Virtual CFO Services – Why Your Business Needs Them

Every business grows at a different rate. It’s one thing to know where to take your company next and the other how to get there. But the one thing that startup owners are always stumped on is when to hire a CFO for their company. For some, it is a question of whether it’s even worth hiring one, and for others, it’s how long they should wait until they get one on-board to manage their company’s finances. Let’s dive deep and begin with analyzing just precisely what a CFO does in practice in order to resolve these queries one-by-one.

What Does A CFO Do?

The primary responsibilities of a Chief Financial Officer, much like a supervisor, are two-fold. On the one hand, they are responsible for managing the accounting team keeping your books up-to-date, and making sure you’re meeting your tax liabilities. On the other, they act as a financial advisor and provide guidance regarding investment decisions to help keep your company’s economic well-being secure.

Now, as wonderful as that sounds, hiring an in-house CFO requires deep pockets. They are egregiously expensive. A full-time CFO could cost you up to $300,000 yearly, perks included. For startups that are in their early years of operation and have a tight leash on their payroll budget, this kind of investment doesn’t make a whole lot of sense. Plus, the need for a CFO’s services is usually on a contractual basis; ergo, hiring one on a full-time position could seem like overkill.

So, how do you avail the services and essential expertise of a CFO without having it wipe a huge chunk your budget? Simple, until and unless you plan to take your business public within the next few years, consider employing a virtual CFO.

How Is A Virtual CFO Different?

A virtual CFO (also known as a fractional CFO) fulfills all the duties a regular CFO does; providing you:

  • Regular financial updates
  • Maintaining your budget
  • Recommending future investments
  • Creating forecasts of your financials
  • Improving your cash flow
  • Analyzing your KPIs

The only significant difference you’ll notice is that a Virtual CFO will be, you guessed it, virtual. They will be providing their services virtually on a contractual basis rather than working as a full-time employee in your office. A virtual CFO will charge for their services on a per hourly basis instead of demanding a fixed salary in thousands and will be providing the exact same solutions a regular CFO does, without expecting any perks.

So, what’s the catch?

There is none, actually. As surprising as that sounds, it is indeed true. Usually, the needs of many small-time businesses are in areas such as forecasting, fundraising, and budgeting, and they inaccurately estimate the extent to which they’ll be needing the assistance of a CFO.

See Also: 7 Easy Steps To Safeguarding Your Business Against The Fake Invoice Fraud

Benefits of Hiring A Virtual CFO

Moreover, hiring a virtual CFO comes with a couple more extra benefits that provide your business more flexibility and financial leverage.

1) More Opportunities:

The needs of a startup are continually changing. Every day you’re engaging with new clients and see yourself investing in different prospects. Although there is no such thing as doing too much business, but one should always have an eye on the overall picture and put the financial stability of their business at the forefront. A virtual CFO judges your client-engagement based on the stature of your business and helps you stave off any unnecessary meetings or agreements that your startup is financially better off without.

2) A Fresh Perspective:

While this may sound surprising, not having a CFO physically present in your office is actually a great advantage. More often than not, in-house CFOs tend to get lost in the weeds of chasing numbers and firefighting day-to-day issues. This impacts their performance and can be a distraction from the crucial task of keeping an eye on the bigger picture and undertaking measures for long term stability. Having a virtual CFO who isn’t always knee-deep in day-to-day financial hassles can be paradoxically beneficial for they will have an outsider’s perspective on your numbers, and they will be judging your metrics from an objective point of view and provide strategic advice accordingly.

Choosing the Right Virtual CFO provider

Trusting someone with your company’s sensitive financial data is not a decision that is to be taken lightly; therefore, it’s essential that your virtually hired CFO is someone who’s trustworthy, professional, experienced, and ticks off all the right boxes for your business’s demands. Here are a few things to remember while you thin out the herd:

1) Compatible Experience:

No company is the same as another in scale. Different companies have different needs, face different challenges, and hire their employees based on those requirements. A virtual CFO service that has made waves working in big-time companies might not be the most suitable candidate for your startup. It would be best if you looked for someone who bears experience working at small-time companies similar to yours. If your startup is a service business that offers professional skills, advice, or products, then you’ll want your virtual CFO to be familiar with these areas of expertise.

2) The Unique Demands of Your Business:

One of the best things about hiring a CFO virtually is that you have complete control over the extent of the service you actually need from them. Depending on your needs and budget, you will have the availability of hiring either one independent consultant and have constant one-on-one communication with them. Or request the assistance of an entire CFO service team to work collectively and deliver results under tight deadlines. Of course, the cost will be a varying factor here, so it’s better to take as much time as you need to decide on this matter. In the end, you will have full liberty of picking your troops individually and deciding what fronts of your business you want them to guard.

3) Your Personal Goals:

There’s no shortage of services and solutions that a virtual CFO will be able to provide you. That’s why it’s paramount that you know beforehand what kind of solutions your venture needs and what areas you would like them to target. Services like Monily, which provides a wide-range of financial management solutions including accounting, bookkeeping, forecasting, tax preparation; offer you a one-stop shop solution and guide you every step along the way to mold the business plan of your dreams into a reality. Whether your needs are only on a one-time basis, or you’ll be needing constant support to advance your business further, Monily Virtual CFO Services can provide the perfect fit for your needs.

If you’re unsure and would rather have a CFO run diagnostics and identify sensitivities and problem areas for your business; a short-term fixed hours contract can help you find the answers. After all, if you’re careful in picking out the right service to watch over your small business, then you shouldn’t have much to worry about later and you can have the peace of mind, knowing all bases are covered.

Farwah

Hi, I'm Farwah. I am the Product Owner of Monily. I have an MBA from Alliance Manchester Business School, UK. I'm passionate about helping businesses overcome challenges that hamper their growth, which is why we've launched our suite of accounting solutions to facilitate entrepreneurs to efficiently manage business finances and stay focused on growth. Hope you find brilliant ideas and useful tips on this blog.

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