What Is a Virtual CFO?
You're probably familiar with the role of chief financial officer (CFO), but your company doesn't have one ... yet. CFOs are usually high-level business executives, commanding high salaries to match. But small- and medium-sized businesses like yours might not be ready for that. Virtual CFO services provide an alternative to in-house financial expertise as you continue to scale.
What's so different about a virtual CFO compared to a traditional CFO? You're in the driver's seat. Virtual services are a business partnership, letting you pick and choose how to manage your account.
Contract and Part-Time
Virtual CFOs don't just work for you. They have rosters of other clients, allowing them to perform the same functions as an internal hire but on a contract, part-time basis. As part of the arrangement, your virtual CFO provides strategic guidance and extracts data insights from real-time financial intelligence.
Choose your own adventure! With an outsourced relationship, you're free to pick and choose what to use your virtual CFO for and whether it'll be a short-term or long-term arrangement. Maybe you want help with [insert X] or [insert Y]. Customze the scope depending on your size, industry, and financial needs. Virtual CFOs are either paid by the hour or at a flat monthly rate.
3 Things Included in Virtual CFO Services
"Do virtual CFOs do my business's taxes? Can they pay my bills?" Not quite. For these things, you might be better off with a bookkeeper or accountant. But virtual CFO services do help you in several important areas, making the business more valuable and increasing returns.
1. Financial Management
Your business should have as much access to strategic growth opportunities as any conglomerate. A CFO focuses on making your organization more valuable financially and introducing processes for intelligent spending. Virtual CFO services could include:
Cash flow forecasting and management
Labor cost management
2. Key Financial Reports and Analysis
Your business spent $50,000 more in Q2 compared to Q1. So what? Having access to figures like this doesn't matter much if you don't know what to do with the data. Virtual CFOs not only collect key information, but they do so with your interests (and understanding!) in mind.
Get greater reporting accuracy.
Financial reporting helps businesses make both long-term strategic and immediate decisions. Virtual CFO services keep tabs on your performance to guide you appropriately.
While report frequency really depends on your company's needs, starting off monthly is typically a fair yardstick. If you need to monitor more closely, your CFO may shift to weekly or even daily reports (e.g., weekly cash flow).
Control costs and identify opportunities.
Are you eager to grow your business? While one adage says, "You have to spend money to make money," you still need to be responsible about it. Financial reporting helps you grow your wealth over time by keeping an eye on your fixed and variable costs. Virtual CFOs partner with your business on:
Financial statement reporting
Fund management and meeting capital requirements
Example: Variable versus fixed expense reporting can help identify ways to spend effectively while pursuing business goals.
3. Budget and Performance Monitoring
Are you overspending? Underperforming? Maybe you fall somewhere in between. A core piece of a virtual CFO services partnership is aligning your budget and performance.
Establish and track your goals.
Virtual CFO services are forward-thinking. Your CFO partner will work to help establish goals. In addition to crafting strategies to achieve each one, they'll get your budget in place so you can operate within clear guidelines.
Analyze your performance against budget.
Are you living up to expectations? Lean on your financial partner to assess how the business is performing against your goals. Key reports measure what you want to accomplish through the lens of your company's established budget. Virtual CFOs track business performance and take corrective actions.
Example: Variance reporting—also known as budget-to-actual reporting—compares whether the actual performance of your company is in line with the budgeted one.
Are you operating over budget? Right your financial ship before you sink. A virtual CFO services partner can keep you on course and even create a debt reduction plan to get your company above water.
Simplify with Virtual CFO Services
Financial management, reporting, budgeting—it's easy to get frazzled by any or all of these things. But to be honest, it's best to leave them to the professionals anyway. If you're looking for a fresh approach to CFO services, outsource! Ignite Spot has more than 14 years of experience helping businesses just like yours, and our expert team is eager to help. Explore our CFO services, and get in touch to start your journey.