Property Investment

Buy to Let Property – Is Buy to Let still a Worthwhile Investment?

Are you looking to enter the property investment market or are you an established investor looking for Buy to Let guidance and advice?

AccountsPro are Property Specialist Accountants in all aspects of property accounts and company and personal taxation.

As property specialist accountants, we can help you make an informed decision on how to invest in property in the most tax efficient way.  Not having a full understanding of accounting and tax implications can significantly impact your return on investment.

Is Buy to Let still a worthwhile investment?

This question goes beyond the issue of tax and to a large extent it depends on the type of investment your looking for and your ultimate goal of your investing activities.

In recent years, the stock market has had its ups and downs. The public have lost confidence in pension funds as a means of saving and investors are looking for alternatives.  The UK property market has been known for its success in long term investments resulting in an expansion in the buy to let sector.

If you are in a position to invest in property, it can be a beneficial asset to have but there are essential things you should know. You might be an experienced investor who wants to brush up on your buy-to-let knowledge  or be familiar with property investment but after starting to look for an opportunity and build an investment strategy you still feel unsure about things.

Knowledge is key – knowing which property will deliver the income and capital growth you require takes experience.

Understanding the basics is one of the most essential tips when beginning your property journey and as property tax accountants, we at AccountsPro can advise and guide you to get the most out of your venture.

 

BUY TO LET – FACTS TO CONSIDER

DO’S

  • think of your investment as medium to long term
  • research the market
  • do your sums carefully
  • aim to attract tenants quickly
  • get advice & guidance from a property specialists tax accountant

DON’TS

  • purchasing property that may have serious maintenance problems
  • rely on friends and family to look after the letting for you – consider a full management service
  • cut corners with tenancy agreements and legal documentation

 

WHICH PROPERTY TO INVEST IN?

Buying a home and investing in a buy to let property is not the same.

  • Consider which type of property you want to invest in – for example residential property, student let, or furnished holiday let
  • Seek advise from a local agent about the market for rented property and what is in demand in the area.
  • Consider local amenities and transport and the standard of decoration and furnishings to ensure a quick let.
  • Use an agent to save time and inconvenience. An agent will deal with viewings by prospective tenants and provide quick solutions to maintenance issues.

 

TAXATION

When buying to let, all aspects of taxation must be considered.

 

Tax on Rental Income

It was previously possible to deduct some of the finance costs when working out the property rental profits.

From April 2020, you are no longer able to deduct finance costs from your profits but instead claim the basic rate tax deduction on 100% of the costs. The basic rate deduction is 20%.

These changes affected anyone letting a residential property as an individual, a partnership, or in a trust. As a result, landlords can no longer deduct all of their finance costs from their property income to arrive at their property profits.

Finance costs include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans.  No relief is available for capital repayments.

This restriction does not apply to landlords of furnished holiday lettings or commercial property lets.

 

Tax on Sale

Capital Gains Tax (CGT) will be payable on the eventual sale of the property. This will be based on the disposal proceeds less the original costs of the property, certain legal costs and any capital improvements made.  The gain can be further reduced by any annual exemption available.

CGT is generally charged at 10% for basic rate tax payers and 20% for higher rates. However, 18% and 28% rates apply to chargeable gains arising on the disposal of residential property that does not qualify for private residence relief (PRR).

CGT is payable on 31 January after the end of the tax year in which the gain is made.

From April 2020, you will need to make a payment on account of CGT due within 30 days of completion of the disposal.  This will not affect gains on properties which are not liable to CGT due to PRR.

 

Student lettings

Buying to let makes sense if you have children at college or university.  It can be beneficial for the student to buy the property with several advantages:

  • This is a cost effective way of providing your child with somewhere decent to live.
  • Rental income on letting spare rooms to other students should be sufficient to cover the mortgage repayments from a cash flow perspective.
  • As long as the property is the child’s only property it should be exempt from CGT on its eventual sale as it will be regarded as their main residence.
  • The amount of rental income chargeable to income tax is reduced by a deduction known as ‘rent a room relief’ (£7,500). In this situation no expenses are tax deductible. Alternatively expenses can be deducted from income under normal letting rules where this is more beneficial.

