Why do Small to Medium Businesses need a Virtual CFO?

What is a Virtual CFO?

To succeed in today's ever-changing marketplace, it is important for a small to medium business to both gain and keep its competitive advantage. An important part of achieving this is an effective CFO function. An outsourced individual or entity that provides highly specialized financial services, called a Virtual CFO or an Outsourced CFO helps in providing advice and insights to business owners. Although the fundamental responsibilities of a Virtual CFO and a physical one are the same, the clientele of the latter are start-ups and small to medium businesses, while the former’s are large corporations. This is because large companies can afford in-house CFOs to take care of their business, whereas smaller businesses hire virtual CFO services which practically, offer the same service quality and are way more cost-effective.

The main tasks of a CFO for a start-up or a small to medium business are: -
  • Controlling expenses through budgeting suggestions.
  • Capital acquirement suggestions.
  • Book-keeping of current and accurate financial accounts for clients.
  • Forecasting future business improvements.

Like a large company’s CFO, a virtual CFO is skilled enough to evaluate your business to estimate close to an accurate long-term financial projection of the company. Your business will start reflecting on the work of a good virtual CFO’s analyses in no time.

The Need for a Virtual CFO

Here are 5 operational benefits we have chosen to highlight, of hiring a virtual CFO: -

  • As an entrepreneur, you are fully involved in the management of your company’s operations and you will often come across situations where you must take major strategic decisions that will alter the future of your business. A virtual CFO acts like firm support on whom you can rely upon, to make these critical decisions. With their intensive experience, they are quick to draw out significant insights that you might have missed, that can make or break your firm’s policy.
  • Critical issues like cash-flow forecasts, budget planning, etc. call for extreme accuracy. A virtual CFO can give you more accurate financials, so you can work off superior data that, in turn, increases your probability of succeeding.
  • Risk mitigation is one of the most overlooked roles of a virtual CFO. The virtual CFO needs a certain amount of authority over your firm to alter its structure in such a way that it reduces risks and boosts opportunities.
  • A virtual CFO is always more affordable than a full-time CFO since the extra costs of benefits do not apply, while still receiving advanced financial assistance when you need it.
  • Virtual CFOs work with multiple clients at a time and they are subjected to a diverse range of industries. This gives them extensive insight into all these industries, which will then go on to help your organization when they work for you. An in-house CFO will most likely focus on your industry alone, missing out on the impact of the other ones.
Benefits of Hiring a Virtual CFO for Small to Medium Businesses
Better Hold Over the Firm:

Small to medium businesses are often mismanaged and lack break-up of duties. One person is generally responsible for performing all financial operations, and this situation makes the company vulnerable to financial losses, theft, or fraud. Hiring a Virtual CFO for these operations is the most rational action to take; it restores your peace of mind and eliminates these possibilities.

Enhanced Cash Flow:

CFOs are experts in devising strategies to maximize a company’s cash flow. If you are a start-up, a small or medium business owner and your cash flow is not what you envisioned it to be, then a virtual CFO can help you immensely.

Tax Assistance:

Business owners generally struggle the most with their taxes. Keeping up with the ever-changing rules of penalties and fines sum up to a big amount. Too many evaluations go into a firm’s taxes, as an owner you cannot handle all these single-handedly. A virtual CFO takes this burden off your shoulders, handling your taxes with ease.

Higher Accuracy in Financial Statements:

So many companies file financial statements with errors. The mark of a successful firm is an array of impeccable financial statements. A virtual CFO is exceptionally knowledgeable and well-trained in finances to prepare your company’s fiscal statements accurately, with zero errors. You can sit back and heave a sigh of relief while your CFO is making the best decisions for the company.

Today, start-ups and small to medium businesses are habitually taking the help of Virtual CFO services to save their resources and streamline operations. With a blend of practice knowledge, mobile technology, cloud-based accounting software, and modern data analytics, Virtual CFO's can offer enormous benefits to your business.