Why is Virtual CFO Services a Growing Trend?
CFO Services are important for those looking for outside of the box solutions in today’s changing economic landscape. Getting a small company or startup running efficiently may take a bit of time, most especially if your business lacks financial intelligence. Do you know that a significant reason why many small ventures fail in the first three years of operation is financial incompetence? Tracking loss and profits, and maintaining budgets and accurate bookkeeping can determine your business’ survival.
In this day and age, corporations and startups are looking for innovative approaches to run lean. Now more than ever, there is so much pressure in making cuts to staff members, and whenever possible, outsource. This has resulted in the trend of hiring virtual CFO services instead of more traditional full-time, in-house CFOs.
A lot of small business owners are finally prioritizing this service. Fortunately, cloud technology has helped grow the virtual CFO services industry. Cloud technology has been of great help in utilizing the ability of virtual CFOs for many small and medium-sized companies. This technology advancement allows your business to get broad, expert support over the entire financial process, without having to employ a full-time team member.
What Is a Virtual CFO?
Just as the title of the role suggests, a virtual CFO is a financial and operational expert who performs the services of a chief financial officer. However, instead of offering those services in person, a virtual CFO works remotely on a contractual, sometimes part-time schedule.
Until recently, the strategic advice of a CFO wasn’t even possible for many small businesses, since financial executives wanted permanent, in-house roles. Most small and medium-sized ventures have hesitated to fill the position because it’s been so hard to know when a growing organization is ready for such a big commitment.
What does an outsourced CFO do?
An outsourced CFO is a financial expert who offers financial strategy services on a contractual or part-time basis. This person helps businesses resolve challenges like executing more efficient systems, solving tight margins, raising capital and dealing with cash flow issues.
Hiring a virtual CFO is a brand new concept. Today, many types of small- to medium-sized businesses hire a virtual CFO to gain access to a seasoned financial professional at a fraction of the cost of employing a full-time CFO. Virtual CFO services differ from company to company.
Here are just a few of the services a virtual CFO might provide:
- Assistance with strategic goal creation and vision casting
- Financial planning
- Opportunity budgeting and analysis
- Cash flow forecasting and management
- Scenario modeling
- Financial statement evaluation, preparation, and reporting
- Financial risk management
- contingency planning
- cost-benefit mapping
- Cost management
- productivity, and talent recommendations and assessments
- supply chain insights and reviews
- capital-investment due diligence and analysis
- Opportunity identification
- Funding administration and evaluation
- Debt management or reduction
- Organizational transformation
The responsibilities of a virtual CFO usually depends on the industry, size, and unique financial needs of an organization. Typically, get paid via a monthly flat rate or by the hour.
What does a CFO do all day?
Do you think your business needs a CFO? Will the expertise of a CFO make a huge difference in the way your venture grows and operates? As small organizations grow, their business architecture changes. This financial expert can help you build financial models, analyze and prepare financial statements and reconcile expenses and income. By working with a CFO, whether outsourced or internal, you can help your company thrive in the long run.
A CFO provides better, faster data.
As your business changes and grows, your financial system needs to change, too. A seasoned CFO will help you convert to an efficient system that can accommodate big numbers, more data points, and more sources. With a CFO’s help, you can also handle complex capital management systems. This allows you to get faster information with better quality.
A CFO helps your organization manage risks.
When you’re running a growing business, managing risks is more than just having sufficient insurance. It is also about protecting your business from human capital, environmental, and regulatory risks. A CFO can pinpoint exactly how and where risks could impact the company’s business plan. Moreover, he or she can make important decisions about which goals to prioritize and where to allocate resources.
A CFO offers specific growth-oriented tasks.
With a CFO on board, any growth-oriented organization can pay more attention to initiatives in order to achieve their goals. CFOs working for small businesses are very hands-on, highly dedicated to communicating financial results and controlling growth. It’s crucial to have all the forward-looking capabilities a CFO brings to the table.
CFOs provide focus and clarity for the CEO.
The CEO, or business owner, is generally focused on generating revenue during growth periods. During these times, a reliable CFO can handle budgeting, accounting, financial analysis, and other crucial needs like legal issues, real estate, banking, and account receivables.
When the CEO puts all of these matters in a CFOs capable hands, the company can achieve great balance. In turn, the CEO can pay more attention to the bigger picture, as well as the venture’s overall health, while the CFO directs and watches the financial systems.
CFOs offer timely preparation for important business decision
Oftentimes, business owners are so busy with daily operations. They don’t have enough time to deal with cost control measures, capital acquisition, and financial forecasts. A CFO can focus on these aspects, as well as other forward-thinking tasks, so your organization can stay financially prepared at all times. This means timely, accurate information so business owners can act in case social, regulatory, industry and economic issues arise. A CFOs ability to offer accountability and insights can help a business avoid pitfalls and take advantage of full opportunities.
Wondering if your business needs the services of a virtual CFO? Here are the signs you need to watch out for.
You’re struggling to forecast and budget.
