Growing your company’s revenue is a beautiful thing. There’s no feeling quite like the one that comes with hitting a financial goal that’s long been on your horizon. However, reaching new revenue levels also comes with growing pains. If you’ve hit that point, your business needs a financial executive. But it’s also highly unlikely that you can afford to hire a full-time CFO at this stage.
You’re probably wondering about hiring a virtual CFO and looking into virtual CFO services. Some common questions will also spring into your mind, such as:
- What is a virtual CFO?
- What can their expertise do for me?
- Does my business need an outsourced CFO?
In this article, we are going to highlight the services a virtual CFO provides, the benefits of engaging one, and how to decide whether virtual CFO services are a good fit for your business.
What Is a Virtual CFO?
Just as the title suggests, a virtual CFO is an operational and financial expert who performs the services of a chief financial officer. However, instead of delivering those services in person as a full-time employee, the virtual CFO works remotely on a contractual, part-time schedule. Until recently, a CFO’s strategic advice wasn’t even an option for most small businesses because financial executives wanted in-house, permanent roles.
Small and medium-sized businesses have hesitated to fulfill the seat because it has been difficult to know when a scaling organization is ready for such a commitment. Luckily, things are changing as small business owners are finally able to prioritize this service. A big focus for leaders is what to do with all the rich data their accountant provides, and that’s exactly where a CFO can provide the most value. However, a corporate CFO is prohibitively expensive, and because they can’t afford the salary, too many businesses forgo the benefits of a CFO.
Thankfully, outsourcing a virtual CFO solves for the high expense. With outsourcing, growing companies harness the expertise of highly skilled professionals at a fraction of the cost of attracting and retaining a full-time executive. The virtual CFO provides their expertise to several clients, splitting their time among them. It’s a win-win for both sides. Some of the services a virtual CFO provides include:
- Assistance with vision casting and strategic goal creation
- Financial planning
- Financial statement preparation, reporting, and evaluation
- Financial risk management
- Cost management
- Opportunity identification
- Funding evaluation and administration
- Debt reduction or management
- Organizational transformation
A virtual CFO’s work scope typically depends on the organization’s size, industry, and unique financial needs. The CFOs are usually paid by the hour or via a flat monthly rate.
Does Your Business Need a Virtual CFO?
Now that you understand what a virtual CFO is and the services you can enjoy, the next question you’re naturally asking is whether it is the right solution for your business. To help you out, here are some common signs that it’s a good idea to hire a virtual CFO for your business:
- Your business is becoming more complex
- You’re experiencing rapid growth
- You want to find and exploit opportunities
- Your financials are unfavorable and you don’t know why
- You lack the detailed financial understanding needed to make decisions
If your foggy understanding of your business’s financials inhibits your ability to make decisions, working with a virtual CFO may be a good idea for you.