 

Furnished Holiday Lettings

Furnished lettings (FHL) are another type of investment that can be considered. This is letting for short-term holiday lets rather than the residential market.

To qualify as a Furnished Holiday letting property, a number of conditions apply:

  • The property must be in the UK or European Economic Area (EEA)
  • The property must be available for commercial lettings as holiday accommodation to the public for at least 210 days (30week) of the tax year
  • Our of the 210 days, the property must be let out for at least 105 days (15 weeks) as holiday accommodation.

Benefits:

  • Offset losses from FHL against personal income tax
  • Claim capital gain tax reliefs – business asset rollover relief, entrepreneurs relief, relief for gifts of business assets
  • Claim capital allowances on costs incurred to furnish the property.

Tax allowance for Property and trading income

You can get up to £1,000 each tax year in tax-free allowances for property and trading income.

The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property. This allowance can be used to reduce your taxable income.

If you want to learn more about property investment, our team of accountants are on hand to help you every step of the way.  Giving you a solid foundation of advice both when starting out as an investor and as an established investor needing continued guidance to stay tax efficient.

Contact us for a free consultation or take our Property Investor Score Test.

Advices Business Funding

Cheat-sheet The Business Startup Checklist – Part 1.

The Business Startup Checklist:- Things you need to start a business
When launching a new venture it’s important to get the best advice and guidance to help you through the process from evaluating yourself and creating a business plan to funding and building your team.

Wouldn’t it be great if you could have a cheat-sheet (or a startup checklist) to guide you through the process with key tasks and activities to ensure your start-up business is a success.

There is not an ultimate guidebook, but AccountsPro have put together a business startup checklist which will guide you through the things you need to know from pre-launch to post-launch.

Startup Checklist (This is Part 1. of the Startup Checklist. There will be a Part 2. to follow)

Evaluate yourself
This is a vital step in starting up a small business. Consider your knowledge, confidence and experience and identify areas where you night need support. Commit yourself to starting a business and ask yourself:

• What skills do I have?
• What am I passionate about?
• What is my area of expertise?
• Am I committed to starting a business?

Once you have satisfied yourself that starting up a business is for you consider:

• How much can you afford to invest?
• Do you need to raise extra funding or capital?

Create your idea
Validate your idea and ensure it solves a real-life problem. Consider what is different about your idea.

• How will it stand out from the crowd?
• Why will people want to use it?
• Do you know about this business?
• If not, what do you need to learn?

Market Research
This is critical for any small start-up business. Spending time on market research is the best way of knowing and understanding your customers. Comprehensive market research is the best way to evaluate the strength of you new business and vitally important if you want to raise capital.

Write a business plan
Formalise your ideas on paper. Planning helps clean up ideas, achieve full potential, find the right team to support the business and secure funding.

Your business plan will give a clear picture of your small business startup and is more likely to attract investors and funding.

Choose a business structure
Choosing the right business structure is important, with each structure having different tax issues to consider as well as different liability considerations.

The differences between the main structures are:

  • Sole trader – exclusive ownership of a business, entitlement to all profits, but also liable for losses.
  • Partnership – similar to the option above, but profit and liability split between all founders.
  • Limited company – a private company where your liability is only tied to the amount you have invested.
  • Limited liability partnership – as above, but with multiple partners tied to the amount they have invested.

Assess your finances
Once you have evaluated your plan you will have a clear idea of what sort of capital you will need to start. The finance you will need will depend entirely on the business you are launching. Break it down into categories:

  • Essential investment
  • Helpful investment
  • Nice to have investment

You will also need to consider:

  • Finance options including bank or startup loans and investment or funding. You may consider applying for funding through the UK government Seed Investment Scheme (SEIS). For further information see AccountsPro article A Guide to SEIS for Startups: How to Make Your Startup Investible. Crowfunding and venture capital funding are other options open to small business startups.
  • Finance tools to ensure you are able to effectively track and manage your money and meet your financial obligations as a small startup business in respect of accounting and bookkeeping and tax advice and obligations. There are a number of accounting tools that are available for startups. AccountsPro can assist with our Cloud Automation Services which can automate a number of financial processes within the business.