This is a big problem for high-growth SMEs and startups, most especially those in search of crucial next-round funding. You need to prove to investors that your business is established on strong financial ground, and that equates to showing a firm grasp on your forecasting, goals, and budget. Your organization may be full of brilliant individuals, but it’s not probably full of people who are good at financial planning.
You need better business insights to make better business decisions.
Every decision-making process must be data-driven, and CFOs have the expertise and experience to make these informed options. Trusting your gut means you can have unfortunate consequences and can lead to the loss of big amounts of money. Insight and transparency are keys to making proactive, responsible, confident, rather than reactive options.
Thankfully, virtual CFOs are seasoned accountants and can solve issues by providing businesses clarity around their finances, helping them make rational decisions.
Your business is growing, but your processes and routines aren’t.
The bigger your business gets, the more complex finances can become. The busier the organization is, the more difficult it is to dedicate time to deal with finances. If your bookkeeper can’t handle it alone, most probably, a virtual CFO can. A virtual CFO can often offer much-needed advice on investing in a technology setup that can support growth.
Your expenses are spiraling out of control.
Expenses can spiral out of control instantly, and its adverse effects can negatively impact your finances. This can only be avoided with the proper expense and spending management, and clear policies that in turn, require control and scrutiny. A virtual CFO can help you solve these issues: advising on technologies and measures to put in place in order to prevent these problems in the future. He or she can also create best practices, so you can spend your funds properly.
What are the benefits of outsourcing CFO services?
Customized services depending on your budget and needs
The requirements of an online food delivery service vary from that of a startup clothing brand. The forecasts, processes, and reports that these businesses need are distinct. A virtual CFO can customize the scope of work and skills necessary to fit the business at hand, without charging you an inappropriate amount.
You can work with someone who can grow with your company
A virtual CFO’s services change as the company grows. He or she can help you navigate through various growth stages from a financial perspective. Furthermore, this person can help transition your business from having an outsourced CFO to an in-house one, in due time.
You can enjoy better ROI
Perhaps one of the best benefits of working with a virtual CFO is gaining access to this expertise level without paying the usual cost of employing an in-house CFO. Hiring a virtual CFO allows you to better manage the expenses by acquiring only those services you need, and when you need them, without having to roll the terms and other benefits of employment into the equation. A virtual CFO can help you cut the costs within your company.
It’s less expensive
Hiring a virtual CFO is a lot cheaper than employing an in-house professional with a similar experience. Virtual CFOs don’t require bonuses or benefits. In-house CFOs are full-time salaried employees, while virtual ones only get paid depending on the number of deliverables and time your business needs.
Multiple Industry Experience
Many virtual CFOs have the experience of working in various fields at any given time. While the CFO firm you’re coordinating with can pair you with a person who has vast experience in your industry, that CFO will also have wide experience in other fields. This offers opportunities for multilayered networks and insights.
Fits Perfectly Into your Existing Teams
Virtual CFOs have worked with various personalities, sometimes simultaneously. These professionals know how to deliver financial expertise to existing staff without messing up egos or feathers.
A CFO can handle any challenge you throw at them.
CFOs have a “been there, done that” attitude. They can handle any challenge you throw at them. These people have worked with businesses of all growth stages and sizes.
A CFO goes through smaller learning curves.
In general, employees usually go through 6 to 12 months in order to perform at their maximum capacity. The advantage of hiring a virtual CFO is that they have so much experience in entering businesses mid-process. They can quickly evaluate the current situation and start putting actions in place to achieve goals and resolve challenges.
A CFO offers standardized formatting and reporting.
While most bookkeepers, controllers, and CFOs bring some of their own styles in how they format reports, a virtual CFO is more likely to have used the most widely accepted best practices for formulating and generating client deliverables and reports.
A CFO has a vast network.
Most CFOs have been in the industry for many years, long enough to have a wide network of organizations and individuals. A chief financial officer who is part of a virtual CFO team has not only his or her contacts, but also has access to the networks of the other people in the team.
As a business owner, this means you can expand into new products and services. If you want to take on something new in your business, your CFO will know some people who may help you get a better start.
A good virtual CFO can work with you on so many levels.
If you’re not yet ready to hire a full-time CFO, yet feel like you need a CFO’s expertise, you can outsource a part-time CFO who can provide efficient financial leadership. The value this can add to your company can be significant. It can be the difference between growth and stagnation.
Several businesses feel the need to hire financial experts to manage growth. The thing is, hiring a high-level employee can be expensive. One expert most organizations eventually need is a CFO or Chief Financial Officer. Thankfully, technology innovations now make it possible to hire one. Each business, small or big, has a CFO on some level.
How to Get Started with a Virtual CFO
If your obscure understanding of your venture’s financials prevents your ability to make good business decisions, working with an experienced virtual CFO may be an excellent idea. Explore a virtual CFO relationship now by scheduling a consultation.
We deeply understand the challenges of running a small- to medium-sized business. That is why are dedicated to working closely with them. Our main goal is to speed up growth so founders and owners can take them to a whole new next level. We can help keep your investors happy, manage cash flow, and establish strong efficiencies in the business and operations processes.
Why not book a time to speak with us to go over your Virtual CFO needs?