By Richie Lennon
An outsourced CFO can help an agency with financial planning, major decisions, funding and commercial analysis. But many agencies first need reliable monthly accounts, project margins and a cash forecast, rather than a CFO title. Define the missing work, who owns it and the decisions it must support. Then compare an outsourced arrangement with the internal responsibilities you still need to maintain.
If you only discover a project’s margin after the team has delivered it, your next pricing or hiring decision starts with incomplete information. A year-end set of accounts will not repair that timing.
We hear owners describe that gap as needing a CFO. Our view is that the right level of finance partnership matters more than the title. Regular reporting and someone who can explain the numbers may solve the immediate problem. Deeper modelling and transaction support are a different scope.
For an agency, the first questions are practical. Which client work pays for the team? What capacity are you buying? When will the invoices turn into cash?
Define the gap before choosing the role
Bookkeeping, reporting, control and strategic finance are responsibilities. Different teams and advisers can combine them in different ways. They do not form a compulsory ladder that every agency must climb at a fixed turnover.
| Gap | Work to specify |
|---|---|
| Late or unreliable figures | Reconciliations, complete cost records and month-end ownership |
| Unclear project margins | Consistent fee, labour and direct-cost allocation |
| Hiring decisions made from the bank balance | Capacity, delivery demand and a cash forecast |
| Funding, acquisition or major investment | Detailed modelling, commercial analysis and relevant specialist support |
A CFO cannot produce reliable insight from missing timesheets or unreconciled accounts. Establish who fixes the records and whether that work is included.
Our accountant, controller and CFO comparison explains the broader responsibilities. This guide applies the buying decision to an agency’s delivery economics.
Separate fees from money passing through the agency
Client media spend and other pass-through amounts can make invoiced revenue a poor measure of the agency’s economic scale. Establish the accounting treatment, then keep the management measure consistent.
For illustration, assume €100,000 invoiced includes €20,000 of separately identified pass-through amounts. The management view below uses the remaining €80,000 as agency fee income; it does not decide the formal principal-versus-agent revenue treatment.
| Illustrative management bridge | Amount |
|---|---|
| Client invoices | €100,000 |
| Identified pass-through amounts | −€20,000 |
| Agency fee income used for this comparison | €80,000 |
| Delivery labour and direct costs | −€48,000 |
| Contribution before overheads | €32,000 |
| Remaining overheads | −€20,000 |
| Operating profit | €12,000 |
The same €12,000 profit is 15% of the €80,000 fee income and 12% of the €100,000 invoiced amount. State the denominator before comparing ratios.
An agency report should explain which clients, services and projects produced the contribution. A total margin can hide work that is consistently over-serviced.
Labour cost needs capacity context
We challenge the automatic response to a high wage ratio. The question is what the cost is buying: current delivery, capacity for credible future work, or avoidable rework and under-pricing.
Hiring ahead can be a deliberate investment. It still needs a plan showing the work expected, the time until the person becomes effective and the cash available during the ramp-up. A forecast built from hopeful pipeline does not provide that evidence.
Cheaper resourcing also needs a full-cost view. Include management time, handovers, quality checks and the operational burden. An attractive contractor rate can be offset by work elsewhere in the agency.
There is no single wage percentage that proves every agency is healthy. Define delivery costs and the income denominator, then assess the business model, capacity and trend. Our agency profitability guide covers the operating decisions in more detail.
Record all the time, then interpret it
Timesheets help distinguish paid capacity, client delivery, internal work, sales activity, leave and rework. Recording only billable time prevents the agency from explaining where the rest went.
For illustration, a fixed €6,000 project taking 60 hours produces €100 of fee income per recorded hour. At 90 hours it produces €66.67. Neither figure is profit; subtract the relevant labour and other costs to establish the margin.
Review scope changes and write-offs alongside the hours. The action may be a revised brief, a change request, better handover or a different price. A report naming the least profitable client without explaining the cause is not enough.
Look at invoice timing and cash timing separately
An agency can have signed work and still struggle to fund delivery. Deposits, milestones, payroll dates and debtor collection determine the cash position.
We would use a rolling baseline that shows when projects are invoiced and when the cash arrives. Use credible demand and test delays, rather than treating every proposal as won work.