Choose a business name and brand for your business
This will need to be thought about carefully for legal and marketing purposes. Check that your business name is available by doing a search with Companies House.

Register a website
Once you have decided on a business name, you should consider registering your website address (domain name). It is important in today’s world that you have a digital presence, and we can help you to source the talent to design and build your website for you.

Making your first hire
Many startup founders have the mindset that they can do everything themselves, but this is rarely the case. Startups need talent at different stages of growth, and it is often more cost effective to hire interim talent and leaders that can specialise in building teams around their particular function.

AccountsPro specialise in helping your hire permanent or interim talent but, hiring is not always the option, and we can advise and provide guidance on more cost-effective alternatives.

Sourcing an Accountant and financial services
Ensuring you have a good accountant will help to overcome initial hurdles. Keeping financial records, complying with tax obligations, VAT and PAYE rules are all musts.

Our Accounting Services include monthly and all-inclusive packages from bookkeeping to year-end accounts and PAYE.

AccountsPro are listed as a Tech SME UK Accountant Recommendation for 2021 and our team can give you guidance and advice on financial modelling for your small business startup including company incorporation, preparing startups for investment through to flexible FD support.

Our Startup Advisory Service provides guidance which is based on our teams’ experiences of both working ‘with’ startups and ‘inside’ startups. Our team have the experience as employees and founders, and we are always on hand to give you the best possible guidance.

For a trusted finance partner that will support and guide your business, contact us for a free consultation using our contact form. Alternatively, you can call us on 0207 193 8798 or email us at: hello@accountspro.co.uk

CFO

Outsourced CFO and FD Services for Startups & SMEs

Outsourcing a CFO or FD can be a very cost-effective practice for startups and early-stage companies and provides an invaluable resource for your business, allowing you to access the strategic financial skills and expertise that your company may not as have as a newly formed company or startup.

Hiring a Chief Financial Officer (CFO) or Financial Director (FD) is often not economically possible and allows you to gain expertise without adding to your permanent headcount.

As a business develops and expands, a start-up or early-stage company will need CFO or FD to help navigate growth. An outsourced CFO service can be highly effective and outsourced CFO service costs can be very appealing to start ups and small businesses.

 

An outsourced CFO or FD can provide your company with:

  • Experience – being able to tap into financial expertise
  • Forward planning – working with your business to provide monthly forecasts, yearly budgets, source funding and capital and give you a clear view of your company’s likely landscape down the line
  • Oversight – help you to see, understand and enhance the numbers
  • Insight – review and challenge financial strategy and information

 

Chief Financial Officer v Financial Director

The roles of CFO and FD are interchangeable. Both roles play a vital part in managing, controlling, and analysing the financial climate of a business.

In larger companies, where there are teams of people working on financial matters, the CFO is the most senior person within the finance operations.  The FD will be the most senior accountant in charge of day-to-day operations.

The key responsibilities of both roles are outlined below.

The Chief Financial Officer will oversee the company’s financial operations, managing the financial intricacies and working together with senior company executives and the senior management team to develop and manage financial and tax strategies and set up financial IT systems.  Their primary goal is to drive the company’s financial planning to support its growth and secure new business and are responsible for strategic direction.

The Financial Director has similar responsibilities, creating a solid foundation upon which a company can grow, providing financial advice and support to senior executives and directing the company’s financial operations.  They are generally responsible for focusing on all financial aspects of the company and overseeing systems and controls on a day-to-day basis.

In start-ups and small to medium sized businesses, the distinction can be academic with the job descriptions being comparable.  The key point is to focus on the tasks to be performed and to ensure the business has the right financial leaders to build financial models, source investment, raise capital and explore funding options.

