Why should you hire a Virtual Chief Financial Officer?

Virtual CFO services in today's digital landscape

 For every business, whether you are running a new or an existing business, you need to have a handle on your finances, but you may find it challenging to do this yourself as your business grows.

If you were taking a traditional approach, you would have hired a full-time CFO to manage your finances. A CFO will track business finances, manage cash flow, analyze financial statements, and revamp your financial strategy. An in-house CFO handles all the crucial financial tasks and offers strategic advice to keep the business profitable and grow.

However, many small businesses do not have the financial resources to employ an in-house CFO. As the salary of a CFO can reach up to hundreds of thousands of dollars a year, hiring one is not a financially viable option for a small business founder.

Thankfully, with the development of technology like the cloud-based accounting system, we have access to many financial management services for relatively low prices. One of those is virtual CFO services that can meet the needs of smaller businesses.

But what are virtual CFO services and what benefits can you gain when hiring virtual CFOs? Let's jump in and find out more!

What is a virtual CFO?

A virtual CFO has the same expertise and performs the same tasks as a full-time CFO. The main difference between the two is the virtual CFO works remotely and on a part-time or temporary basis.

What can you expect from a virtual CFO service?

Virtual CFOs can offer a myriad of services to their clients. Some core services include:

In-depth reporting

Your business financials are the key to knowing your current (and future) financial position. However, not all business owners are adept at financial reporting.

Virtual CFOs will help you generate in-depth reports (like balance sheets, income statements, and cash flow statements), conduct financial analysis, and offer advice to make the right strategic decisions for your company.

They can also create reports for your investor meetings or board meetings.

Budgeting

The economic downturn the world is facing right now has put many businesses at risk, and even some out of business. While companies cannot prevent an economic downturn, they can survive it with the right help.

A virtual CFO will help you to review your current budget and create a plan to survive an economic downturn.

Financial forecasting

Accurate financial projections, especially cash flow forecasts, are vital to a company's future growth. 

Suppose you struggle to maintain or increase profitability for your business. A virtual CFO will create a financial forecast and help you identify ways to optimize your cash flow to grow your business and achieve your profitability goals.

Financial strategy

In business, you should make decisions based on strategic planning. A virtual CFO will make sense of your financial data and give qualified advice and insight to run your business.

They are financial experts in long-term strategic planning. They can work out precisely what is needed to take your company from where it is now to where you want it to be.

Compliance

Virtual CFO services typically include controller services and accounting team oversight. This will help ensure the company's finances comply with the laws and regulations where the business has operations.

Raising capital

You can use virtual CFO services to streamline a lot of the financial tasks involved with the entire process of fundraising. They will help you prepare documents, presentations, and economic models to present to investors.

They can also provide guidance and advice on answering tough financial questions from potential investors. Sometimes virtual CFOs may also connect you with investor contacts in their network. As they have vouched for you, the investment process is much faster.

Benefits of Virtual CFO services

Hiring a virtual CFO is a wise choice for smaller businesses and companies in the startup phase. A virtual CFO can offer all the benefits to a startup or small business owner as a full-time or traditional CFO. These benefits include:

Reduced cost

Virtual CFOs offer the same services and have the same expertise as a traditional CFO. But their services come at a fraction of the cost.

Another advantage of virtual CFO is that because they operate as a service provider, you only have to pay for the required service.

If you're a small business with a limited hiring budget, employing the service of a virtual CFO will save your business a good amount of money.

Increased profitability

Making a profit is the primary goal of any business, and this is also the case those people in virtual CFO roles. Virtual CFO services will help you better control your G&A expenses, accounts payable, and other costs in a company. They will also assist in improving business strategy, making financial processes more efficient, and setting reasonable financial goals to maximize profitability. 

Risk management

The availability of good risk management determines whether a company can maintain sustainable growth. And this is where the tremendous value of virtual CFO services lies. A virtual CFO will assess the risk before making any business decisions ( in investment or business strategy). They will help you move your business forward with sound business decisions.

Save time

If you are one of the founders that is burning the midnight oil managing your own finances, a virtual CFO service will save you a lot of time. They are experts in this area and can help to take the load off of you, so you can focus on managing operations and driving growth.

The right time to use virtual CFO services

If you ask when should you use virtual CFO services? The answer is NOW!

Although this is a time of high inflation and waning investment enthusiasm, your company can ride out this wave of economic depression and achieve business growth with advanced financial planning and business strategy. 

‍