Include payroll, contractors, tax, debt and other commitments. Test what happens if the largest receipt slips or a major client cancels. A general statement that the business is profitable does not settle whether the next hire is affordable.
Use the business forecasting guide for the assumptions and review process. The forecast needs an owner who updates it when the commercial position changes.
When deeper CFO work earns its place
More developed support can be useful where the agency needs to evaluate a substantial investment, acquisition, funding structure, ownership change or exit. It may also help where several operating units need an integrated commercial view.
Define the output. A funding model, a board pack and a project-margin report require different inputs and expertise. Tax, legal and transaction work may need other advisers.
Avoid buying a vague promise of strategy. Ask which decisions the adviser will support, what they will produce, what information they need and who implements the actions. The scope should be clear enough that both sides know whether the work was delivered.
Outsourced versus in-house
An outsourced arrangement can provide an agreed amount of specialist work without a full-time hire. An internal role can offer more day-to-day capacity and involvement. The comparison needs to cover the actual work and time available.
Do not compare a full-time finance leader with a few monthly advisory hours and call the difference a guaranteed saving. Include bookkeeping, reporting, internal administration, systems and additional specialist work in the total cost.
| Compare | Questions to ask |
|---|---|
| Capacity | How much time is available, and when? |
| Scope | Who owns records, reporting, forecasts and decisions? |
| Continuity | What cover and handover arrangements exist? |
| Communication | Which reviews happen, with what preparation and follow-up? |
| Cost | What is included and what triggers an extra fee? |
| Control | Who retains access, authority and internal responsibility? |
Outsourcing does not eliminate every dependency. The agency still needs people who provide timely inputs, approve commitments and act on advice.
Agree the first outputs
Begin with the current records and the recurring decisions. If the accounts need repair, make that visible in the plan before expecting a sophisticated forecast.
Useful first outputs might include a reconciled month-end pack, a project-margin view, a rolling cash forecast and a short decision list. Agree the delivery date, inputs and owner for each.
Measure progress against those outputs and decisions. Do not promise a 15% profit improvement or a 30-day transformation without an evidenced basis. A clearer margin can initially reveal that the business is less profitable than the old report suggested.
Discuss onboarding, response arrangements, meeting rhythm, contract terms and software access explicitly. An article cannot prescribe Around Finance’s current terms for every engagement.
What to ask in the first conversation
Bring the recent accounts, debtor list, project or client margin information, payroll and pipeline. Tell the adviser which decision you cannot currently make with confidence.
Ask whether the first need is better records, recurring reporting or deeper commercial work. Then request a written scope that joins the gap to the deliverables and ongoing internal responsibilities.
Our accounting service for agencies is the commercial starting point. If your Irish agency turns over €250,000 or more, a Finance Fit Call can establish whether Around Finance’s ongoing support fits. Agree any deeper CFO, funding or transaction work separately within the scope.
FAQs
Does every growing agency need a CFO?
No. Many first need reliable monthly accounts, margin reporting and a cash forecast. Choose support around the missing responsibilities and decisions, rather than a universal staff-count or turnover trigger.
Will an outsourced CFO replace our accountant?
That depends on the scope. Strategic work can sit alongside an existing accounting team, or responsibilities can be combined. Specify who owns bookkeeping, returns, reporting and forecasting so nothing falls between providers.
What should agency reporting include?
Relevant fee income, delivery costs, project or client contribution, capacity and cash. Define the treatment of pass-through amounts and cost allocations before comparing margins.
Is outsourced support always cheaper?
No. Compare the complete work and capacity, including internal administration and additional specialists. A part-time advisory arrangement and a full-time internal role are different purchases.
Do we need new software?
Possibly, but establish the reporting gap first. Existing systems may work with better records, allocation and review. Test any proposed setup before assuming the connection solves the accounting problem.
Can the adviser help with funding or a sale?
Potentially, where that expertise and work are agreed. Financial modelling, tax, legal and transaction execution can require different advisers. Do not assume all are included in a monthly reporting fee.
How do we know the arrangement is working?
Check whether the agreed reports arrive, the figures reconcile, the owner understands the changes and the decisions receive follow-up. Judge against the scope and useful outputs, rather than a promised percentage improvement.