In organisations where there is a CFO the FD will have similar responsibilities, but the key difference is that the CFO will be part of the senior executive team and sit on the board, whereas the FD are not part of the senior team but have a key role in overseeing and directing the company’s financial operations and report to the CFO.

The level of financial leadership required will depend on business requirements.  Each have different skill sets and the stage of a business will establish when such skill sets are needed. A startup or early-stage company will need advice and support when raising funds and capital and to explore tax relief schemes such as EIS/SEIS.

Hiring is not always the right option, at AccountsPro we can provide your business with FD and CFO Support which are designed to help your business grow and succeed. We will provide an experienced and commercially astute finance professional without adding to employee count and resource costs and will work with your startup or early-stage company to ensure you have the right level of support that will add vast support to your team.

We understand how businesses work and how to make them grow. By combining financial support and business acumen, we will build the right financial foundations for your company and give you the support and advice when you need it – identifying opportunities and providing a cost-effective resource to support your company’s growth.

AccountsPro can find the best talent for your startup, helping you hire interim or permanent FD or CFO support as we become an extension to your business.

For a trusted finance partner that will support and guide your business contact us for a free consultation.

Events

AccountsPro are exhibiting at CogX – Come and visit us!

The AccountsPro team is exhibiting at CogX this year. Come and chat with Daniel and Ruth.

The CogX Festival is the world’s largest gathering of CEOs, entrepreneurs, academics, artists, activists, and policymakers working together to address the biggest questions, achievements, and challenges of the influential technologies shaping our future.

From June 14th-16th, 2021, the CogX Festival will go ahead as a hybrid in-person and virtual gathering at the distinguished King’s Cross Estate in London. We’ll be bringing the excitement of the Festival to multiple sites within the Knowledge Quarter’s vast, two million square feet estate. Between its spacious indoor areas and open-air spaces, we’ll safely gather for three invigorating days of inspiring sessions and candid conversations.

Following government guidelines, the CogX team is putting health and safety first and working unbelievably hard to protect our community, partners, and suppliers throughout the Festival.

With an unmissable agenda and a wealth of knowledge and expertise, we’re expecting over 100,000 online and in-person visitors*, including 1,000 speakers across 18 topic stages.

CogX signature features:

  • The Global Leadership Summit
  • The 5th edition of the CogX Awards
  • Extraordinary breadth of content and topics
  • An Expo to discover and explore ideas
  • Intelligent and serendipitous networking

Our theme this year is, ‘How do we get the next 10 years right?’ and gathers the best in their fields to:

  • Inspire current and future generations of leaders
  • Move conversations forward with concrete actions
  • Celebrate the latest innovations, especially those focused on addressing the COVID-19 pandemic
  • Continue the fight for equality, diversity, and inclusivity in all aspects of society
  • Help reframe the climate emergency as the biggest economic opportunity in the last 200 years

*The CogX guarantee: If Covid creeps back up and the Government enforces new restrictions, we’ll move all our brilliant speakers and sessions onto our lively virtual platform. As for your in-person pass, you can either ask for a full refund or get two in-person passes to CogX Festival 2022. Whatever you choose, we’ll also give you a free Premium Virtual Pass so you can join the 2021 Festival from home.

 

Tax

Our Guide to R&D Tax Credits – How to Claim R&D Tax Relief ?

If you are a UK company that has invested in innovation, you could be eligible for R&D tax credits.

What are R&D Tax Credits?

Companies in the UK are able to claim tax relief for their R&D activity.  The scheme is administered by HMRC and is intended to support businesses with their products and processes by boosting innovation. If you are spending money on your innovation, you can make a Research and Development tax credit claim.

Whether you are a large company or a small business there could be an R&D solution for your company.

For small and medium enterprises (SMEs) the incentive is Corporation Tax relief that can reduce a company’s tax bill or result in a payable tax credit (SME R&D Relief Scheme).

For large companies, the incentive is the R&D Expenditure Credit (RDEC).

