What Is a Virtual CFO—And Does My Business Need One?

If you’ve found yourself feeling overwhelmed, stressed, or pulled in too many directions when it comes to managing your business’s financial tasks, then you may be wondering if the time has come to hire a Chief Financial Officer or Virtual CFO. 

This is an exciting development—after all, needing a new hire is a sign that your business is growing and succeeding. It’s gotten too big for you to manage all on your own. 

But when it comes to actually find that CFO, often the excitement quickly wanes. Hiring is typically a long process for most positions, but that’s even more true when you’re looking for an executive-level person—especially one whom you’ll be trusting with your business’s finances. 

What’s more, paying the salary and benefits of another executive is a costly proposition. 

This is why many businesses turn to a virtual CFO. But what exactly is a virtual CFO, and how do you know if this approach is right for your business? 

Here’s what you need to know. 

What is a virtual CFO? 

A virtual CFO is a highly skilled financial and operations professional who manages the financial functions of a business—however, instead of doing so as a full-time employee, they do so remotely as a contractor on a part-time basis. They may also be providing these services to other organizations, as well. 

Think of it like outsourcing—in this case, you’re outsourcing your financial needs to a specialized contractor, saving yourself both time and money in the process.  

Working with a virtual CFO is a great option for small businesses, as hiring a full-time CFO is financially unrealistic for most. With this arrangement, the business receives financial expertise and guidance that they would otherwise not have access to, adding or reducing services as needed (and as the contract allows). 

What services does a virtual CFO provide? 

Virtual CFOs provide a wide range of services, both high-level and more granular. These include: 

  • Assistance with strategic goal-setting for your company
  • Strategic goal management
  • Organizational transformation
  • Debt management
  • Cash flow management
  • Budget creation and management
  • Contingency planning
  • Tax planning
  • Tax reduction
  • Financial reporting and evaluation
  • Salary and benefits analysis
  • Recruitment and vetting of lower-level financial hires
  • Due diligence

Depending on what you need, a virtual CFO can provide any and all of these and other services—whatever you need in order to keep your business running smoothly and growing steadily. 

What are the benefits of hiring a virtual CFO? 

The benefits of outsourced CFO services, rather than going without or hiring an expensive full-time executive, are numerous. 

First, virtual CFOs do so much more than handle a business’s books or keep an eye on the budget. 

Rather, a virtual CFO can offer you the financial guidance, advice, and planning capabilities that are crucial to growing a sustainable, successful business.

This is especially true when your business is in the difficult Growth stage—when it’s grown too big to manage all on your own or with a partner, but not yet big enough to justify an executive hire. This is the point at which many businesses struggle the most, because this is when scaling—increasing capacity without compromising service or quality—must occur. 

Having the guidance of a virtual CFO to help you through these challenging growing pains can mean the difference between a daily struggle to meet increased demand, and confident, sustainable growth. 

Another benefit of a virtual CFO is the reduced cost as opposed to a full-time employee. Because virtual CFOs are hired on a contract basis, there’s much more flexibility in terms of scaling back expenses and services, or increasing them as needed or wanted. In addition, they won’t require benefits, further reducing the relative cost. 

This makes it easier to ensure that you don’t get into a financial position you can’t sustain, while also lowering the barrier to hiring. Since you won’t be bringing this person into your office full-time, you can spend less time concerned with things like culture fit and schedule, and more time identifying the skills and functions that you need from this person.  

Finally, virtual CFOs can give you a huge leg up on your competition, by virtue of the long-term, big-picture financial guidance they’re giving you. 

Of course, there’s a flip side to this: if your competitors are working with virtual CFOs and you’re not, then you’re the one at a disadvantage. 

How are virtual CFOs paid? 

Most virtual CFOs are paid either hourly, or on a monthly flat fee basis. 

How do I know if my business needs a virtual CFO? 

A virtual CFO could be the right fit for your business if you’re struggling to keep up with the financial and operational functions with the staff you currently have. 

Every entrepreneur knows there will come a point at which they’re unable to handle running the entire business on their own–assuming the business is successful and growing. But hiring a full-time executive is often cost-prohibitive, and such a resource-intensive process that it’s simply out of the question. 

Hiring a virtual CFO solves for those issues by being both less expensive, and a quicker process. Plus, virtual CFOs have worked with many different types and sizes of businesses, so they can offer a broad range of knowledge that can be indispensable for helping to guide you through the various financial ups and downs that every company experiences.

If you think it might be time to hire a virtual CFO, get in touch!

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