Virtual CFO Services – Everything You Need to Know
Today, it takes focused efforts for businesses to drive long-term growth and maintain a consistent revenue stream. Most organizations run into issues when trying to grow their businesses. After hitting a certain growth threshold, businesses need a professional CFO.
But most startups and small businesses cannot afford to hire an in-house CFO. In fact, most in-house corporate CFOs are expensive. Still, companies want to hire out-of-house expertise, and this is where virtual CFO services come into play.
You’d be surprised what a virtual CFO can do for your organization at a lower rate and without compromising traditional CFO perks and values.
Fundamentals of Virtual CFO
According to McKinsey research, CFOs provide added operational and strategic value. The role of a CFO continues to evolve in helping organizations run and expand seamless operations and drive long-term growth. However, virtual CFOs work on a contract or part time.
Typically, strategic advice by part-time CFOs wasn’t even an option for small and medium-sized businesses. And that’s because, traditionally, small businesses wanted to fill in full-time in-house roles. Fortunately, the tide is changing for good, and small businesses can now opt for part-time CFOs.
The fact is that small businesses now have access to extensive data. With the advent of automated tech solutions, small businesses can directly access advanced accounting tools and bring in accountants to review real-time financial data and make strategic and logical decisions to improve overall operations.
Small businesses cannot afford to pay significant salaries and often don’t even think about hiring a professional CFO. With fractional CFOs, small business leaders can address that problem. In fact, small businesses can get outsourced services at a significantly lower rate than a full-time executive CFO. A Virtual CFO is an experienced financial professional – they help small businesses build robust and practical guidelines and hit current and future financial goals.
Virtual CFO Services
A virtual CFO renders all the same services as a full-time chief financial officer. You may have heard about such services as outsourced, part-time, or fractional CFO services. Whether it’s upgrading the online accounting system or in-house services, virtual CFO services make it easier for business leaders to follow their recommendations. Most small business owners concur that they can address financial issues much better when they have direct access to a CFO.
After all, accountants and CFOs help business owners achieve financial objectives. In hindsight, think of fractional CFO services as an opportunity to get added flexibility for business leaders and focus on the most relevant data.
What Does it Entail?
Small entities need to realize the value-added benefits and reasons to get virtual CFO services. Virtual CFO services are an ideal fit for startups and small businesses. It is an effective measure to ensure your company’s finances are not disorganized and form a clear understanding of how your finances function.
Here are the main areas that a virtual CFO can help your small business:
As your small business grows, business operations and financial information is bound to get more complex. Business owners often think about working solo or putting in an all-nighter to review the company’s financial position.
But this makes matters worse and complicates how to optimally align finances and operations. With virtual CFO services, you can build a strong MIS reporting system for your business and address complex issues. You can make highly informed and calculated business decisions when you outsource virtual CFO services.
Virtual CFO services help you make your financial strategy more robust and reliable through strategic practices and guidelines. Through virtual CFO services, small businesses can better organize their letter transactions and bookkeeping process.
Budgeting & Forecasting
One of the perks of getting outsourced virtual CFO services is that it allows businesses to crunch numbers accurately and improve their financial position. Several businesses need capital to survive. One of the key functions of a virtual CFO is help the business in acquiring capital, and help in closing the diligence and capital raise.
The struggle to meet financial objectives and drive consistent growth never ends for businesses. But virtual CFO services make it easier to navigate external and internal forces and leverage the best opportunities. It allows businesses to engage in responsible budgeting and financial forecasting practices and secure economic stability.
Financial System Design and Strategy
There’s growth, and then there’s rapid growth that can transform your company’s finances. But this requires a high degree of preparedness for business owners that often become overwhelming. By outsourcing virtual CFO services, business leaders can navigate different periods of their growth, implement robust systems, and accelerate growth.
It also allows small business owners to depend on virtual CFOs to mitigate potential financial risks and track cash flow and resources to manage revenue seamlessly.
Virtual CFOs help business leaders prepare for various board meetings. It can include performing financial analysis and communicating to company heads or board members about the existing financial position and performance.
One such benefit that small businesses can count on is comprehensive financial reports. It gives business leaders insights into the company’s current financial health in the form of financial statements and balance sheets.
Maintain External Relationships
Virtual CFOs, like corporate in-house CFOs, can help business leaders communicate complex data with banks, investors, and auditors. It helps business leaders communicate their company’s financial status in the market.
Implement Financial Systems
Small businesses can successfully implement financial processes and systems with virtual CFO services. It can include setting up bookkeeping, payroll, and accounting software.
Benefits of Getting Virtual CFO Services
Here are the top benefits of getting virtual CFO services to improve your small entity’s financial posture:
Personalized Service: The major perk of out-of-house virtual CFO services is that it allows businesses to get customized financial services. Each business has a different scope and size and needs specific skills to address financial issues and improve finances. And virtual CFO services are highly scalable and help small businesses achieve growth faster.
Higher Return on Investment: One of the benefits of outsourcing virtual CFO services is that it is highly cost-effective and renders the same top-executive level expertise as corporate CFOs. Whether you’re an entrepreneur or a small business owner, you probably cannot afford to pay the high salary of a traditional in-house CFO.
But hiring a virtual CFO allows you to control overall costs and get the same value-added CFO services as hiring a full time CFO. It also means you don’t have to worry about paying compensation and bonuses. Virtual CFOs help small businesses find cost-cutting new opportunities to recover the initial investment in virtual CFO services.
Access to Industry Knowledge and Expertise: Virtual CFOs possess in-depth industry knowledge and expertise like in-house corporate CFOs. In fact, virtual CFOs have extensive experience working in different sectors. It allows small business owners to better understand their business and leverage virtual CFOs’ experience to follow the newest trends, practices, and guidelines.
Navigate Business Growth Phases: Small businesses need someone reliable to help them evolve and improve their financial position. Virtual CFO is expected to help business leaders navigate changing growth stages. Outsourced virtual CFOs can provide temporary solutions and fixes and help small entities make a hybrid or remote transition.
If you’re ready to outsource virtual CFO services, ask a few basic questions beforehand. Focus on whether or not the virtual CFO services align with your financial goals. Also, realize and recognize that getting part-time CFOs will save you valuable resources and time.
You can build a personalized financial plan, explore financial needs, and build a finance department through virtual CFO services. Small business owners should break down the cost structure of virtual CFO services and measure their transparency. So, inquire about all charges from the start.
And most importantly, ensure part-time CFOs are reliable and trustworthy for handling your finances. Small business owners should set practical expectations when availing such services. For instance, outsourced virtual CFOs may need access to your company’s connections, resources, and digital records.
How KayOne Can Help
Once your small business starts to grow, you need professional financial management to address complex issues. Whether you want to build or expand your business, an outsourced virtual CFO’s expertise and skills can make all the difference.
Like qualified and experienced financial advisors and accountants, virtual CFOs offer compact financial services. And these CFO services are essential to support and improve your business operations. Value-added virtual CFO services help businesses ensure accurate asset and debt management. You can also set the correct budget parameters to improve business health and make a solid strategy to drive business growth.
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