Eligibility for R&D Tax Relief

The business must:

  • Be a limited company in the UK that is subject to Corporation Tax
  • Have carried out qualifying research and development activities
  • Have spent money on these projects

R&D Tax Credits for Small Business

The Small and medium-sized enterprises (SME) R&D Relief can be claimed if you are an SME with:

  • Less than 500 staff
  • A turnover of under 100 million euros or a balance sheet under 86 million euros

Many companies, including start-ups, fall within this category.

 

What counts as Research & Development?

The project must be specific to make an advance in science or technology and must relate to the company’s trade.  The company must be taking a risk by attempting to solve scientific or technological uncertainty. This can include creating new products, processes or services or changing or modifying an existing product, process, or service.  It is important to note that the R&D doesn’t have to have been successful to qualify but the project should have set out to make an advance.

Research and Development can be in any sector from food processing to mechanical engineering, construction and information technology.

 

What costs qualify for R&D Tax Relief

The key qualifying costs are:

  • Staff costs – apportioned to the time spent on the R&D project (salary, NIC, employer pension)
  • Software – any software purchased for R&R purposes and apportioned to the project if used subsequently
  • Subcontracting R&D costs – claims can be made for 65% paid to a subcontractor
  • Utilities & Consumables – water, fuel, power, and material used for the project
  • Prototypes – all R&D prototypes

 

How much can a company claim?

If this is the first claim a company has made the claim can cover the last 2 accounting periods. All subsequent claims can be made annually.

Claims can be worth up to 33% of the total R&D costs providing the criteria for R&D Tax Credits have been met.

 

How will the claim be paid?

Under the scheme, the R&D tax credit reduces the company’s taxable profit.  If the company recorded a profit for the period, it is claiming R&D expenditure, the overall Corporation Tax due will be reduced by the amount of tax relief awarded.

If the company is making a loss, it may be able to claim a cash credit.

Depending on whether the company is profit-making or loss-making will determine how the R&D tax credit is paid.

At AccountsPro we can help identify tax-saving opportunities such as R&D tax credits and can help reclaim R&D costs from HMRC.  Contact us for a free consultation.

Funding

A Guide to SEIS & EIS For Startups: How To Make Your Startup Investible

A Guide to SEIS & EIS For Startups: How To Make Your Startup Investible

There are a number of UK government venture capital schemes to support SMEs.  The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) were introduced to make investment in UK- businesses attractive and to encourage innovation. The schemes offer generous tax relief to investors and have essentially the same purpose – for startups and young UK companies to raise growth funding.

The funds raised under the schemes must be used for a qualifying business activity and solely to advance the growth and development of the company.

SEIS v EIS

The incentive of SEIS/EIS for investors is the tax relief opportunities. Although the schemes have similarities, there are important differences.

SEIS

SEIS is aimed specifically at startups and very early-stage companies, allowing individual investment of up to £100,000 per tax year.

SEIS funding criteria for companies:

  • Fewer than 25 employees
  • Trading for less than 2 years
  • Gross assets valued at no more than £200,000
  • No previous investment from Venture Capital Trust or under EIS

There are also substantial tax benefits to investors:

  • Initial Income Tax relief of 50% against the amount invested
  • No Capital Gains Tax on any SEIS gains after 3 years
  • CGT write-off 50% of the investment in same tax year
  • No Inheritance Tax on shares held for at least 2 years – if shares are sold at a loss the investor can offset the loss against CGT

EIS focuses on small to medium sized companies and allows for an investment of £5m each year and a maximum lifetime investment of £12m or £20m for “Knowledge Intensive” companies, which also includes amounts raised from venture capital schemes.

EIS funding criteria for companies:

  • Fewer than 250 employees or 500 employees for “Knowledge Intensive” companies
  • Trading for less than 7 years or less than 10 years for “Knowledge Intensive” companies
  • Gross assets valued at no more than 15m

Tax benefits to investors:

  • Initial Income Tax relief of 30% against the amount invested
  • No Capital Gains Tax to pay on EIS gains after 3 years
  • Up to 100% deferral of investment amount against CGT
  • No Inheritance Tax on shares held for at least 2 years – if shares are sold at a loss the investor can offset the loss against CGT

If you want to learn more about SEIS & EIS schemes then please contact our team on 020 7193 8798 or email us at: hello@accountspro.co.uk. Alternatively, you can send us a message via our contact page:- https://accountspro.co.uk/contact-us/

 

Cloud Automation

Cloud Automation: What Are The Benefits?

