Do You Need a Virtual CFO?

Financial management can comprise accounting, expense management, strategy, forecasting, and much, much more – and in a fast growing company, it can be easy to lose sight of it.

A CFO, by their very nature, is better at holding the purse strings than anyone else, but they’re not always affordable. You might think you have a tight grip on your finances, but without the necessary expertise, time, and visibility, you’ll run into serious problems later on down the line.

 So, what can you do if you can’t afford a full-time CFO? Darren Upson, VP Small Business Europe at Soldo, knows the answer.

The concept of the ‘virtual CFO’ was created to answer that question: they work remotely – seldom on a full-time schedule, and effectively act as an outsourced finance head. Virtual CFOs also benefit as they can deploy their strategic experience and services to a diverse set of clients, without ever setting foot in the actual office.

It’s a service that accounting firms are actually best placed to offer. Most good ones are equipped with the skills and the experience to take on financial administration without the overhead of a full-time finance lead; in fact, we’ve found that many of Soldo’s accounting partners effectively perform this role for clients already.

If you’re running a small business, you might be wondering if you require the service of a virtual CFO. Here are some key signs to look out for.

If you’re struggling to make the right calls, or if you don’t have the information to do so, virtual CFO services can help remove some of the fog around your numbers.

You need better insights to make better decisions

Data-driven decision-making is essential – and CFOs have the expertise to make these informed choices. After all, trusting your gut is high risk and can have unfortunate consequences. At worst, you can lose serious amounts of money; at best, you’ll fail to unlock the true value of some of your decisions. It becomes all too easy to focus on what has happened rather than what could happen in future – making it equally easy to miss the corrective actions that could align performance with strategic objectives.

Transparency and insight are key to making confident, responsible, and proactive (rather than reactive) choices. Virtual CFOs are often experienced accountants and can solve this problem by giving businesses clarity around their finances: helping them make sound, rational decisions.

If you’re struggling to make the right calls, or if you don’t have the information to do so, virtual CFO services can help remove some of the fog around your numbers: delivering meaningful insights into the trends affecting your business – and the opportunities that could be available to it.

You’re struggling to budget and forecast appropriately

This is a huge issue for startups and high-growth SMEs – especially those looking for that all important next round of funding. You need to prove to your investors that you’re on strong financial ground, and that means demonstrating a strong grasp on your budget, your goals, and your forecasting.

Your small business is no doubt full of brilliant people. But it’s probably not full of people who are excellent at financial planning. A permanent CFO might not be a hire you can make right now – but through an accounting firm, a virtual CFO can provide essential longer-term forecasting and analysis.

A permanent CFO might not be a hire you can make right now – but through an accounting firm, a virtual CFO can provide essential longer-term forecasting and analysis.

You’re growing – but your processes aren’t

The bigger you get, the more complicated finances can become. At the most fundamental level, the busier your business is, the harder it is to dedicate time to managing finances. Yet a growing number of employees, agencies, vendors, clients, and other components of managing your books can make the process of getting your accounts in order exponentially more difficult. This is especially true if you’re using manual processes, or if your financial technology isn’t particularly scalable.

So, if your bookkeeper alone can’t handle it, a virtual CFO probably can. Again, as experienced accountants, they can often provide much-needed advice on investing in a technology setup that can support growth – helping you navigate periods of substantial expansion with systems that can bear the weight of your new requirements.

You’re spending, but you don’t know how you’re spending

It’s depressingly simple for expenses to spiral out of control: when employees claim more than they should, it adversely affects your finances; when they claim less than they should, it affects their morale and financial wellbeing.

 This can only be avoided with clear policies around expense management and spending, and that, in turn, requires scrutiny, control, and visibility into incomings and outgoings. Your team should feel empowered to spend when they need to – but with the right limits in place to ensure that they’re doing so within the company’s means.

This spending can sometimes spiral out of control to the point where businesses can struggle to maintain profitability without quite knowing why. If you can’t empower your employees to spend, you can actually stifle growth: when budgets are throttled, staff can’t buy what they need to maximise revenue-generating activities.

A virtual CFO can help solve these problems: advising on measures and technologies to put in place to prevent these issues – as well as creating best practices for how to spend which funds properly.

You might not be ready for a permanent CFO just yet: a small business will struggle to justify the expense. But don’t ever think you’re too small to manage your finances properly.

2 Comments
  1. virtual cfo austin tx says

    Understanding what a virtual CFO does and the 4 tips to see if a business is at the right phase is important for a business to succeed. Great post!

  2. David Johnson says

    That’s interesting that budgeting and forecasting is usually a struggle for startups or those that have high growth. Recently, the company that I work for has been growing really rapidly. I’ll have to look further into virtual CFOs.

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