You’ve likely heard the statistic that 33% of businesses fail within the first two years. But did you know that 82% of those businesses fail due to cash flow and money management problems? Don’t worry, though; there’s a remedy to that type of financial issue.
As a small business, you might hear your accountant extol the virtues of having a Chief Financial Officer (CFO) to ensure financial security and healthy profits. But in this era of business, the traditional CFO model isn’t always feasible.
Rather than pour your already limited resources into accountants you can barely keep up with, why not give virtual CFO services a try?
With a top-tier virtual CFO at the ready at all times, from strategizing solutions for growth to capitalizing on opportunities that arise in fluctuating markets — the benefits of using virtual CFO services could be just what your business needs.
What Is a CFO?
First thing first. What is a CFO and what kind of role do they play in helping build small businesses? When it comes to keeping a business’ finances on track, the Chief Financial Officer or CFO is a small business’s best friend. Not only do they monitor financial performance, but they make sure money is invested reliably, long-term goals are established and objectives are met.
For small businesses, in particular, a CFO’s organizational skills come in handy for monitoring day-to-day spending and making sense of all that confusing paperwork for taxes.
Ultimately, a great CFO is responsible for making sure that all cash flow is organized and accounted for, that financial decisions are sound and responsible, and that taxes are up to date. They also create budgets and financial plans to guide their company on the path from start-up to success.
We know what you’re likely thinking: “This sounds like a great option for us as a business!” We agree! You don’t have to let the stress of running your own business overwhelm you. Hiring a CFO or virtual CFO to help out can help any business owner breathe easy knowing their business finances are being handled well.
What Are CFO Responsibilities?
CFOs have a pretty sweet gig. They may not receive the glory or recognition of some other C-level executives, but CFOs are entrusted with keeping an organization’s financials in order.
From establishing financial goals to preparing and analyzing financial statements, CFOs uphold a scrupulous sense of responsibility when it comes to properly managing a company’s purse strings. They:
- Oversee budgeting activities
- Anticipate potential investments that could benefit operations
- Strive to protect their organization from any avoidable financial catastrophes
All in all, virtual CFO responsibilities can be summarized as ensuring financial stability for their employer.
Virtual CFO vs. Regular CFO: What’s the Difference?
You might already know what a CFO does in a typical organization. But have you ever wondered what the difference is between a regular CFO and a virtual CFO?
A regular CFO can be thought of as your regular office buddy. They often need to come into the office every day and operate with traditional accounting techniques. Virtual CFOs, on the other hand, are more like wizards — popping in whenever needed and using magical accounting skills to make sense of any financial data.
Both regular and virtual CFOs can save their organizations time and money. However, one carefully inspects ledgers in person and is part of the day-to-day operations of the business. Basically, regular CFOs are permanently on the payroll whereas you can hire a virtual CFO to help with one-off tasks or special projects.
This makes virtual CFO services a more flexible option for small but growing businesses. Instead of hiring a full-time CFO to manage your company’s financial tasks, you can hire a virtual CFO and enjoy more cost-effective services without sacrificing quality or experience.
Benefits of Virtual CFO Services
When you’re pondering the benefits of a virtual CFO, you might get caught up in the clouds imagining all the new possibilities for your business. Take a step back and make sure you’re looking at the bigger picture. After all, understanding the advantages can mean the difference between success and failure.
Knowing what benefits a virtual CFO can bring to the table is essential before you take that leap into cyberspace. Doing your research and taking the time to understand exactly how they can help you is a crucial first step in choosing the right one for your unique needs.
While the benefits of these types of financial planning services abound, here are a few of the biggest benefits most of our clients get out of virtual CFO services.
Flexibility
The popularity of virtual CFO services has revolutionized how businesses view financial success. Instead of being tied down by finding the right hire with all the credentials and expertise a modern business requires, virtual CFOs offer an agile alternative. With it comes more flexibility while still being reliable and passionate about helping businesses reach their goals.
This virtual solution brings a wealth of knowledge to teams of any size without having to worry about managing a regular CFO’s schedule. However, it also brings with it the beauty of not having to worry about those well-known accounting nightmares. In short, it’s a virtual win-win.
Scalability
Hiring a virtual CFO could be the secret to scalability for your small business. In an ever-changing and competitive business world, you need flexibility and versatility to adjust accordingly. Having virtual financial expertise at your fingertips can give you just that.
Say goodbye to financial guesswork. Virtual CFOs are professionals with more varied knowledge than one individual employed full-time in the same role could possess. With a virtual CFO on board, you no longer have to fret about spending money on the payroll when operations are slow and revenue is low.