Cloud Automation: What are the benefits?

Automated accounting systems provide long-term benefits and common tasks, and processes are accelerated making them more efficient. Through automating core processes such as accounts payable, accounts receivable, invoice processing, data reconciliation and end-to-end audit trails, companies can save finance team time and stress and reduce the risk of delays and inaccuracies.  Multi-day transactions can be instantaneous and real-time data can be used to inform decisions.

Cloud automation uses specialised software tools to automate manual tasks in the workplace. It can be used to reduce administrative overheads and achieve greater workflow efficiency and targets.  It enables businesses to make the best use of their cloud-based resources making it a time-saver and allowing effective cloud management practices. In turn, this promotes streamlining of repetitive tasks and increases operational efficiency.

Five reasons to automate your accounting processes

  • SAVE TIME
  • REDUCE THE LIKELIHOOD OF ERROR
  • ENSURE GREATER CONSISTENCY
  • GREATER PRODUCTIVITY
  • REDUCE THE CHANCE OF FRAUD

Cloud automation isn’t necessarily meant to replace people, but as a business becomes more efficient using automation, human intervention becomes less frequent and allows for more focus on greater problems rather than day-to-day, repeated tasks.

Investing in automation is a small price to pay with significant benefits and could provide your business with the essential toolkit for greater efficiency.  It can also leverage the benefits of flexible and remote working and create accounting functions that are efficient and accurate.

Cloud automation could be a lucrative investment for your business and is now more important than ever for finance and accounting teams.

At AccountsPro, we can provide bespoke cloud automation services to automate accounting processes and data reconciliation with no up-front cost for development and all for a monthly fee.

So, if you are thinking of entering the world of cloud automation for your accounting Contact Us for a free consultation.

 

Property Investment

Staycation Investment Property. Your Questions Answered – Join Our Webinar on Tuesday 25th May 2021 at 7:30pm

Join our Webinar on Tuesday 26th May at 7:30 pm on the topic of:  ‘Staycation Investment Property. Your Questions Answered.
Jonathan Levy, Director of AccountsPro will be joining Investments Manager, Michael Holliday, and Development & Acquisitions Manager, Paul Winder & Raj Patel to discuss your frequently asked questions on the short-term, furnished holiday let market.

New research commissioned by The Cumberland, the ‘Research Without Barriers’ has found that 83% of British travelers would prefer a UK staycation than travel abroad this year. Given this, many British holidaymakers are set to take a holiday at home in the UK staying in self-catering accommodation, research has also highlighted ‘holiday cottages’ being the most popular choice of accommodation as Brits attempt to book their holidays this year.

With staycatons on the rise across the country, many of our existing and new investor clients are wanting to know the best way to take advantage of the buy-to-let market in time for summer 2021, with many believing that the great British staycation is not just a short term solution to the current pandemic, but a long term option for travelers.

Join us on Tuesday 25th May 2021 at 7:30 pm [BST]

https://www.residential-estates.co.uk/…/staycation-boom…

CFO

CFO Insights for 2021: Growth still matters

CFO Insights For more than a decade now, we have operated in a growth economy.

A good CFO is a controlling force for organisational behaviour. In times of growth, CFOs want that bottom line to increase at least as fast as the top line. Revenue is good; profit is better; cash is king. As such, a CFO provides a negative feedback loop on spending and thus brings stability to the company.

CFOs of all people know that you can’t cut your way to growth, and sadly there has been a lot of that this past year. If a CFO perceives that the business is on the upswing side of the recession curve regardless of the economy as a whole then he/she will be more eager to return to spending in key areas.

