Many small businesses turn to virtual CFO services to help manage their finances. They cannot afford to hire a full-time CFO, and this option allows them to oversee their finances while remaining within their budget. The virtual CFO helps with financial planning, reporting, forecasting, and more.
Understanding Virtual CFO Services
Virtual CFO services are known by many names, including fractional, outsourced, and part-time. However, they all operate similarly. They are nothing more than professional financial management services that can be received in person, but they are delivered remotely. Every company should consider using avirtual CFO and accounting service rather than hiring someone to handle these tasks in the office.
The virtual CFO supports the upper management team and ensures they receive the correct financial advice. The CFO also shares information about potential economic opportunities and hazards the team might otherwise overlook. The CEO and CFO work together to support one another and ensure the company’s objectives are achieved.
Why Choose a Virtual CFO?
A business owner might wonder why they should choose a CFO. Wouldn’t it be better to have someone in the office every day? Before making this decision, the owner must understand the benefits for their company and why a company might choose this option.
A business can save money by hiring a virtual CFO. It won’t need to recruit and hire a professional or pay their onboarding costs, salary, and benefits. Furthermore, it won’t need to pay someone when there is little work for that individual, such as during slow periods. The CFO works with several clients, which exposes them to various scenarios and issues. This diverse experience allows them to tackle challenges head-on.
Thanks to the tools and technology they can access, a virtual CFO can provide up-to-the-minute financial health data for a company. Business owners can make informed decisions based on the latest data to remain agile in competitive industries. This individual will also help the business streamline operations. They work with companies to automate processes, freeing human workers to focus on core business activities. When automation is used, errors decrease, and the company saves time and money.
Many business owners hire a virtual CFO to ensure compliance with all financial regulations and tax laws. They understand the complexity of the rules and regulations and want to ensure they know relevant standards and regulatory changes. One mistake could lead to costly penalties and fines, which most businesses cannot afford. The virtual CFO implements controls and procedures to ensure compliance and protect the company.
Why would a person wish to be a virtual CFO rather than take a full-time position with a company? They can help multiple companies simultaneously and know their income won’t be reduced to zero if one client leaves. Virtual CFOs are increasing in demand, so job security increases, and they have more flexible schedules.
Virtual CFO Services to Consider
A virtual CFO may offer numerous services. Business owners should talk with several professionals to learn which services they offer. The following are the ones most virtual CFOs will provide if asked.
A virtual CFO helps the business owner develop a financial strategy, create a budget, and implement cost-saving measures. They help the owner identify and manage financial risks while developing long-term goals to increase the company’s profitability. The CFO also helps with cash flow management and financial reporting. If the company has a board, the CFO prepares financial reports, analyzes the company’s finances, and shares this information with board members.
Which Companies Benefit From Virtual CFO Services?
Any business can benefit from virtual CFO services. However, certain companies see a better return on investment than others. A rapidly growing business may turn to a virtual CFO for additional support. The same holds for businesses undergoing numerous changes simultaneously. The virtual CFO can help them address the financial impact of these moves. This individual may work independently or support an in-house CFO as the changes are being made.
Some companies find a virtual CFO isn’t enough to meet their needs. A company with $1 million in annual revenue no longer qualifies as a small business. It needs somebody in-house whose sole job is to manage the company’s finances while it grows and scales. The company may still use a virtual CFO at times to help support the activities of the in-house professional.
If the company is scaling and the operations are becoming more complex, it is time to hire an in-house CFO. The virtual CFO may not have the time or resources to devote to the tasks that come with scaling operations, so an in-house CFO must be hired. The individual brought in to handle these tasks must have the knowledge and skills to manage and improve complex financial processes.
The Cost of Hiring a Virtual CFO
Business owners often wonder about the cost of a virtual CFO. They question whether they can afford to pay a professional to handle these tasks, especially when they are starting out. A reputable virtual CFO service charges a minimum of $1,000 monthly, but a larger company may pay up to $10,000 per month based on the services it wants and needs. Many business owners think hiring someone to handle these tasks would be cheaper.
An in-house chief financial officer makes anywhere from $250,000 to $700,000 a year, as reported by Salary.com. Most people can’t afford to spend that much, but they won’t find anyone highly skilled to take on this job in-house for less than $200,000 yearly. A small business can pay a virtual CFO as little as $1,000 a month or $12,000 a year and benefit from the same services without paying for insurance and other benefits as they might for a full-time, in-house CFO.
Every business benefits from a CFO’s expertise. Many organizations hire a virtual CFO rather than adding one to their staff. This offers numerous benefits while ensuring the company has access to the expertise needed to succeed financially. Learn more today to see if this option is right for your organization. Many will find it is.