Instead, virtual CFOs can offer much-needed help as and when it is needed. This allows your business to go through periods of expansion, stagnation, and growth without worry. You can scale your virtual CFO services up or down as needed.
Cost-Effectiveness
When it comes to staying atop your books and finances, virtual CFOs are the way to go. Not only do virtual CFOs offer more cost-effectiveness than hiring a full-time CFO, but you benefit from their business acumen without having to employ somebody on a full-time basis and all the additional financial costs that come with that.
Furthermore, virtual CFOs are employed on an as-needed basis so you get the insights you need at lower and more predictable costs in an era where finance is ever-evolving. Therefore, virtual CFOs can be a really helpful investment for businesses looking to save time and money in the long run.
Financial Reporting
Utilizing the services of a virtual CFO can be a tremendous help when it comes to financial reporting. A virtual CFO can provide guidance and structure for your organization’s financial workflow. The result? You’re able to implement better methods for tracking and recording vital information.
Not only does a virtual CFO make sure that your company is compliant with financial reporting regulations, but they also help identify potential opportunities for increased efficiencies and cost-savings. This means they’ll assist you in managing the data related to finance. They do so through:
- Understanding key indicators
- Highlighting growth areas
- Preparing custom reports
In most cases, this eliminates the risk associated with manual processes. It also helps create a culture of greater accountability. In short, virtual CFOs are an asset to any business seeking to streamline its financial reporting process.
Increased Cash Flow
Having cash flow problems? A virtual CFO might be just what your business needs. By evaluating existing financial processes, they can identify changes that:
- Increase efficiency
- Reduce costs
- Increase revenue
They can advise on how to decrease expenses according to business objectives without compromising the ability to grow your business in the future. Corporate structuring is another way virtual CFOs help growing businesses. By optimizing the structure of your company you may be able to increase tax efficiency and financial health.
Ultimately, any great CFO will help inform business decisions with comprehensive analysis and make sure there are sufficient funds to achieve short-term and long-term goals. Whether it’s preparing budgets or updating accounting software systems, a virtual CFO could prove an invaluable asset for any company looking to increase its cash flow.
Technical Improvements
Having a CFO on your side to help with financial processes can be a great advantage. Virtual CFOs are uniquely suited for assisting businesses in technical improvements. Yep, this includes the implementation of specialized financial software. No longer do you have to sift through online reviews and endless demos; a virtual CFO will do all of that for you.
CFOs have immense experience and knowledge that allows them to analyze key points and identify potential areas of improvement within all of your business’s financial practices. It’s worth considering bringing one on board to ensure that you’re utilizing the best possible tools and practices for managing business finances.
Compliance
Finally, working with a virtual CFO is a great option for businesses that want to stay compliant but don’t have the means to hire an in-house CFO.
For any company, tax compliance and regulatory compliance can be a lot to wrap your head around. Having an expert CFO take care of it gives you the chance to focus on other aspects of your business such as sales and profitability without worrying about taxes and regulations.
When it comes to compliance, a virtual CFO can help:
- Keep track of taxes due
- Make sense of financial requirements
- Help optimize deductions
- Assist with refund accruals
What’s more, depending on the CFO you choose, they may have expertise in specific industry regulations too; be sure to ask before making your final decision.
How a Virtual CFO Helps With Cash Flow Management
Did the cash flow management bit above pique your interest? That’s understandable. Most business owners, as mentioned, struggle with cash flow management. It’s one of the biggest reasons why teams bring a virtual CFO on board, and for a good reason: your business can’t survive and thrive if your cash flow is off!
If you’re interested in hiring a virtual CFO or other financial services to improve your company’s cash flow, here is how they can help you achieve your goals.
Financial Tracking
The beauty of having a virtual CFO is that it can take the hassle out of cash flow management. A virtual CFO can give you critical insights into where your cash flow currently stands, as well as provide strategies and assistance on how to best manage cash flow in the future.
With financial tracking made easier by a virtual CFO, you’ll have more access to timely information. This will allow you to make better-informed decisions, so your cash flow stays steady regardless of seasonal changes or economic conditions.
Data Accessibility
Cash flow is obviously a key component of running a successful business. However, being able to access the financial data needed to efficiently manage cash flow can be a challenging task. By engaging with a virtual CFO, you can get the help you need to make sure cash flow is being managed effectively.
They provide experienced guidance when it comes to cash flow. They also provide you with access to cutting-edge technology and analytics that can quickly identify cash flow opportunities and threats.
Savings Opportunities
Hiring a virtual CFO can be an excellent way to identify cash flow opportunities and make more from the money already coming into your business. With years of knowledge and experience, they’re able to provide insight that you can’t always find on your own.
