3 key benefits to hiring a virtual CFO

7 minute read

What differentiates a successful business from the rest? The answer: being smart in your operations and leveraging the best of what the market has to offer.

One example is by hiring a virtual Chief Financial Officer (vCFO) who can help businesses create a profitable business model, among many other benefits. Curious to find out more? Here’s our quick guide on virtual CFOs, and 3 key benefits of hiring one.

Overview:

What is the difference between a virtual CFO and a traditional CFO?

In every sense of the word, a virtual CFO (vCFO) is exactly like your traditional CFO. The only difference is that they are an outsourced service provider hired to do work on a remote and often part-time basis.

In simpler terms, if you hire a vCFO, you outsource the position of the head of the finance department.

Small businesses benefit the most from this decision as it is the most cost-effective means of scaling up their business. For a fraction of the cost, they are able to receive the same quality of financial counsel and service.

What does a virtual CFO do?

Just like your traditional CFO, vCFOs are capable of handling a variety of financial tasks that business owners simply don’t have the capacity to do. After all, there is often a myriad of other tasks that will require your attention to look into.vCFOs take the pressure off by managing financial-related tasks so that business owners can simply focus on more pertinent tasks at hand.

Here’s a quick summary of the following roles and financial responsibilities a vCFO can do.

  • Cashflow and financial projections. These are calculated based on the financial statements, income, and cash flow statements of the company.
  • Utilization of cash and proper cash flow management. The virtual CFO helps with the help of creditors and debtors management and they also evaluate key operation indicators so they could migrate the risk factor and make better business decisions.
  • Budget planning. Helping with budget and cash requirement analysis so they can easily balance the company’s expenses and income.
  • Cash flow forecasting and financial projections. This can help to reduce the wastage of resources and improve productivity.

For a deeper dive, read more about the benefits of CFOs and why you should outsource them.

How does a virtual CFO differ from my Accountant?

An accountant will take care of the past: balancing books, reporting results, and filing taxes. CFOs focus on the company’s present and future: creating strategies, forecasts, and pathways to achieve future goals.

Accountant focuses on:CFO focuses on:
HistoryFuture
Understands and follows accounting principles and guidelines, translating reality into numbers.Understands the business model and evaluates its feasibility.
Perfect precisionAs precise as necessary
Repetitive activitiesExplorative activities
Purely financialFinancial & strategic considerations
Staying on top of your bookkeeping and accounting transactions, and ensure financial statements are accurateUnderstanding your financial statements, to review your financial performance and position
Recording financial transactions through accounting and bookkeeping softwareForecasting and setting revenue growth through frameworks and strategies

Why are virtual CFOs becoming popular?

There are multiple reasons why vCFO are quickly becoming more preferred amongst businesses. Here are some of them:

  • Incredible flexibility. When you hire a vCFO, you’re the one who sets the conditions for the work hours you require for your CFO as well as the expense. You can change up the schedule as needed and you’ll still get excellent results.
  • Greater productivity. When you hire your virtual CFO, they can quickly start working on whatever project you assign and quickly provide you with results. This will help you free up your time to focus on your other business needs.
  • Professional services liaison and external stakeholder. vCFOs are also a liaison with lenders, stakeholders, and various specialists. They can provide you with further assurance for your reporting and review, as well as competent supervision and due diligence.
  • Scaling your business. vCFO services can help you scale a business and make better business decisions. After all, a growing business needs all the help it can get, and if you have a virtual CFO service provider who can provide you with business advice regarding finances, it can mean a lot to a small business.

3 key benefits to hiring a virtual CFO

vCFO services can be essential for the financial aspects and growth of your business. Let’s dive a little bit deeper into the benefits below.

Cashflow management

Virtual CFO services can help you significantly improve this type of management by doing the following:

  • Tracking and data accessibility. Virtual CFOs track invoices, which helps eliminate any errors as well as duplicate or missed payments. They will also keep your financial data in a single location to ensure you always know what’s going on with the company’s business finances.
  • Find savings opportunities. Cutting costs is always a smart decision, and sometimes even a necessary one. A virtual CFO can identify all unnecessary expenses and cut them effectively to save resources.
  • Offer quick payment discounts. One part of CFO services are offering discounts for your clients who pay their invoices quickly, which will increase your cash flow and raise capital.
  • Create a lean business with the help of technology. CFOs often use analytical tools, accounting software, and other technology to help create a lean business that runs smoothly.
  • Predict your cash balance. To ensure you have a stable business and the potential for business growth, it would be smart to have a long-range cash flow projection that goes at least six months into the future. Your CFO can help you create it thanks to effective sales forecasting.
  • Help you choose the best business card. CFOs are in the know about a lot of things in their industry and can give you professional financial advice on many things, including credit cards. They will be able to find you a business credit card that allows companies to collect points and get rewards.

Strategic counsel

Chief Financial Officers are trusted advisors among business owners, but aside from being experts in financial planning, they can also be amazing at strategic planning. If these financial professionals are able to get out of their pure finance mindset, they can be a big part of your strategic counsel.

Here are all the components your CFO support needs to pay attention to when it comes to strategic planning:

  • Revenue. For a company to grow, it’s not enough to pay attention to keeping costs low, it’s just as important to drive revenue. With a revenue plan, your CFO can set achievable goals, encourage return customers, and refine your pricing and financial strategy.
  • Competitors. A good CFO will take competitors into consideration to see if there are any areas that your company needs to invest in to gain a competitive advantage. By taking a look at brand loyalty, product uniqueness, and scaling possibilities, creating a growth plan will be easier.
  • Customers. Ensure you hire a CFO who will spend time on the front line and listen to customers to figure out where they stand and what their view of your company is. They need to find out if the customers have the means and the will to engage with your business and buy your products.

Financial reporting

Finally, your virtual CFO will help you by implementing strong financial reporting and accounting systems. This ensures that you have full visibility into all the metrics necessary to make smart financial decisions and create better business processes.

They will produce reports that are easy to understand and filled with information on your organization’s financial health and performance. This kind of in-depth reporting is extremely important when you need to make decisions on how to run your business and distribute your finances.

Your CFO also might schedule meetings or conferences with you to discuss these reports. Usually, these meetings are done via phone or a video conference. You can also ask them to send you emails or use a document management solution so you have full insight into their performance.

The data you receive from your virtual CFO will probably come from multiple sources. You will also probably receive your ultimate reporting package in various formats such as Word, PowerPoint, Excel, PDF, or perhaps an industry-specific finance analytics tool.

Is a virtual CFO right for my business?

In essence, yes. It’s important that all businesses have some level of access to financial expertise. Whether you’re a brand new business owner looking to get clarity over your company’s financial performance, or a high-growth start-up looking to implement a strategy to scale and grow sustainably, a virtual CFO is an excellent, flexible solution.

Start your search for the perfect CFO with Sleek. We offer CFO services for businesses of all sizes that can help you take your business to the next level.

If you want to find the perfect CFO for your company or you have any questions about this topic, feel free to contact us.

Start a business in less than 3 hours with us. Talk to our experts today.

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