Chief Financial Officer (CFO) is a senior position in an organizational hierarchy. A high level of experience is expected from the person who holds this position. At an organization, the CFO is responsible for managing different operations such as elevating financial strategy, streamlining operations, maximizing sustainable growth, and so on. Established companies can easily hire an experienced full-time CFO, but small businesses and start-ups cannot do this as they have a shoestring budget. This is where the virtual CFO comes into play.
The question that comes into mind now is: what’s a virtual CFO? The answer is a virtual CFO is an outsourced service provider that handles all the duties of a traditional CFO while working part-time and on a remote basis. Virtual CFOs can manage numerous finance-based activities that many business owners and start-up founders just haven’t developed the skills to deal with, which covers creating budgets, obtaining money, highlighting industry dynamics, and much more. As part-time CFOs are often employed by start-ups or small businesses, they will also expect to take on some of the more basic financial tasks like reconciliation, bookkeeping, and so on.
As a small business owner or founder of a start-up, you need to face this question: how do you know if your company is ready for a virtual CFO or need one? If you don’t have the answer, read the below-mentioned points.
In this blog, we have pinned down five signs which indicates it is time to consider hiring a part-time CFO:
- You don’t have a long-term financial strategy
You could have put together a financial forecast when your business first started or raised funds for the first time. However, it is also very likely that this prediction has barely been looked at since then, let alone reorganized and kept updated. This is where virtual CFOs can help you. A part-time CFO can easily make informed financial predictions based on historical data, market patterns, and company data. If you don’t have a long-term financial strategy, then a virtual CFO can help you create a practical financial blueprint to help you achieve your goals.
- You want to grow your business
If you want to grow your business, you need the right expertise, guidance, and plan from your CFO. Hiring a full-time CFO is not possible due to your limited budget. This is where a virtual CFO can help your company put together that plan and help you choose the most appropriate path for growth. The part-time CFO also provides you the senior-level guidance and supervision that your organization needs, at a fraction of the cost of a full-time CFO. This is why you need to hire a virtual CFO.
- You need help with cash flow
One of the aspects of the financial equation is to acquire cash. No matter what stage your company is in, it needs to have cash on hand to manage day-to-day expenses and pay suppliers and workforces. Hence, you need to employ a virtual CFO if you’re concerned about the cash flow into your business drying up or you continuously struggle to make ends meet, although you earn more money than you spend. A virtual CFO will analyze your organization’s past performance and help you create a forecast for future performance and future requirements.
- You need help beyond payroll and taxes
The complexity of a growing business can become terrifying and at the same time overwhelming, even if you have a background in accounting or employed a person with an accounting background. A virtual CFO not only handles your company’s finance-based activities but also ensures that the day-to-day spending does not obscure your company’s short-term and long-term objectives. The part-time CFO can help you see where you’re spending too much and recommend reducing expenditure. Plus, virtual CFOs offer compliance with accounting for businesses and also compliance with the relevant regulatory authorities.
- Your investors are asking for answers and more information
If your investors ask for more data that you are unable to provide, then it is one of the significant reasons for hiring a virtual CFO. Investors who decide whether they want to invest in your company or not frequently ask many questions and more information. They may ask you to review your internal financial controls or reports that you don’t have the time or skills to create. A virtual CFO can prepare all the reports you need to fulfill the demands and requests of investors. A skilled part-time CFO will know what potential investors want to see and deliver the same.
For a start-up or small business, a virtual CFO plays a significant role in its success and growth in the business world. Having worked with numerous clients previously, Virtual CFOs offer you a range of expertise and knowledge that your company might not have otherwise had. As part of your management team, part-time CFOs genuinely work and are focused on making your company more successful. So, are you ready to hire an experienced virtual CFO? If you have any questions or doubts, don’t hesitate to contact us.