What Is a Virtual CFO and Why Do Small Businesses Need One?

Introduction

In recent years, the demand for outsourced financial services has been increasing, and technological advancement has fueled this trend further, where businesses constantly seek outsourced solutions, and providers are trying to enhance their visibility. 

However, with the rising costs, emerging startups are opting for outsourcing solutions to alleviate the burden on their budgets. One such solution is the virtual Chief Financial Officer services.

So, if you are looking for virtual CFO services, you are in the right place. This blog post will provide insights into what a vCFO is and why your business needs one.

What is a virtual CFO?

A virtual CFO is a single entity or team of financial professionals who perform traditional or full-time financial officers’ duties. In addition to that, virtual CFO is a digital ally who works on contract, part-time, and as a remote worker. 

They aren’t your all-time financial advisor but in times of need. 

Moreover, they have an accounting, finance, and business administration background.

Key Takeaway

Virtual CFOs work closely with the company’s finance department or account professionals to better understand the finances and critical issues because they have organization-specific experiences.

Why do Small Business Enterprises (SMEs) need Virtual CFO Services?

In general, a full-time CFO costs double that of a virtual CFO; however, SMEs are short on their budget and don’t have advanced financial issues and duties to perform. Thus, they need a cost-effective solution for their financial management. That’s precisely what a virtual CFO does!

Thankfully, things are changing, and people know the benefits of hiring a virtual CFO for small businesses. Moreover, companies are upgrading their in-house accounting team with outsourced ones like vCFOs.

A small business may need to hire a Virtual CFO in various situations. Following are some signs, indicating you need one. 

1. Complexity in Financial Management
2. Lack of Strategic Financial Planning
3. Limited Internal Financial Expertise
4. Funding and Capital Needs
5. Business Expansion, Acquisition, and Mergers
6. Financial Troubles or Restructuring
7. Compliance and Regulatory Requirements

Overall, a Virtual CFO can provide value to small businesses during various growth stages and financial complexities by streamlining financial operations, enhancing strategic decision-making, and bringing financial expertise that might not be available internally. It allows you to focus on core business activities.

The roles and responsibilities of a virtual CFO!

You might be wondering, ‘What can a CFO do that I cannot do myself? Their role starts by conducting an initial assessment of the company’s financial portfolio, and then they go ahead with a customized approach. Simply put, CFOs are integral members of your team who undertake various roles and responsibilities, including:

• Budgeting and forecasting
• Financial Reporting
• Risk management
• Cash Flow management
• Financial planning and analysis
• Tax filing and planning
• Provides expert financial advice 
• Optimization of economic system and processes

Accounting Tools and Technology!

Modern-time CFOs, especially the remote ones, can only work with leveraging tech into their practice. They utilize accounting tools to carry out financial management and advisory services effectively. Here are some tools and technologies used by virtual CFOs:

• The latest cloud-based accounting software, including QuickBooks Online, Xero, NetSuite, Sage Intacct, and FreshBooks, provides real-time access to financial data, allowing for seamless collaboration with the business owner or internal finance team.
• Financial analysis and reporting tools like Excel are used for financial modeling, data visualization tools like Tableau or Power BI are used to create informative dashboards, and financial reporting software is used to generate accurate and professional reports.
• Expense Management Tools such as Expensify, Concur, and Bill.co, Ramp, or Zoho Expense. These tools help streamline expense tracking, automate expense approvals, and generate reports, saving time and ensuring accuracy in expense management.
• Budgeting and Forecasting Software like Adaptive Insights, Anaplan, or Excel-based budgeting templates. These tools enable comprehensive financial planning and scenario modeling.
• Collaboration and communication tools include video conferencing platforms like Zoom or Microsoft Teams for virtual meetings, project management tools such as Asana or Trello for task tracking, and instant messaging tools like Slack or Microsoft Teams for efficient and quick communication.
• Document Management Systems like Google Drive, Dropbox, or SharePoint securely store and share financial documents, contracts, and reports with the business owner or internal stakeholders.
• Data security encryption tools and practices to protect financial data, including secure file transfer methods, encrypted email services, and adherence to industry-standard data protection regulations like GDPR or HIPAA.

