There’s no feeling like the one that comes with hitting a financial goal and growing your revenue. But that also comes with growing pains.
Once you’ve hit that growth point, your business needs a financial executive—but you probably can’t afford a full-time CFO yet. Luckily, it’s easy to get the expertise you need out of house for now with virtual CFO services.
But what is a virtual CFO, and what can they do for you? Does your business really need an outsourced CFO? Read on to learn about what a virtual CFO provides, the benefits of engaging one, and how to decide whether outsourced CFO services are right for you.
A virtual CFO performs all the services of a chief financial officer, but they usually work on a contract, part-time basis. Until recently, a CFO’s strategic advice wasn’t an option for most small businesses because these folks wanted permanent in-house roles.
Thankfully, things are changing, and small-business owners can finally access this service.
Today’s business leaders upgrade from in-house or online accounting services to CFO advising because there’s more data available than ever before—thanks in part to technologies automating traditional accounting work. Suddenly, accountants can extract insights from real-time financial intelligence and provide more operational advice.
With this freedom and newly available intel, leaders can focus on what to do with that data. That’s where a CFO provides the most value. In fact, McKinsey revealed that the CFO is generating more strategic and operational value than ever before:
![[REFRESH] What Is a Virtual CFO, and Does My Business Need One-1](https://www.ignitespot.com/hs-fs/hubfs/Google%20Drive%20Integration/%5BREFRESH%5D%20What%20Is%20a%20Virtual%20CFO%2c%20and%20Does%20My%20Business%20Need%20One-1.png?width=500&name=%5BREFRESH%5D%20What%20Is%20a%20Virtual%20CFO%2c%20and%20Does%20My%20Business%20Need%20One-1.png)
Source: McKinsey Global Survey
There’s just one problem: A corporate CFO is expensive. In-house CFOs outrank directors and managers, with compensation to match. When businesses can’t afford the salary, they forgo hiring a CFO. Thankfully, outsourcing a virtual CFO solves that problem.
With outsourcing, growing companies harness the expertise of skilled professionals at a fraction of the cost of a full-time executive. Because a virtual CFO provides their expertise to a number of clients, they split their time among them—kind of like how a landscaper maintains several properties.
Unlike a transactional CPA or controller, a virtual CFO goes beyond tactical advice and provides strategic guidance. Instead, a virtual CFO’s scope of work depends on an organization’s size, industry, and financial needs. They’re usually paid by the hour or at a flat monthly rate.
There are many benefits to hiring a virtual CFO to help manage your growing company’s financial posture:
The biggest perk of a virtual CFO is top-level expertise without the cost. According to October 2021 data from salary.com, the median annual salary for a chief financial officer in the United States is close to $400,000.
If you’re an entrepreneur, salary sticker shock can be jaw-dropping. Pair that with benefits and bonuses, and you’re looking at a hefty price tag to hire someone full-time.
![[REFRESH] What Is a Virtual CFO, and Does My Business Need One](https://www.ignitespot.com/hs-fs/hubfs/Google%20Drive%20Integration/%5BREFRESH%5D%20What%20Is%20a%20Virtual%20CFO%2c%20and%20Does%20My%20Business%20Need%20One.png?width=500&name=%5BREFRESH%5D%20What%20Is%20a%20Virtual%20CFO%2c%20and%20Does%20My%20Business%20Need%20One.png)
Source: Salary.com
Hiring a virtual CFO lets you control costs by getting only the services you need when you need them. Your virtual CFO becomes your best resource for cutting costs within your business, starting with their own compensation and expanding into your larger operations. And often, virtual CFOs find enough cost-cutting opportunities to recoup your initial investment in their services.
E-commerce companies have different financial needs than pharmaceutical research and development labs. Virtual CFO services customize the skills and scope of work to fit your company and don’t charge you for anything else. Plus, their services scale alongside your business growth.
Business needs are inherently different at $1 million in revenue versus $10 million and so on. Virtual CFO services help you navigate different growth phases. Of course, good virtual CFOs know they are a temporary solution. And an effective virtual CFO can eventually help you transition from outsourced CFO services to an in-house position.
Virtual CFOs usually specialize in one industry while working with clients across various sectors. This way, they develop a deep understanding of your business while still drawing from unrelated experiences.
A virtual CFO resolves diverse financial conundrums. Whatever your situation, rest assured that your virtual CFO has prior experience in a similar situation and can advise you accordingly. This flexibility translates to affordable rates for virtual CFO services without skipping a beat. What’s more is that an outsourced CFO brings a diverse pool of expertise to businesses.
Virtual CFO services are clearly valuable, but is it the right solution for you? A virtual CFO isn’t a fit for all businesses. Some don’t need high-level strategic advice. In other cases, a company’s finances are too disorganized. If you’re in the latter situation, engage an outsourced accountant to organize your accounts and provide a clear understanding of your financials. Once you’re confident about your accounting practices, you may be ready to hire your own CFO. A virtual CFO can help your business in several key areas:
As you grow, your business becomes more complex. Gone are the days of working solo in your basement at midnight. As you add more equipment, employees, suppliers, vendors, and contracts, your operations and finances get harder to manage. Besides, if you deal more in big ideas, financial know-how may not be your strong suit. If a data expert alone can’t keep up, it might be time to hire a virtual CFO.
At Ignite Spot, we’re all about informed decision-making. We’ll walk you through a reliable financial strategy with robust accounting practices—from organizing your bookkeeping process and ledger transactions to advising on mergers.
Each step that you and your Ignite Spot CFO take together gives you more insights into your business’s money-making engine. Maybe you need better visibility into corporate spending, like GlobalEd. Or you need to know where to cut costs to survive a global health event, like Kaka’ako Kasuals. The good news is that our virtual CFO services prioritize giving you visibility so you can make sound business decisions.
Growing quickly is a good thing—until it’s not. Rapid growth can put your finances into a tailspin if you’re not prepared. A virtual CFO can help you navigate periods of accelerated growth and implement systems for the next phase of your business. To do this, your Ignite Spot CFO doubles up on handling potential risks while simultaneously monitoring resources and cash flow to manage revenue.
Business leaders are watching one another more than you would think. They see how economic destabilization can crush one business while another thrives on volatility.
But all companies go through unfavorable periods.
The key is to understand why and take the necessary steps to right the financial ship. If you’re struggling to maintain or grow profitability—due to internal or external forces—a virtual CFO may be the right person to add to your team. A virtual CFO shows you how to find and exploit new opportunities while budgeting responsibly during economic instability.
If a foggy understanding of your business’s financial picture is inhibiting your decision-making, working with a virtual CFO can help. Take the first step by exploring what virtual CFO services are all about. Schedule your free virtual CFO consultation with Ignite Spot today.
Eddy Hood
