As a small business proprietor, you are the marketer, salesperson, operations manager. One such role which is frequently ignored or perhaps under appreciated is chief financial officer (CFO). Many small businesses have no dedicated CFO role whatsoever or are managed by a bookkeeper or the owner with limited financial knowledge.
It is an expensive mistake. Any business requires financial management, planning and plan. Without good financial leadership, businesses face issues like cash flow crunches, financing expansion, making terrible investment choices and losing out to competition.
This is where virtual CFO (VCFO) services can actually help small businesses. However what are Virtual CFO services, and how can they benefit your business and is that the best choice for you? Let us explore these questions in this blog.
What Are Virtual CFO Services?
Virtual CFO services function as an external financial executive providing part time or interim financial management, analysis, along with strategic advisory services. Virtual CFO services are basically finance veterans who have previously been CFO of another company.
Key services and duties that Virtual CFO services can provide include:
- Financial planning, analysis, forecasting and modelling.
- Financial reporting/KPI tracking.
- Cash flow management/projections.
- Budgeting, cost control and profitability analysis.
- Accounting oversight/controller support.
- Fundraising/capital raising activities.
- Mergers, acquisitions and exit planning.
- High level strategic advisory & financial operations consulting.
Virtual CFO services don’t just handle simple bookkeeping, accounts payable/receivable, payroll along with other daily accounting duties. Rather, they’re a strategic partner delivering financial management and planning which results in growth and business value.
Benefits of Virtual CFO Services for Small Businesses
For small enterprises and startups, having Virtual CFO services on their side can have many advantages over doing everything yourself or employing a general accountant or bookkeeper.
Expertise & Experience
VCFOs bring operational and financial expertise from years of executive leadership across businesses and industries. Such high knowledge and proficiency is difficult and expensive to build out internally.
Objectivity
As an outside advisor, best online VCFO services can present an objective, basic view of the business’s strategies and finances, without personal biases or company politics.
Growth Potential
A full time CFO is a continuing expense which might not be feasible or monetarily justifiable for many smaller companies. Online VCFO services deliver top tier financial leadership and support on a fractional, as needed basis that matches the workload.
Better Financial Discipline
With a VCFO overseeing and enforcing financial best practices, reporting and cash flow management you are likely to operate with the budgeting discipline of a bigger company.
Continuity of Leadership
That major in-house financial manager departing can cause major disruption and knowledge gaps. The best VCFO services maintain continuity and stability in financial operations.
Is Virtual CFO services Right For Your Business?
Online Virtual CFO services are invaluable for small enterprises although the product might not be appropriate for each business’s situation and requirements. Main factors include:
Growth Stage – Fast growth startups and organisations in rapid expansion or transformation modes are best candidates for VCFO support to get around the financial complexities and strategic decisions related to fast growth.
Funding Needs – If you’re looking for equity financing from investors or looking into MandA, a VCFO can assist with financial modelling, funder/buyer prep, due diligence & transaction execution.
Owner/Leadership Experience – If financial management and strategy aren’t areas of deep knowledge and passion for you as the owner or leadership team – a VCFO can provide that crucial competency.
Complexity – When your business gets to a moderately basic level of simplicity in terms of financial infrastructure, reporting requirements, banking relationships, tax situation etc., an experienced VCFO will add value.
Cost versus value – the bottom line here is analysing the price of VCFO services compared to the possible Value, financial leadership and expertise that they are able to provide to better decision making and much better results.
For many small businesses in a growth cycle looking to outsource their finance and operations the value proposition of an outsourced VCFO can justify the investment. But for extremely early stage companies or businesses with little financial complexity it might make more sense to start with a fractional controller or CFO before moving onto a complete VCFO assignment.
How to Find and Engage Best Online VCFO Services
In case you’ve evaluated your situation and believe a VCFO might be advantageous to your business’s economic operations and growth trajectory, there are many ways to find and engage one:
Professional Services companies – Some boutique consulting/advisory Firms deploy interim and fractional CFOs as a managed outsource service. Choose StartupFino for best online VCFO services for your small business.
Independent consultants – Many good finance executives & former CFOs are independent Consultants providing VCFO services.
Online platforms – Many freelancer Platforms have categories in which you are able to search for and contract VCFO professionals.
Recommendations – Your professional group of investors, advisors, lawyers, and business associates may suggest VCFOs they’ve worked with previously.
Final Words
Consider experience level, relevant industry background, technical and leadership capabilities, references/case studies and fit with your company values and team when evaluating prospective VCFO candidates or firms. Set your key priorities, expectations and engagement scope to align on costs and terms. Also, have safeguards like confidentiality agreements and non-compete clauses in place.
In a competitive business environment, having a good, strategic financial leader within your team is becoming increasingly critical to driving growth and enterprise value creation. For many small businesses, virtual CFO services are a strong yet cost effective way to play that major role.
FAQs
1. What is a VCFO?
A VCFO (Virtual Chief financial Officer) is an outsourced Financial executive who offers part-time or even interim Financial management and strategic advisory services.
2. What services do VCFOs generally provide?
Key VCFO services include financial planning/analysis, cash flow management, fundraising support, M&A guidance and strategic economic advisory.
3. What are the benefits of a VCFO for a small business?
Benefits include deep expertise, objective financial leadership, far better financial discipline and continuity of operations.
4. When should you engage a VCFO?
Fast-growth companies, businesses searching for funding, those without financial leadership experience and individuals with complicated financial requirements could all use a VCFO.
5. How is a VCFO different from a controller or bookkeeper?
VCFOs provide strategic advisory beyond the accounting/bookkeeping tasks performed by bookkeepers or controllers.
6. How do I find a competent VCFO?
Sources include professional services firms like StartupFino, independent consultants, online platforms and personal/professional recommendations.
7. What exactly do VCFO services generally cost?
Costs can range but are basically much less than a full time hire, utilising pricing models including monthly retainers or hourly/project rates.
