services you should use for depositing cash
The maths that goes into these decisions aren’t exactly calculus, but they’d take up your day.
A virtual CFO offers this type of guidance and will be able to present strategies that you can use to progress to your goals.
5. Providing financial forecasting
Do bank meetings scare you? Do you know how to talk to potential investors about your business outlook?
When you need to sit down with a bank manager to discuss financing or talking to a potential investor about your future, a business plan is a must.
Being all over the numbers is vital. You won’t get away with wishy-washy projects on your five-year revenue plan. Hold up, how are you supposed to forecast sales for the next five years?
The answer isn’t coming, but you can pay for CFO outsourced services to take care of these types of problems for you.
Working on your business plan to bring your future to life with a business expert is invaluable – the monthly fees will be worth it. What’s more, you get some security that your vision is working, and there are no glaring holes in the plans and pricing you’re working with.
6. Providing real-time access to critical business information
The devil is in the detail, and sometimes he doesn’t like to give it up too fast – especially when money is involved.
Ok, your bookkeeper is fantastic, and you’ve never seen someone work a spreadsheet quite like them. You can rely on them for the monthly and quarterly reports, and it’s all good.
What happens when you need fast answers on your finances?
Part of a CFO’s job is to have dashboards ready with your mission-critical information and provide and monitor your business targets. If a tax inspection comes up or needs accurate data about banking reconciliation to deal with a customer complaint, your CFO should be there to find it.
It might seem like a pie-in-the-sky need, but you never know when you’ll need to audit data beyond the skills of your standard accountant in Hong Kong – retaining CFO professional services can be a huge help when you need to provide specific information quickly.
7. Help with cross border tax issues
As an international hub for business, running your company out of Hong Kong probably works across borders. Whether your money is in and out of China, Malaysia, and Thailand or rushing across the Pacific, it’s likely you’re in some way international.
This might not feel difficult to manage when you’re small, but when your company grows, it’s vital to understand how to be tax efficient across different countries.
- Does the cost of setting up a representative office outweigh the tax benefits?
- What are the legalities of employing a local person on a different continent?
- Exactly which international costs can be written off against your Hong Kong business?
These are questions for a CFO – they’re the ones who you pay to have these headaches.
Outsourcing these tasks will get you analysis and answers fast, with a team of people pitching in behind the scenes, rather than relying on one person to know all about your business’s unique challenges.
8. Help with raising funds
The process of raising capital is different for each company. The exact process will depend on the particular industry of your business, your specific business model, and the timing of the fundraising.
This means that every fundraising will have different requirements. That’s why using an outsourced CFO service for raising capital for your business can be so helpful.
You can expect a good quality outsourced CFO service provider to have up-to-date knowledge and should be able to provide advice on:
- How to raise funds; equity or debt
- The lowest cost options available
- When to raise funds
- The magnitude of fundraising – you need to find the sweet spot.
Another hugely important service that a good outsourced CFO company should provide is helping to provide a valuation on your company when you’re raising funds.
You don’t want to use a too-high valuation – this might make raising capital unnecessarily difficult. At the same time, if you use a valuation that is low, you are unnecessarily given away value.
FAQs about outsourced CFO services
Even if this sounds like an excellent solution for your business, in theory, you’ve probably still got some questions.
How much does a CFO cost?
There is no hard and fast rule for pricing a virtual CFO or contracting CFO outsourced services to a professional services business. Your costs will be based on your needs and the complexity of your business, as well as the level of access and support you need.
As a benchmark to compare a quote to, the average base salary of a CFO in Hong Kong is $1,260,000. If you’re not into paying that for a CFO, look for a quote from a reputable company for some outsourced services.
Is a CFO an accountant?
Yes and no. To be more precise, if you have a CFO in your business as the only finance-centric role, they may do some accounting tasks.
However, the primary function of an accountant and a CFO is different. Your accountant in Hong Kong, if you’ve got one already, will work on your books, track your income and expenditure, pay salaries, taxes, and suppliers, and prepare your year-end accounts – all very functional.
A CFO is more focused on strategy; they’ll take an overview of your business and offer guidance and leadership. It’s their job to make sure your money is working as hard as it should and is being used in the right way to drive your profits.
What type of financial services are outsourced?
There are plenty of tasks that you can outsource when it comes to your finances, such as:
– Financial reporting
– Accounts payable and receivable
– Risk assessment and management
– Advice and support
If there’s any financial aspect of your business you don’t feel completely confident in, you can pay someone to do that for you.
What are CFO services?
CFO services are the activities that a CFO (Chief Operating Office) normally undertakes. These activities include:
– protecting the business and the assets of the business
– conducting the financial operations of the firm such as paying the bills
– helping to strategize about the future of the business
– introducing best financial practices to the firm
What is the best-outsourced CFO services company?
For outsourced CFO services, we like Pinetree Accounting Services. They are extremely knowledgeable, friendly, and reasonably priced.
Who can help me with CFO services for small businesses?
If you aren’t ready to hire a CFO, consider using outsourced CFO services. Pinetree Accounting Services has a very good reputation in Hong Kong for providing an on-time and reliable service.
Choosing to outsource CFO services to a virtual person or team is a thoroughly modern way to get the services you need at the right price. Rather than taking on a full c-suite level salary into your business, you can get your home or office remodeled or buy the new car you’ve been promising yourself.
A virtual CFO will take big calculations off your desk and replace them with strategy and reports that add value and make running your business easier. Don’t be afraid of outsourcing; no one expects you to be the master of all elements of your business in Hong Kong.
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