In today's fast-paced business world, companies face constant challenges that require quick and informed financial decisions. However, not all businesses can afford to hire a full-time Chief Financial Officer (CFO) to manage their finances. This is where virtual CFO services come in.
A virtual CFO is a professional who provides financial advice, analysis, and management services to businesses remotely. This solution has become increasingly popular among small to medium-sized businesses as it offers a cost-effective way to manage their finances without compromising on expertise.
In this guide, we’ll explore:
- What is a virtual CFO?
- What a virtual CFO does
- Five benefits of outsourced CFO services
To round it off, we’ll also explain how hiring a Liston Newton virtual CFO can streamline your business growth and offer reliable financial planning solutions.
What is a virtual CFO?
A virtual chief financial officer performs many of the same duties as a traditional in-house CFO but works with clients remotely rather than being physically present at the client's location. A virtual CFO is a financial expert who provides outsourced financial management services to businesses or individuals on a part-time or as-needed basis.
What does a virtual Chief Financial Officer do?
The responsibilities of a virtual chief financial officer can vary depending on the needs of the client but may include tasks such as managing cash flow, collecting financial data, financial forecasting and budgeting, financial analysis and reporting, tax planning and compliance, and providing guidance on financial strategy.
Some specific tasks a virtual chief financial officer may perform include:
- Bookkeeping - managing financial records, recording transactions, and reconciling bank accounts.
- Budgeting and forecasting - developing and managing a budget that aligns with the client's financial goals.
- Financial planning and analysis - analysing financial statements to identify trends, risks, and opportunities.
- Cash flow management - monitoring and managing cash flow to ensure there is enough liquidity to cover expenses.
- Tax planning and compliance - developing tax strategies and ensuring compliance with tax laws and regulations.
- Financial reporting - preparing financial reports for clients or stakeholders, including income statements, balance sheets, and cash flow statements.
- Mergers and acquisitions planning - analysing the financial, legal and strategic implications of a potential merger or acquisition.
- Strategic planning - providing financial advice and guidance to help clients achieve their long-term financial goals.
As a senior executive, the CFO must marshal the financial insights they’ve gathered to create financial statements for the business and shareholders. Their financial reports are crucial for senior management to understand the state of the business and mitigate risks as soon as possible.
Ultimately, there are two main goals your CFO will accomplish:
- Gain a clear and accurate understanding of your business’s financial health
- Develop strategies to improve its financial health
To learn more about what a Chief Financial Officer does, especially for small businesses, read our more information here.
The benefits of virtual CFO services
Return on investment
One of the major benefits of hiring a virtual CFO is gaining financial expertise for your business without the heavy price tag. According to SEEK, the average annual salary for an in-house CFO can range anywhere between $215,000 - $235,000. However, for most small-medium-sized businesses, this salary is too high to pay to a single employee.
Therefore, by opting for a virtual CFO service, you can pay for specific services and only when you need them. It’s a perfect way to cut down spending as a business owner and create a more profitable business model.
Every industry has varying financial needs, and each business will need a CFO that understands these goals and financial projections. By hiring a virtual CFO, you will receive tailored services that meet the requirements of your industry and business needs.
For instance, Liston Newton worked with Cambridge Plumbing on building wealth and protecting business assets. Through our customised services, we were able to look after the company’s bookkeeping, tax compliance and financial forecasting needs.
Read more about how Liston Newton helped execute financial decisions for Cambridge Plumbing in our case study.
While the breadth of services you gain access to with a virtual CFO is ideal for the business, the biggest benefit you’ll get is its added flexibility.
Whether you’re looking for an interim or temporary CFO or part-time CFO, your financial management services are covered by hiring outsourced CFO services. This is because they’ll have the resources and expertise to provide the same financial forecasts and business strategies that a traditional CFO in your finance department would set for the company.
Understanding marketing trends and opportunities
A company’s success, failure and ability to take financial risks is largely based on an understanding of market opportunities and trends. However, without the right expertise and data, this can be hard to develop.
One of the benefits of a virtual CFO service is that they can spend time understanding trends and opportunities for your finances while you continue to grow the business. This includes creating reports, data analysis and finding valuable insights. By getting an outsourced CFO to do these tasks, you get to find out what your competitors are doing, understand the needs of your customers, and take advantage of emerging trends.
Gain financial guidance
The right financial advisor will help a business make the right decisions in terms of growth, the company’s finances and overall business strategy. Virtual CFOs are experts in their field and can help manage money the same way an in-house full-time CFO can.
Whether it’s managing cash flow, helping to create a budget, providing guidance on investments, or assisting with debt management, outsourced CFO benefits mean that a virtual CFO can do it all, whenever it is needed.
When to hire a CFO
CFO responsibilities vary in difficulty. So, as your business grows, you’ll come to realise you need an expert with multiple skills to focus on the more challenging financial issues within your organisation. But what kind of expert is best?
Here is a general overview of the kinds of financial leadership you’ll require, based on your company’s annual revenue:
- $1-$5 million - you may require a financial controller. A financial controller is the head of accounts and will act as a de facto CFO for small businesses. They’ll manage your accounting systems and ensure they run smoothly
- $5-$30 million - you may require a fractional CFO. A fractional CFO is a part-time role in which a financial expert performs high-level tasks, such as uncovering structural inefficiencies and evaluating financial strategies.
- > $30 million - you may require a full-time CFO. This is as high as CFO salaries can be, they pale compared to the losses a company can take without their help. If your business has reached this scale and you’re not a financial expert, there will be limits placed upon your business’s potential. It’s time for a CFO to take over.
Want to know more about our virtual CFO services?
Free financial strategy session
A 90-minute strategy session gives you a clear plan for business growth.
- Get a better understanding of your business
- We generate a detailed report from your strategy session
- Understand your priorities and next steps
When is the right time to hire a virtual CFO?
If you feel your business could benefit from an outsourced financial expert that provides the same value and service as an in-house finance director, then it may be time to hire a virtual CFO.
Liston Newton offers a full spectrum of virtual CFO services designed to help businesses achieve their financial goals. You can rely on our 40 years of experience, industry expertise, and leading software processes to maximise financial efficiency.