Virtual CFO: What It Is and Why You Might Need One
As businesses grow, their financials become more complex. As financials become more complex, it becomes more difficult to measure and manage cash flow, inventory, production costs, payroll and other critical financial information and tasks.
This is why many companies grow themselves right out of business. They’re unable to maintain the financial controls and systems required to operate effectively and efficiently. As a result, they make business decisions based on inaccurate, incomplete and/or outdated information.
If you see your financials becoming difficult to manage but you’re not ready to hire a full-time chief financial officer (CFO), a virtual CFO might be the perfect solution.
What Is a Virtual CFO?
IT services and support, customer service contact centers, marketing and other services and processes are often outsourced. The cost to outsource is typically less expensive and less complicated than hiring full-time staff, and many of these services don’t require full-time employees. Some needs may be temporary or somewhat sporadic. Also, outsourcing often gives you access to knowledge and skills you don’t have in-house.
For the same reasons, many companies are turning to virtual CFOs to help manage a wide range of financial management tasks and processes depending on the company’s specific needs. Instead of paying a six-figure salary with a benefits package, you can pay for the financial expertise, guidance, and services you need, when you need them, for a fraction of the cost.
Virtual CFO services include but are not limited to:
- Choosing and configuring the right accounting software
- Implementing accounting changes related to the 2017 tax reform legislation
- Compliance management (government/industry regulations, Affordable Care Act, etc.)
- Inventory management
- Resource planning
- Sales forecasting
- Cash flow projection and management
- Budget review
- Accounts payable/receivable
- Financial reporting
A virtual CFO can also ensure a seamless transition between CFOs. If your CFO is retiring or pursuing another opportunity, or you’re planning to make a change, a virtual CFO can get up to speed on your financial systems and process and assume the responsibilities of your CFO on an interim basis until the new CFO has been hired and on-boarded. A virtual CFO can even help you review applications and resumes so you hire the right person.
Why You Might Need a Virtual CFO
The list above includes information, discipline, and tasks that are critical to your business. If you don’t have a handle on one or more items on this list, you’re increasing the risk of cash flow issues, compliance violations, audits, and disputes with vendors, employees and business partners.
Is all necessary financial data being captured and recorded in the right place? Are you effectively collecting and organizing the correct data that your accountant will need for tax filings? Is your accounting software doing what you need it to do? Do you know what products and services are performing best? Do you know your exact labor and production costs? Are you able to accurately measure, track and analyze your profit margins by product line? Do you know how to use this and other information to make better business decisions and become more profitable?
If you’re not sure about the answers to any of these questions, you should consider bringing in a virtual CFO. You might need to have existing systems and processes reviewed and optimized. Otherwise, it might be necessary to build or rebuild them from scratch. Once the right systems and processes are in place, your virtual CFO can then meet with you on a regular basis to discuss your financials, offer recommendations, and help you implement any changes that may be necessary.
LFL Veritas offers virtual CFO services that are customized to suit your specific business needs. We pride ourselves on being business consultants first, explaining your financials from a business perspective, not just an accounting perspective. If you’d like more information about outsourcing CFO responsibilities, schedule a complimentary consultation so we can help you determine the best path forward.