Pervasive Myths About Outsourced Financial Directors

Where the Myth Comes From:

This is often because of the belief that only large enterprises have either the complexity or resources to need and be able to afford an FD’s services. The very term “FD” might conjure up images of high-powered executives in corporate boardrooms, making SMEs feel that such services are out of reach or unnecessary.

Reality:

Outsourced FDs are designed to work with businesses of any size, including SMEs. Their flexible engagement model allows businesses to access strategic expertise without the cost of a full-time hire. Many outsourced FDs work with startups and small businesses to help them establish strong financial foundations that will sustain growth.

Why This Matters:

Dismissing the idea of an outsourced FD may leave SMEs without the financial leadership they need. As a business, one should not view financial challenges as “too small” for an FD but realize that even modest improvements in cash flow, budgeting, or strategy can have a significant impact.

Reality in Detail:

• Outsourced FDs provide tailored solutions based on the specific needs of smaller businesses.
• Their services can scale with the business, offering more support as the complexity grows.
• They often specialise in solving the financial challenges unique to SMEs, such as cash flow issues, tight budgets, or growth planning.

Where the Myth Comes From:

This could be based on the belief that outsiders are inherently less invested than insiders. Assuming outsourced FDs have multiple clients, they will spread their attention too thin or fail to integrate into the company culture.

Realistically:

Experienced outsourced FDs establish strong, long-lasting partnerships with their clients. These partnerships may also involve becoming part of the leadership team by attending board meetings, participating in strategic planning, and offering ongoing support based on the business’s needs.

Why It Matters:

This belief about a lack of commitment might deny a business the advantages of the unique, outside expertise that the outsourced FD provides. Paradoxically, his outsider position actually brings more objectivity to developing solutions.

Reality in Detail:

• Many outsourced FDs have a relationship focus and work to become a trusted advisor.
• They will embed themselves into the business through regular communication and involvement in key decisions.
• Their results-orientated approach often drives them to ensure client success.

Where the Myth Comes From:

This myth likely originates from outdated perceptions of outsourcing, where the professionals were less accessible due to geographical or technological limitations. It may also come from experiences with poorly structured outsourcing arrangements.

Reality:

Modern communication tools and practices have eliminated many of these barriers. Outsourced FDs are just as accessible as in-house staff, and they can stay in touch through video calls, project management tools, and regular check-ins.

Why This Matters:

A business’s fear of communication problems can make it shy away from outsourcing, but in reality, outsourced FDs usually provide clearer and more regular updates because they would have to use structured reporting processes.

Reality in Detail:

• A lot of outsourced FDs use technology such as Zoom, Slack, and collaboration platforms to ensure seamless communication.
• They often establish clear schedules for updates, reporting, and meetings to ensure alignment with the client’s needs.
• Proactive communication is a cornerstone of their service, and they make sure businesses are always informed and supported.

Where the Myth Comes From:

This myth arises from the belief that outsourced professionals, working across multiple industries, may lack the sector-specific knowledge necessary to navigate a business’s unique challenges.

Reality:

While outsourced FDs often work with clients across industries, this broad exposure is an asset. Many specialise in specific sectors or develop transferable skills that serve them well as they adapt quickly to different industries.

Why It Matters:

Rejecting outsourced FDs out of hand because of perceived industry gaps may be depriving a business of fresh insights and innovative approaches. Their diverse experience can help businesses identify opportunities or risks that an industry insider might overlook.

Reality in Detail:

• Outsourced FDs usually conduct extensive research into the client’s industry prior to engagement.
• They bring best practices and innovative strategies from other sectors to the table, enriching the client’s approach.
• Their objectivity will help a business find weaknesses or blind spots that may be specific to its industry.

Where the Myth Comes From:

This is usually a myth because the hourly or project rates of outsourced FDs are compared to the annual salary of an in-house FD without accounting for associated employment costs.

Reality:

Outsourced FDs are generally more cost-effective because businesses pay only for what they need. Unlike hiring a full-time FD, there are no additional costs for benefits, office space, or training.

Why This Matters:

Businesses that assume outsourced FDs are more expensive may forgo strategic financial leadership altogether, potentially hindering growth and efficiency.

Reality in Detail:

• Outsourced FDs offer flexible pricing models, whereby businesses can engage them part-time or project-specific.
• The cost savings on salaries, benefits, and overheads can be substantial.
• The ROI on an outsourced FD’s expertise often outweighs the cost of engagement.

Where the Myth Comes From:

This might be a misunderstanding of what outsourced professionals do and think of them as someone who comes in to do just isolated projects, like audits or fundraising.

Reality:

Whereas outsourced FDs are superb for project-type work, they also forge long-term relationships with clients by offering ongoing strategic support throughout the life cycle of the business.

Why This Matters:

Limiting outsourced FDs to short-term engagements misses out on the continuity and deep understanding they can offer over time, which is especially valuable for growing businesses.

Reality in Detail:

• Many outsourced FDs serve as ongoing advisors, attending regular board meetings and providing continuous financial oversight.
• Their ability to adapt to the changing needs of the business makes them invaluable as a long-term resource.
• They provide scalability—offering more or less support as required.

