There’s no sugarcoating the present state of the economy. Even if we have not reached the technical definition of a recession, it certainly feels like a recession to a large segment of the population. Inflation hit a 40-year high of 9.1 percent in June. The stock market is down. Bitcoin is down. Although gas prices have started to retreat, people continue to be affected by the high cost of food and household essentials and have cut back spending on non-essentials.
Businesses are finding themselves in a similar situation. Some industries and companies have been hit harder by the economic downturn and are looking for ways to cut costs. Excess inventories will have to be sold at discounts, resulting in lower margins, and layoffs have already begun in certain sectors.
This is the current reality and it’s not a pleasant one. However, forward-thinking organizations that make decisions with the next five years in mind will be in a much stronger position than those that make knee-jerk reactions to get through the next month.
The Business Case for Outsourcing CFO and Controller Functions
As an added consequence of high inflation, many businesses are currently seeing an increase in employee turnover with personnel in key positions leaving for offers of higher wages and better opportunities. Businesses are finding it difficult to find qualified replacements, and the few who are available come with high price tags. Businesses are finding it financially impossible to compete for a top performer’s services and are hesitant to bring in someone who doesn’t have the experience and talent their business requires just to fill a chair.
The added pressures that the state of the economy has placed on operations have been an impetus for many businesses to rethink their traditional back-office operations and consider outsourcing as a positive alternative to retaining or replacing a full-time CFO and/or controller. From a dollars-and-cents standpoint, a fractional CFO or controller allows you to pay only for the services you need when you need them and eliminates the cost of a full-time salary and high-priced benefits. Although many decisions to outsource are initially driven by a desire to reduce costs, we have found that business owners soon learn that more can be accomplished through part-time CFO Advisory Services.
Proactive and Resilient vs. Reactive and Struggling
A partner at Prager Metis recently referred a $150 million company to the CFO Advisory Services team. The company’s CFO had been working there for more than 15 years and the business owner was hesitant to terminate the CFO despite poor performance. Our team was initially called in to assist in getting the business’s financial records current.
The business soon found out that Prager Metis CFO Advisory Services was able to do more than guide them through a rough patch. Our team helped the business owner gain a better understanding of business financials and introduced the client to a wide range of services they didn’t know were available to better manage their financials, improve stability, and reduce risk.
What we offered was not a temporary fix, but a smart, long-term strategic investment that will make the company more resilient to future economic downturns and stay on track to achieving its goals. Operations will be streamlined, and the company will have access to more expertise, resources, and services than at any point in its history. While many of our client relationships start out as a request to remedy something presently impacting a business, our proactive services provide assurance that a business is equipped and prepared to weather future adversities.
An Opportunity to Overcome Longstanding Challenges
Instead of approaching a bad economy in a state of panic as if the sky is falling, take advantage of this opportunity to assess your current financial situation and strengthen your position. Prager Metis CFO Advisory Services can upgrade your capabilities and reduce risks while improving cost-efficiency.
If you have any questions or would like more information on our CFO Advisory services, please contact me at rmayer@pragermetis.com.