Using their skills and financial expertise, a virtual CFO can help you identify areas where your business can save cash. Whether that’s through cutting operational costs, raising prices, or analyzing customer trends, they know it all. All of these steps are necessary in allowing your business to continue growing in the right direction; a direction digitally enabled by hiring a virtual CFO.
Analytical Tools
As mentioned above, a great virtual CFO will know all about the best financial planning software. Not only that but they’ll know how to implement the right financial analysis tools that work for your business.
This means they can provide insight into cash management strategies such as cash budgeting and cash forecasting to ensure you’re in control of essential cash flow events. This ultimately helps you gain the confidence needed to make great financial decisions in the long run.
Predict Cash Balance
Running a successful business means having cash on hand. This can be a challenge since cash flow tends to vary. That’s why it is essential that you can accurately predict your business’s cash balance. Not sure how to do that? This is where hiring a virtual CFO comes in.
Virtual CFOs have the experience and know-how needed to use their sophisticated tools and analysis techniques to monitor cash inflows, outflows, and cash balances so you don’t fall short of cash. In short, they’re integral for forecasting cash flows to help predict the cash balance of your business accurately, now and in the future.
Business Banking
Business banking can be a great way to access the capital you need to help your business succeed. However, it can often feel like an intimidating process. That’s why having a virtual CFO on board can be so helpful. They’ll have the inside knowledge you need to make sure that you’re getting the best business banking products for your business.
From business credit cards to small business loans, a virtual CFO can handle it all. Not only will they take the stress and confusion out of making sure that you have what you need, but they’ll also help you choose the product that works best for your business. All in all, this helps put your business on a path toward success!
How a Virtual CFO Helps With Strategic Consulting
Another one of the main reasons why our clients hire a virtual CFO is for the strategic consulting services they offer. What exactly is included in those types of services? It varies from one company to the next, but generally, financial consulting services fall into one of a few categories.
Revenue
Having a virtual CFO to provide strategic consulting services is a great way to find clarity on how to drive revenue. A virtual CFO offers specialized financial advice based on your individual company’s needs and performance. They’ll often help you identify areas that need stabilization or increased spending to reduce costs and achieve increased revenues.
Strategic consulting services like these can include:
- Planning and forecasting an overall budget
- Outlining steps to reduce current expenses
- Exploring alternate sources of financing
- How to increase ROI
With the assistance of a virtual CFO, your business will be able to get the most out of your revenue resources.
Competitive Market
A virtual CFO can be a huge asset for understanding the competitive market your business is in. Through strategic consulting services, they can provide competitive analysis of the industry. They’ll use this to break down potentially complex competitive landscapes into easily digestible, actionable insights.
You can then use this competitive intelligence to assess competitive positioning and inform competitive pricing strategies. The best part? All of those decisions will be data-driven. With consulting services, you don’t have to guess what “might” work anymore.
Customer-Facing Solutions
Finally, working with a virtual CFO can mean more cost-effective customer-facing solutions for your business. How so? A virtual CFO can help you:
- Identify areas to reduce costs for customer-facing solutions
- Review competitive offerings and evaluate customer feedback
- Develop an improved approach to customer service
Their expertise also includes in-depth financial analysis, creating models, and helping with long-term planning. Ultimately, working with a virtual CFO gives you the chance to create customer-centric strategies. When done right, these can improve profits while keeping customer satisfaction at the heart of everything you do.
Is a Virtual CFO Right for Your Business?
Are you thinking about getting virtual CFO services for your business? If so, there are a few ways to tell if it’s the right decision.
Start by assessing your financial goals and needs. Ask yourself if your business would benefit from someone managing those needs or if an in-house team member can handle them. Think about how virtual CFOs can help your business with their expertise in financial strategy, budgeting, forecasting, reporting, and decision-making.
Then, carefully research virtual CFOs to find the right fit for you. Consider factors like experience level and pricing. After all, they’ll have a major effect on the outcome of your financial services.
Overall, it simply pays to know what you want. Do you need help with tax planning or just bookkeeping? How can a virtual CFO improve your bottom line?
Furthermore, it’s essential to speak directly with prospects. This will help you understand how well-suited they are for your account and business needs. Ask about their qualifications and certifications. Chat about their industry experience. It’s especially helpful if they’ve worked with businesses similar to yours.
Get CFO Services Today
You have a dream for your business. You’re committed to reaching those goals. But are you ready to take your company to the next level? If so, a virtual CFO can help ensure you reach success.
At Bennett Financials, we offer virtual CFO services that can provide you with a solid profit plan and optimized cash flow. We will help guide your growth so that you maximize profit potential and sustain progress to make sure that your business succeeds in its mission.
Learn more about virtual CFO services today!
