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Virtual CFO

Chief Financial Officer is one of the most important roles in a company. CFO is responsible for managing the finance function, providing financial forecasting, budgeting and analysis of business performance. The officer is also responsible for planning and leading the long-term financial strategy.

What actually is a Virtual CFO?

Many small businesses are in need of a CFO but can’t afford to employ one on a permanent basis. This is when a Virtual CFO service could be considered. The concept was created recently to answer the needs of growing businesses which require input from an experienced finance professional. A Virtual CFO, also called an outsourced CFO, will usually work remotely, on a part-time basis and effectively act as a finance leader for your business. The cost of hiring a Virtual CFO is significantly lower in comparison with engaging one on a permanent, full-time basis. It makes it much more affordable for smaller companies going through an intense growth phase. Some of them would never be able to hire a traditional CFO.

Nowadays, the Virtual CFO service is usually provided by accounting firms, which are best placed to offer expert advice and support in terms of the financial management. They have adequate skills, experience and resources to support your business on the way to success.

What does a Virtual CFO service include?

The Virtual CFO is not only an advisory package. It comprises of many value-added services which will help your business with long term forecasting and analysis:

  • Monitoring the financial condition of the company
  • Offering financial insight and guidance on important strategic decisions
  • Preparation of management accounts and trend analysis (Profit & Loss, Balance Sheet, Cash Flow)
  • Reporting on Key Performance Indicators KPI
  • Budgeting and forecasting, analysis of actuals vs budget
  • Preparation and analysis of cash flow forecasts
  • Full reconciliations of balance sheet General Ledger accounts and subledgers (Accounts Payable/Receivable, Fixed Assets)
  • Periodic reviews of business performance and early identification of issues
  • Review of existing business processes and suggesting improvements
  • Business strategy meetings and setting targets.

New businesses fail because of inability to control the financial performance and lack of a clear long-term financial strategy

How can a Virtual CFO help your business?

The sad reality is that the majority of small businesses fail in the first 3 years of their existence. The main reason for the failure is inability to control the financial performance of the business and lack of a clear long-term financial strategy. Many business owners may think that they have it under control but usually they lack the adequate expertise, knowledge and time to manage the financial function properly. Sooner or later they run into serious problems which may result in a fiasco.

Having an accounting professional acting as a Virtual CFO will definitely save your business from disaster. A proficient accountant is much better equipped to handle the financial management, analysis and strategic planning. A Virtual CFO can:

  • Act as an advisory voice prioritizing the financial well-being of your company
  • Explain clearly how your business is performing
  • Assist in identifying current problems with expenditures and revenues
  • Back up or discourage important investment decisions
  • Keep control of the finances and prevent unexpected turns
  • Lead an overall long-term financial strategy of the business.

Does your business need a Virtual CFO?

If you are a small business owner, you might have already realized that some aspects of managing your company finances are particularly difficult:

You can’t keep up with how quickly your business is growing

It was certainly much easier to manage your business on your own when you were just starting up. Now, once your company has become more complex, so did the accounting and financial management. It’s much harder to devote your time to getting your books in order, particularly if you are not using advanced accounting technology. Understanding your accounts has become so difficult that you are not sure if your business is making profits or losses.

A Virtual CFO can definitely handle this. As accounting experts, they will support your business by advising on proper systems implementation and guiding you through the growth phase. They will help to tidy up your accounts and get clarity over the financial position and performance of your business.

You don’t have good control over how your business money is spent

Managing cash flows is often the weakest point of growing businesses. Many small companies think that as long as the money is in the bank account, they are free to spend it. This is very wrong. Lack of proper cash flow planning is the first step to a disaster. Without a proper cash flow forecast in place you will never know when to expect payments from your customers and also how much and when you need to pay to your suppliers.

An experienced Virtual CFO will prevent your business from making this mistake. It is crucial to have a proper cash flow forecast in place in order to have your spending under control. A Virtual CFO will assist you in implementing the forecast and updating it regularly.

Find out more about cash flow forecasting…

You find it difficult to budget your costs and analyse the actual trends

It’s not an easy task to predict your future costs if you have no idea what is going to happen in the future. Moreover, analyzing your actual costs versus what was budgeted can be even harder if you don’t see the reasons why your costs fluctuate. It can be really daunting if you don’t have relevant budgeting knowledge and skills. Good news is that there are useful tools which can make this exercise much easier.

Your Virtual CFO will be a great help here. With strong financial planning expertise, they can guide you through the budgeting process smoothly and then assist you in tracking your actual costs vs budget. This way it will be clear for you where the pain points are and where your attention should be focused.

You struggle with making proper business decisions

If you are only trusting your intuition when you make important decisions for your business, that’s not a good sign. On many occasions it may lead to wrong choices and ultimately create a serious threat to the existence of your company. A business owner should always make informed decisions based on detailed analysis of existing figures and trends also looking at future business objectives. It is understandable that you may not have sufficient knowledge to make such decisions on your own.

A Virtual CFO will bring valuable analytical insights into the performance of your business. Being experienced professionals, they will certainly possess the appropriate skill set and expertise to support you in making confident and rational decisions.

Do you think you need help?

If you are experiencing any of the above issues, it’s time to consider engaging a Virtual CFO in supporting your business. For a fraction of the cost you will get an incredible value and your business will hugely benefit from it. A lot of weight can be taken off your shoulders by just reaching out and making this first step.

Contact us TODAY  to discuss your requirements and how our Virtual CFO service can help resolve your problems.

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