Using these tools and technologies depends on business preferences, client needs, and the industry in which the business operates. 

What sets apart a Virtual CFO from an in-house CFO?

There is no such remarkable difference between both. It is evident from the terms that an in-house CFO is a full-time employee of the company getting a high salary and all the benefits of a regular employee. 

On the contrary, a virtual CFO is a remote or part-time employee of an organization appointed as the head of the finance department, providing exceptional financial services at a fraction of the cost. Here, at FixIT we create customized pricing as per your requirements.

Generally speaking, vCFO brings knowledge of the professionals, while an in-house CFO has limited experience.

If you are a small business enterprise or a startup, you should opt for vCFO for your financial management.

How beneficial is a virtual CFO for SMEs?

Business owners have plenty of domains to handle. Meanwhile, vCFOs manage finances and related work that business owners find tedious. Thus, financial officers work as a helping hand to business owners and save ample time for pertinent tasks.

Below are the top-scoring benefits of a Chief Financial Officer to SMEs.

• Virtual CFOs help manage cash flow by tracking invoices, cutting unnecessary costs, and creating foolproof financial plans.
• Financial officers are your best strategic partner, helping you generate revenue, make competitor analyses, and analyze customer behavior. In the long run, it will help you make informed business decisions.
• CFOs provide financial reporting that increases the visibility of all metrics, including financial health and makes all business processes smooth. 
• They provide a better ROI (return on investment) rate by cutting costs within organizational expenses and offering cost-effective solutions.
• Every business has a separate need, such as what is needed for a pharmaceutical company isn’t needed by a travel company. Thus, financial officers provide customized solutions as per your requirements.
• Virtual CFO services are your proven growth partner, helping businesses in growth phases from a startup until they reach their peak.
• On top of that, they have industry expertise that drives results.

How to find the right Virtual CFO for your business?

Finding the right CFO services is challenging, but with the following tips, you can make it go like a breeze.

• Do your research and read online reviews, talk to other business owners who have used virtual CFOs, and get quotes from several different providers.
• Consider your needs by answering these questions. What are your specific needs? What services are you looking for? Once you know your needs, you can start narrowing down your options.
• Ensure the virtual CFO you choose has experience in your industry and a proven track record. 
• Ask about pricing and service packages and choose the one that best meets your needs. Virtual CFOs typically offer a variety of pricing models and service packages. 
• Get everything in writing before hiring a virtual CFO, including the scope of work, the fees, and the agreement terms. It will help you to avoid any misunderstandings down the road.

Conclusion:

Virtual CFO is a must-have for businesses, especially for SMEs in this changing financial and technological landscape, bringing top-notch financial experiences to the table and accelerating growth and profitability. 

By hiring a virtual CFO, businesses can save big while getting the best advice from financial pros to optimize their financial strategies. With the usage of the latest accounting and cloud-based tools, virtual CFOs can solve financial issues in real-time and will provide strategic analysis accordingly. 

In general, the role of a CFO becomes instrumental in providing timely and accurate financial insights, supporting strategic decision-making, and helping small businesses thrive. Once the demand for financial expertise grows, partnering with a vCFO can be a game-changer for small businesses to elevate their financial performance and achieve long-term success.

Why Choose FixIT ConsulTech?

FixIT is one of the leading accountancy firms in the USA. Here are some reasons why you 

should choose FixIT ConsulTech for your virtual CFO needs:

• Experience: FixIT ConsulTech has over eight years of experience providing outsourced CFO services to small businesses and startups.
• Expertise: Our team has financial planning, analysis, and management expertise.
• Flexibility: We offer a variety of pricing models and service packages tailored to your needs. Moreover, you can contact us anywhere from around the globe. This means we are flexible, affordable, and convenient.
• Security: We use the latest security measures to protect your financial data.

Besides, if you are looking for a virtual CFO who can help you save money, get expert financial advice, and free up your time to focus on running your business, then FixIT ConsulTech is the right choice.