Small and emerging businesses have a lot of challenges in setting up the business, registrations, licenses, and compliances. At a time when you do not have the financial capability to invest in a senior CFO, is when you need the advice of a financial expert the most.
Most businesses manage with a small one or two-member accounts team that handles everything from bookkeeping to compliance. If you are struggling with generating the right financial data at the right time to enable you to make the right business decisions, it is time to look at hiring a CFO to address these concerns. Virtual CFOs can work as an extended arm of your company guiding your internal team and liaising with your stakeholders.
Who is a Virtual CFO?
A Virtual CFO, or Virtual Chief Financial Officer, is a finance expert who provides strategic guidance and advice to your company on a full-time or part-time basis, depending on your requirements.
He or She might not be an employee of your company, but works as an external entity bringing in an independent understanding of your business without bias. The key benefit of employing a Virtual CFO is the availability of high-level financial expertise, as and when required, at a lesser cost.
Responsibilities of a Virtual CFO
Though the Virtual CFO can help with everything related to finance and business strategy these days, there are few specific roles they have the expertise in.
Financial Planning and Strategy
A Virtual CFO can ensure that your financial plans and strategies are aligned with the business goals. Finalizing financial plans with the management, as well as communicating them to your team members is crucial for the smooth running of your business, and this is a role that the Virtual CFO can handle effectively.
CFOs have expertise in market trends, economic environment, and industry best practices enabling them to make the right choices while crafting the best financial plan for the sustainable growth of your business.
Financial Reporting and Analysis
One of the key roles of a Virtual CFO is to prepare, analyze, and present the financial reports to all key stakeholders of the company. Virtual CFOs can guide your internal teams to produce accurate, timely financial reports that can help you make the right business decisions.
Tools like CANVAS Financial Analytics can provide you with real-time financial information at your fingertips.
Virtual CFO has the capability and responsibility to identify potential risks for your business and prepare sufficient mitigation measures. These could be related to competitors, market conditions, or unforeseen challenges that can impact your business negatively.
Budgeting and Forecasting
A Virtual CFO can ensure that your budgeting is done on time, and monitor it for major variances. With their experience and expertise in the industry, a Virtual CFO can help craft a budget that aligns perfectly with your business goals.
They utilize the latest tools and technology to develop forecasting models that can provide accurate projections, helping your business immensely.
Cash Flow Management
Virtual CFOs can work with the management and employees to identify strategies to optimize cash flow, ensuring that your business has the liquidity required to ensure smooth operations. They can also identify the right arenas for investment to give you the best returns.
Fundraising is a crucial time in the lifecycle of any business. For companies seeking funding, a Virtual CFO can assist in presenting your business in the best manner, prepare a good value proposition, scout for the right investors, and ensure a smooth transaction.
Do You Need a Virtual CFO for Your Business?
There are certain situations where you would feel the need for a Virtual CFO’s expert financial guidance. Here are some organization types and circumstances where you should consider hiring a Virtual CFO to guide you:
Small and Medium Enterprises (SMEs)
SMEs are often in need of a CFO for their incorporation, as well as funding initiatives, but might face resource constraints in hiring a senior person. A Virtual CFO can provide access to expert financial guidance without the hefty overheads that generally come with hiring a full-time employee.
Running a startup is like being on a fast treadmill, where you have to keep running to stay in place. In this fast-paced environment, financial discipline can often take a backseat, affecting the future of your business. A Virtual CFO can help startups navigate the complexities of fundraising, financial planning, and risk management during their crucial early stages.
Businesses of any size can benefit from a Virtual CFO if your internal team is sufficiently capable, and you only need financial guidance. Consider hiring a Virtual CFO to work with you on a contract basis, visiting you only once or twice a month to ensure that your books and compliances are in order. They can also train your team to generate reports and monitor the financial health of your organization.
When your business is planning an expansion phase, either by taking loans, investments, or acquiring other companies, you might need specialized financial expertise for a limited time. Virtual CFOs can be engaged to handle these transactions efficiently since they would have experience in your industry.
As your business grows, you might become too busy to keep an eye on the financial performance. Virtual CFOs can be employed to take care of the extra workload, acting as your eyes and ears, to give you an overview of the financial aspect of your business. You can scale up or scale down the time spent by the Virtual CFO based on your requirements.
Hire a Virtual CFO to take your business to the next level
Depending on your business requirements, you might require the services of a full-time CFO or guidance from an expert on a part-time basis. By providing timely financial assistance, keeping your books in order, and ensuring that you are fully compliant, a Virtual CFO can be a valuable addition to your company without adding the overheads involved in hiring, training, and retaining a full-time employee.
If you are looking for a Virtual CFO to be in charge of the financial strategy of your business, reach out to Finavi CFO. We have over 14 years of experience working with small and emerging businesses to optimize their financial functions, and move towards profitable growth. Empowered by our proprietary tools, CANVAS for financial analytics, and COMPLY for compliance management, we can make your Financial Planning and Analysis a cakewalk.