Startups and corporations are looking for ways to run lean now more than ever. There is pressure to cut costs and outsource as much as possible, which has led to a trend of hiring virtual CFO services rather than a full-time in-house CFO.
What are the benefits of virtual CFO services?
We’ll get into some of the more specific deliverables later, but first, let’s look at some of the overall advantages of virtual CFO services.
A CFO can help you find and manage a bookkeeper/controller who can produce reliable data and interpret the results, giving you the insight to help you steer the ship toward your stated objectives. As a result, you’ll know exactly where, when, and how to focus your team and communicate with your stakeholders.
A CFO can serve as a sounding board, coach, or guide when needed. Look for a seasoned veteran with whom you can build a relationship, not just someone to fill a void. Finally, you’ll have a team member who is familiar with your company and can hold you accountable as you work toward clearly defined objectives.
The finance function can be positioned as a competitive advantage by a CFO. If you’re frustrated financially, chances are your competitors are as well, but they’re not reading this and actively looking for a solution. An experienced CFO can assist you in reducing waste, efficiently deploying cash, and identifying opportunities for increased production or expansion.
Services provided by a virtual CFO include:
Raising money is a difficult task. Virtual CFOs can create the financial story and do some light pitching, but don’t expect them to fly around the country for six months pitching VCs and banks.
Manage IT systems that are related to finance. The virtual CFO will not be in charge of IT staff, the company network, internet access, security, or CRM/ERP systems.
Attend meetings of the board of directors. Virtual CFOs can assist the CEO with preparation and coaching, as well as be requested to attend meetings.
Attend meetings of the board of directors:
Virtual CFOs can assist the CEO with preparation and coaching, as well as be requested to attend meetings.
Mergers and Collaborations:
This usually entails some light advisory and analysis assistance, but don’t expect the provider to jump into a months-long due diligence project at the drop of a hat.
Virtual outsourced CFO services almost always include the following in addition to these more broad services:
- Determine key metrics and create a reporting plan to keep track of them.
- Analyze financial data on a regular basis.
- Manage the annual budgeting process, as well as the creation of an annual strategy.
- Cash flow management and forecasting
- Planning for the future
Remember that some virtual CFO services combine CFO-level insights with bookkeeping and controller services, effectively providing an outsourced finance department. If your provider offers standalone CFO services, keep in mind that you will not receive:
- Workflow optimization
- Entry and classification of transactions
- Receivables (accounts receivable)
- Accounts receivable
- Reconciliation of bank accounts
- Year-end tax and audit assistance from a CPA
- Implementation and oversight of financial controls
Financial reporting will be detailed and comprehensive if you use the right virtual CFO service. They may also set up meetings to provide context and expert advice in relation to these reports.
Communication is usually done over the phone or through a video conference service such as Zoom or GoToMeeting. Email or a document management solution like Box, SmartVault, or Google Drive can be used to share documents.
The frequency with which you report on a regular basis will be determined by your company’s needs. Although monthly cash flow or daily flash reports are usually the starting point, they may need to be shared and monitored on a weekly or daily basis.