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The Virtual CFO is an acronym for The Virtual Chief Financial Officer. The Virtual CFO offers highly skilled resources, just as a chief financial officer would for large organizations. Virtual CFO Services are appealing to organisations that require the skills, but prefer to outsource the service to a professional or group of professionals.

The primary role of a Chief Financial Officer in any organization is to oversee the financial planning, maintain and report on the financial activities and manage financial risk of the business.

What is a virtual CFO?

The Virtual CFO offers medium sized businesses the opportunity of acquiring the skills and services of a Chief Financial Officer, without the burden of advertising, recruiting and encumbering the corporations overheads.

Businesses that hire a Virtual CFO get access to an experienced financial professional. The services that the Virtual CFO offers includes:

  • Handling of all the duties of a traditional CFO, but working remotely and on a part-time basis.
  • Monitors the financial health and well-being of the business, usually with cloud technology.
  • Offers financial insight and guidance on all company decisions and issues.
  • Provides back-office functions such as managing accounts ledgers, depending on the client and their needs.

Advantages to businesses

Having access to a Virtual CFO can be a big benefit for a business.

Businesses often fail to set themselves apart from the competition, and do not have the ability to find a profitable business model. With an accounting professional acting as their Virtual CFO, they could keep their financial goals and realities clearly in sight.

A Virtual CFO is an affordable alternative to hiring a full-time CFO and can make a big difference to a business, by:

  • Creating budgets and forecasts.
  • Pinpointing problem spending by highlighting trends in the market.
  • Validating or discouraging business decisions with financial well-being in mind.

These are abilities that the vast majority of business owners don’t possess – but they often need them in order to succeed.
With a combination of practice knowledge, cloud-based accounting software, mobile technology and modern data analytics, the Virtual CFO services offer great benefit to clients.

Why would you consider getting a Virtual CFO Service?

One of the tasks most often overlooked in a small business, and neglected in medium sized businesses, is making sure that your financial house is in order. That doesn’t mean just hiring a bookkeeper or accountant. It means having an experienced financial professional looking at your “bigger picture” goals and the company’s intended outcomes, from a financial point-of-view.

So, the magic question is: “Should I hire a CFO, or would it be better to bring on an outsourced CFO?” It’s not always an easy answer. Many start-ups decide that hiring a CFO from the onset is a great way to help them to navigate their financial path. After all, it makes perfect sense to get your CFO in place early so you can capitalize on their expertise, provide strategic financial insight, and create projections, budgets and cash-flow forecasts.

But in many cases, hiring a CFO may not be a great fit for your company, at least in the beginning stages and here are a few reasons why:

  • Your company may still be refining it’s direction, so it may be too soon to bring on someone to “captain the financial ship.”
  • A CFO may not see eye-to-eye with your objectives as the owners or entrepreneurs who started the company.
  • It might takes months (or longer) of sifting through resumes or interactions with executive search firms just to find a handful of potential candidates that may or may not be the right fit for you.any CFO candidates are not willing to brave the uncertainty of a start-up company.

It’s a bit of a double-edged sword. You want the professional guidance of a qualified financial officer; someone seasoned with years of experience, ideally in your industry. Yet, you don’t want the headache of making the wrong choice with a decision as important as hiring a CFO.

So what is the answer?

The simple answer could be hiring an outsourced or virtual CFO.Here are just some of the many advantages of using this potentially powerful strategy:

  • Having someone on your team with experience and expertise to get your financial plan organized and on track.
  • Virtual CFOs tend to be more motivated by doing the work required in a start-up; putting into place those building blocks to assure a solid foundation.
  • They are trained in designing accounting and reporting systems that can greatly increase owners and managers ability to stay on task and on track.
  • Virtual CFOs have extensive experience with various businesses and have a breadth of knowledge and experience that other candidates may not actually have under their belt.
  • They understand regulations, GAAP best practices and how to put all the right policies and procedures in place from the beginning.

Hiring a virtual CFO is substantially less expensive than hiring the wrong “in-house” candidate. You won’t have to leap into a full-time salary, or negotiate stock options and the other perks and benefits that typically go along with keeping an in-house CFO happy and motivated.

There can be a downside as well, but the pros far outweigh the cons. For example, management effectiveness can be limited because he or she may be perceived as an “outsider” from your staff’s perspective. But a solid candidate for virtual CFO will also have the ability to enroll your team into his vision. Another potential drawback could be that your virtual CFO might lack the authority necessary to do the job right, but you can solve that problem by entrusting the right candidate with the necessary authority to move forward with his key roles.

There are always pros and cons to any executive hire, whether internal or outsourced. One of the biggest advantages of hiring a virtual CFO is that is gives you time. Time to set up systems and test your financial methods. Time to organize and vision for your company’s future.

Making the right choices to hire a virtual or outsourced CFO may be the difference between success and stagnation in your business. Consider it carefully.

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Erasmus Pretorius

With over 23 years of unwavering expertise, I am a seasoned Chartered Accountant committed to financial excellence. My journey in the realm of finance has been marked by astute strategic insights, meticulous attention to detail, and an unyielding dedication to precision. Over the years, I’ve navigated the complexities of financial landscapes, providing invaluable counsel to diverse clients. My proficiency extends across auditing, taxation, and financial management, coupled with a profound understanding of regulatory frameworks. As a registered professional, I have consistently upheld the highest standards of integrity and ethics, earning a reputation as a trusted advisor in the dynamic world of finance.