Where the Myth Comes From:

This perception often stems from a fear that an external FD will not understand the company’s internal culture, workflows, or team dynamics. Businesses may also be concerned that staff will perceive an outsourced professional as an outsider, leading to friction or communication issues.

Reality:

Experienced outsourced FDs know how to blend into the inner workings of internal teams. Professional in their approach, they seek to understand the dynamics within teams, aligning their contributions to corporate culture and goals.

Why It Matters:

 Buying into this myth may be depriving businesses of the chance to inject the kind of expertise that would benefit team performance. Outsourced FDs can bring a lot of fresh energy and ideas to teams, which in turn can unite teams through shared goals.

Reality in Detail:

• Outsourced FDs work closely with leadership to align their efforts with company values and objectives.
• They often act as mentors, upskilling internal finance teams and improving workflows.
• Their external perspective can foster collaboration by identifying bottlenecks or inefficiencies that might go unnoticed internally.

Where the Myth Comes From:

This myth likely originates from the misunderstanding of the relationship between a business and an outsourced FD. Business owners often assume that outsourcing financial leadership means entrusting decision-making to someone outside the company.

The outsourced FD collaborates with the business owner and/or other stakeholders. They also offer their views and recommendations, but the business has the final say. The FD facilitates businesses with actionable data and expert advice to empower them, not to override leadership.

Why This Matters:

This could prevent businesses from receiving the strategic guidance they urgently need, as they fear losing control over their operations.

Reality in Detail:

• Outsourced FDs provide detailed financial reports and forecasts to inform leadership decisions.
• They serve in a supportive capacity, not as decision-makers, to ensure that the business maintains full strategic control.
• Their role is collaborative, hence it is aligned with the company’s 

Where the Myth Comes From:

This is partly a hangover from older perceptions about outsourcing, whereby outsourcing was seen as a lottery and outsiders were perceived as being less reliable than in-house employees. Partially linked to this is the fear about availability and commitment.

Reality:

Good outsourced FDs are as reliable, often working for established firms or networks that have credibility, so this becomes a non-issue. They tend to be pretty outcome-focused, given that their reputation and the likelihood of further engagements depend on client satisfaction.

Why This Matters:

Mistrusting outsourced FDs may cause a business to forfeit generally dependable and high-quality financial leadership that proves to be more flexible and proactive than in-house alternatives.

Reality in Detail:

• The usual basis on which outsourced FDs are engaged is under some sort of contract or agreement where their deliverables and commitments are outlined.
• They use various tools to ensure transparency and reliability: performance reports, regular updates, and so forth.
• Many outsourced FDs pride themselves on being accessible and proactive, ensuring their clients’ needs are consistently met.

Where the Myth Comes From:

This is based on the belief that full-time FDs, being integrated into a company, understand it at a deeper level and, therefore, do a better job. It could also be based on a misunderstanding of the caliber of people who elect to offer their services on an outsourced basis.

Reality:

Outsourced FDs are often highly experienced professionals who have worked in senior financial roles before choosing to provide their expertise to multiple clients. Their diverse experience across industries often makes them more adaptable and resourceful than their full-time counterparts.

Why This Matters:

This myth may prevent businesses from accessing high-level expertise that could significantly improve their financial strategy and operations.

Reality in Detail:

• Many outsourced FDs have extensive experience in senior financial roles, including CFO and FD positions.
• They bring best practices, innovative solutions, and a wide wealth of experience from working with different businesses and industries.
• Their decision to work as outsourced professionals is usually driven by the desire for flexibility and the opportunity to work across diverse challenges. 

Where the Myth Comes From:

This is largely a misconception derived from the feeling that getting an outsider up to speed with the company’s financial situation, processes, and goals would take a good amount of time and hard work.

Reality:

Seasoned outsourced FDs can quickly assess a business’s financial condition and determine how it can be improved. They apply tried-and-true onboarding processes and tools to rapidly integrate into a business and become productive, often within weeks.

Why This Matters:

This could be another reason why companies may avoid outsourced FDs, resulting in their missing out on financial acumen for specific urgent issues.

Reality in Detail:

• Outsourced FDs generally start by going into a deep dive of the business through its financial records and discussions with the key stakeholders.
• They can “hit the ground running” because of their many years of experience and fine-tuning of their onboarding process.
• They can often identify quick wins early, providing immediate value while continuing to develop longer-term strategies.

Where the Myth Comes From:

This is likely linked to the older perception of financial professionals as purely operational rather than strategic. Businesses may associate the FD with bookkeeping or compliance, failing to see their broader role in guiding growth and decision-making.

Reality:

Outsourced FDs are really strategic in their roles, way beyond operational tasks: forecasting, growth planning, risk management, and stakeholder communication. They act as key advisors to leadership, helping them align financial decisions with long-term business objectives.

Why It Matters:

Underestimating the value an FD brings to strategy would lead a business to overlook opportunities for growth, scalability, and risk mitigation that an FD can help bring to the table.

Reality in Detail:

• Outsourced FDs often spearhead initiatives such as scenario planning, fundraising, and market expansion.
• Their strategic input helps businesses anticipate challenges and seize opportunities proactively.
• By handling both strategic and operational aspects, they ensure that financial execution aligns seamlessly with broader business goals.