While many people recognise the benefits of a Chief Financial Officer (CFO), many small to medium businesses can’t afford the expense of a salary that might be nearing 100K. With a virtual CFO, small-business owners can reap the benefits of expert financial advice at a fraction of the price. While every virtual CFO offering is different, some services could be as low as $1000 per month. So, what are the benefits and how could a CFO help you and your business?
What is a CFO?
Traditionally a CFO was just tasked with preserving the assets of a business and getting the books right. Nowadays, CFOs play a much more varied and strategic role, helping shape the direction of a business. Technology and increasingly sophisticated accounting software enable a virtual CFO to integrate with your business, diving deep to identify new growth opportunities as well as areas that may be dragging your business down.
What are the benefits of a virtual CFO?
Hiring a virtual CFO gives you more flexibility. While you may have a bookkeeper or have bookkeeping skills yourself, having access to a specialist accountant with stronger expertise in areas like tax or in dealing with banks and financial institutions can be incredibly useful. Outsourcing your CFO also increases productivity because it will allow you and your key employees to focus on your own job responsibilities, giving you your time back.
Creating measures to analyse your business and then regularly assessing them, will mean you are more informed about how your business is performing. Many business owners spend most of their days working in their business, that they don’t have the time to work on it. A virtual CFO will take on that responsibility.
Ongoing compliance with auditors, tax professionals and policies
Compliance with your tax obligations, finance covenants and audits, if you are subject to them, can all be improved by involving a virtual CFO with your business. A virtual CFO will regularly review your financial position, maintain the appropriate records and prepare regular reporting. If you are subject to finance covenants or wish to obtain finance, these documents will be of great use to you.
Quarterly and annual tax compliance will also be an easier process. Having someone review your figures regularly will mean you should avoid any tax bill shock at the end of the year. Having regularly reporting will allow better tax planning in consultation with your tax advisor, which will allow small businesses to make informed decisions and minimise tax.
Analysing the risk of new ventures you’re considering
The ability to manage growth and make strategic moves quickly only happen when you have certainty and knowledge of your numbers.
But making decisions about expansion is not only about knowing your numbers. It is about analysing the risk and returns of any new ventures you are considering – buying another business, expanding a product line, acquiring more staff. A virtual CFO will be able to analyse your business ideas and report back the risk and return that could eventuate. This will allow you to make an informed decision and provide information to the bank if funding is needed.
Discovering new methods and avenues for business growth and profits
A virtual CFO can regularly and deeply analyse your business performance telling you the areas of your business that are performing, and which are not. By knowing this, you can improve or cut loss making products or services, drive more business towards the areas that benefit you, stop any unnecessary profit leaks and ensure your business is running optimally. Not many small-business owners would have the time or skillset to run this process on their own.