What is an Outsourced CFO? – In simple terms, a virtual CFO is exactly what it sounds like. A virtual CFO is a person who administers all the accounting, taxation, and value proposition, normally associated with a Chief Financial Officer (CFO) – only in a third-party capacity, as an outsourced CFO. Instead of going through the trouble of hiring a CFO (and the cost associated with it), along with training a person with those qualifications in your company, you’re getting access to someone who can handle all the requirements of a CFO remotely on a schedule that works best for everyone.
An outsourced CFO was not available about 10 years ago. Technology has advanced to the point where not only is it possible to have an outsourced CFO, but more businesses now are using on demand CFOs, part time CFOs, or virtual CFOs to help their organizations soar in increasingly competitive marketplaces. That is true for many reasons, all of which are certainly worth exploring.
The Value of a Virtual CFO
The main reason why smaller organizations are finding virtual CFOs or outsourced CFOs increasingly helpful is that they’re a viable way to control costs almost immediately. Rather than paying the high salary to hire your own CFO on a full-time basis – which can cost in the hundreds of thousands of dollars, you get the same services you need; at a virtual capacity, for a fraction of the cost. Having an outsourced CFO is more valuable than hiring a full time CFO because an outsourced CFO provides the same amount of value as a full time CFO without having to pay any benefits. Let’s not forget, benefits alone can cost a company thousands of dollars per year for any employee, much less for a full time CFO.
That leads directly into the next reason why a virtual CFO can be so valuable. A virtual CFO can customize their skills and services to better meet the requirements of your business structure. Rather than paying a person for a lifetime’s worth of education, you’re only paying for the skills needed to perform the value aspect of growing your business. What is even better, is the services being offered from an outsourced CFO can also be adjusted on a regular basis as your business continues to grow and evolve. That provides you with unprecedented access of a wealth of knowledge that is used to meet your budget.
Leveraging Experience to Meet Your Goals
A virtual CFO can create a positive effect across your enterprise in the best possible way. You’re hiring a professional who has practice and experience in many different companies like your business. That means that you’re in a unique position to avoid making the same mistakes that other companies have previously made.
Another advantage a virtual CFO brings to your company is the quality of the advice or consultation being offered. That is more than just an accounting setup. The focus goes beyond simply setting up a financial structure and putting a framework in place for you to effectively manage your books.
Consider the different challenges you’re likely to experience over the course of three to five years. Your business can become more complex as you add employees, suppliers, vendors, and all the contracts that come with them. If your company is growing rapidly, it can quickly cause your financials to grow out of control, unless you’re prepared for it.
Be Prepared for the Next Challenges
An outsourced CFO won’t just explain details of your business’ financial situation. An outsourced CFO will work with you to make sure you’re better informed of your current status, but also the pros and cons of the options that are available to you in the future. That level of strategic advice — and the advanced decision-making made possible because of it — would be difficult to replicate through nearly any other means.
With a virtual CFO or an outsourced CFO, you will find yourself in a better position to always make the right decisions, at exactly the right moment, as your company grows. As a result, your business can maximize its profitability as much as possible over the future years, thus allowing you to grow your business in a cost-efficient manner.
A large national company can easily afford to have a full-time CFO and it may make sense to do so. But for most smaller companies, using a virtual CFO isn’t just an effective way to provide the same value that naturally exist in a growing company — it’s a way to help your business grow for future years to come at a cost-efficient way.
Send us an email for inquiries about hiring an outsourced CFO at CFO@mytotalaccounting.com.