On the topic of spending. a recent CFO report on spending has shown that both marketing and sales have seen a recovery as companies re-align the efforts towards acquiring customers. We are seeing more of an emphasis towards a ‘self-discovery’ approach to customer acquisition with less of an emphasis on acquiring customer through ‘direct selling‘; which as a channel has been impacted by the pandemic.

Businesses in both the B2B and B2C segments are using online self-discovery processes that guide customers to finding the products their need. If they were doing this already then these processes have been significantly improved and are more prominent in their focus.

Spend across product support has also seen an increase where companies are now expanding their digital reach to support customers on platforms that have seen little utilisation as a support channel such as WhatsApp and Instagram We have also seen growth in companies providing on-site services. From ‘home’ car servicing from Ford (which would normally be done at one of their franchise garages) to ‘home’ computer repairs from Dell – which was a fabulous service that I used this week.

We will be sharing more insights in future posts.

Stay tuned for more…

 

CFO

Why hire an Outsourced CFO Consultant 2021 ?

Outsourced CFO Consultant: In this article, I would like to briefly explain what a CFO does, as well as what they shouldn’t be doing. We will also look at the advantages and benefits that a CFO consultant brings over hiring a permanent CFO.

The Chief Financial Officer (CFO) position entails more than just ‘score keeping’ on how a company has done. For that function, you would be better off hiring an Accountant. However, I have sadly witnessed numerous instances where Start-ups have hired a permanent CFO (not at market rate) with this initial remit; which under utilizes both talent and company resources that could have been better spent elsewhere.

‘Score keeping’ is where the role starts. The CFO takes financial reporting and fuses it with operational data and metrics which allows them to analyse areas in which the business could make changes to positively affect efficiency, productivity, and profitability.

Outsourced CFO Consultant – Why You Need One?

Financial matters are not the only places where an outsourced CFO consultant is able to lend advice. CFOs are able to help in many critical areas, such as:

  • Advice on choosing cloud software to automate finance, legal, HR and administration workflows.
  • Leading or exploring the opportunity of a potential merger or acquisition
  • Uncovering opportunities and threats to your business presented by other players in the space.
  • The ability to unlock scalable growth through new business models, channels, verticals, or customer segments.
  • Identifying opportunities to improve margins through analysis of channels, service lines and products.
  • Building a finance team from scratch or coaching and mentoring an existing team.

However, the costs associated with hiring a full time CFO role typically puts it out of the reach of many SMEs and start-ups. The average permanent CFO salary in London is £203,800 and can go up to £260,000 (Robert Half 2021 Salary Guide).

The second biggest downside when hiring a permanent CFO is the risk of loss of continuity when the CFO or another senior member of the finance is let go. Whereas hiring an outsourced CFO can mitigate this risk by allowing the consultant to step in when needed to keep a business’s finances running smoothly.

Most start-ups and SMEs do well to find a CFO consultant that can come on-board for short term or medium-term assignments for example, to see through a merger, acquisition, turnaround or to build a finance team. A CFO could also help on a part-time basis to enable continuity, directional leadership or to support transition of staff members.

A CFO consultant has the advantage of starting immediately which saves valuable time and allows the consultant to get to work on a remit straight away. It is also advantageous for companies that are looking to hire a full time CFO where they can hire a part-time consultant to ease their staff into the change. Additionally, bringing in a consultant at the inception can help to flesh out the needs of the permanent CFO role. The result is a better-defined position that is more likely to attract and retain good calibre talent, as well as lead to sustained success for the business.   

In summary, for many SMEs and Start-ups, it makes more sense to hire an ad-hoc or part-time CFO consultant than hire a full-time permanent CFO. Using an outsource firm to ‘lend’ an outsourced CFO consultant is a cost-effective way to carry out important functions like automating workflows, approaching lenders, expanding business operations, and executing time-sensitive financial decisions.

Whether you have a successful business, an under performing one, or are planning for a business transition you may have needs that require a CFO consultant. If you would like to explore the options of hiring a consultant, you can contact us here or call us on 0207 193 8798.

 

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