6 Benefits of Hiring Virtual CFO Services for Small Businesses

6 Benefits of Hiring Virtual CFO Services for Small Businesses
Benefits of Hiring Virtual CFO Services for Small Businesses
Small business owners often struggle with handing over significant control to someone outside their company, whether it's a subcontractor or a separate department. On the other hand, task organization is one of the most beneficial responsibilities to delegate.

Entrepreneurs might just need to convince themselves that taking on the burden of CFO and accounting tasks doesn't contribute much to the business's strategic value. In that case, they're probably good candidates for virtual services.

Given the current situation, one of the biggest barriers to accessing CFO services is the lack of cost-effectiveness for small businesses.

Hiring a virtual CFO means having a skilled professional who can step into the role of a CFO for your business at a fraction of the cost of hiring a full-time, in-house employee. Similar to remote staffing options, the virtual platform is designed to handle all the duties that a traditional in-house CFO would take on, but from a remote location.

What is a Virtual CFO?

A virtual CFO (Chief Financial Officer) is a financial professional who provides CFO services remotely, typically on a part-time or contract basis. They offer expertise in financial management, strategic planning, budgeting, forecasting, and other financial matters without being physically present in the company's office. This arrangement is often more cost-effective for small to medium-sized businesses compared to hiring a full-time CFO.

What are the Duties of Virtual CFO?

The duties of a virtual CFO can vary depending on the specific needs of the client or company, but they often include:
  • They develop and implement financial strategies.
  • Virtual CFOs plan and analyze financial data.
  • They manage cash flow effectively.
  • These professionals prepare comprehensive financial reports.
  • They help to identify and control expenses efficiently.
  • Virtual CFOs can help your business assess and mitigate financial risks.
  • They optimize funding and capital structures.
  • Virtual CFOs will help in mergers and acquisitions.
  • They ensure compliance with financial regulations.
  • They provide strategic business advice when it matters most.
When we understand the benefits of what a virtual CFO is responsible for, we can appreciate how beneficial these tasks are when handled through a virtual platform for small businesses. Plus, the usual benefits of any virtual staffing solution—like lower costs and an alternative to hiring in-house staff for the same role—also apply.

Top 6 Benefits of Hiring Virtual CFO Services

Here are the top five reasons why you should hire virtual CFO services today:

1. Cost-effective financial management solutions

Since virtual CFO services are provided by professionals on a freelance basis, they don't face the same challenges and expenses as hiring a part-time or full-time employee. This can lead to cost savings in several areas. For instance, the service provider typically works from their own offsite workplace, and since the service is virtual, all communications and deliverables are handled electronically, eliminating the need for a physical presence.

As a result, the money saved can be reflected in offering small businesses virtual CFO services at a more affordable rate than hiring an in-house employee. This benefits the service provider as well, as it allows them to offer viable CFO services to businesses that may not have been able to afford them otherwise.

Moreover, many virtual CFO service providers can provide tailored solutions for specific financial challenges within small businesses. While the business may not need a full-time or part-time in-house CFO because their bookkeeping and accounting processes are straightforward, there might be areas of financial management where expertise or assistance is needed, including tax structuring, financial reporting, and implementing new systems.

2. Expert financial advice tailored to your business needs

If we want to say it as it is, the primary reason for setting up every business is to increase revenue and make more profit. In fact, profit is the main yardstick people use to measure business success. However, business owners can't achieve a high level of success without proper planning and effective implementation of these strategies.

Making decisions and crafting strategies should be guided by sound financial advice, which can be obtained through CFO services. So, basically, lots of small businesses are realizing they need help managing their finances better. That's why there's been a huge increase in the number of them wanting to hire virtual CFOs.

As a small or start-up business, you really need to be flexible with your budget. If you hire a full-time, in-house CFO, you're looking at a lot of fixed expenses for the owner, like a monthly salary, EPF, Socso, medical benefits, and other staff perks. On top of that, there's the expense of purchasing accounting software and systems and handling things like medical claims and leave entitlements. These expenses will likely increase your business budget when added together.

When you hire virtual CFO services, you only pay for what you actually use. The cost is adjusted to fit your specific needs and budget. Typically, it's a fixed fee, but sometimes you can set up a monthly package that's way cheaper than hiring a full-time employee.

3. Timely and accurate financial reporting

If you have been following the trend of the past decade, you will notice that the fundamental needs of businesses have changed greatly. These trends have exposed business owners to the need to use different tools to make decisions. While these needs vary, timely and accurate financial reporting emerges as the top priority for small business owners.

However, small businesses still find it difficult to meet the requirement of preparing financial reports on time and accurately due to insufficient funding. Limited funds make hiring a full-time accountant less attractive compared to outsourcing accounting tasks.

Lots of small business owners are checking out virtual chief financial officer services because outsourcing jobs has been such a success. Using virtual CFO services can have some benefits when it comes to getting those financial reports done right and on time.

Virtual CFOs come with expertise from various fields and industries. Usually, virtual CFOs work part-time and often have other consulting jobs, thus bringing a wealth of experience. This setup beats having in-house accountants, whose expertise might be limited to just accounting and could take longer to understand the level of complexity of your business model.

4. Strategic financial planning and forecasting

A lot of small businesses focus more on day-to-day tasks than thinking long-term. But strategic planning is where it's at. Strategic planning is like setting the game plan for a company—deciding what it's going to do and how it's going to do it. So, business leaders have to put on their thinking caps and come up with the best strategies to reach their goals.

Once managers settle on a new venture, they turn their ideas into clear goals and plans, often in the form of budgets. But here's the thing: many small businesses don't put much emphasis on financial planning. They don't connect financial planning with their overall strategy, and they often don't use projected financial statements to guide their decisions.

If a company doesn't have a clear set of projected financial statements and doesn't understand how internal and external factors will impact those statements, it's tough to do any meaningful financial planning. And without financial planning, success is a long shot.

Small businesses often desire the expertise of a CFO for financial planning but find it financially impractical. A solution is to hire a virtual CFO who operates part-time or per project, offering services from financial statement preparation to strategic planning. This option suits businesses that are not yet ready for a full-time CFO and want to save costs.

5. Improved financial decision-making and business growth

For a business to grow, it needs to make sound financial choices; it's actually a necessity. However, for smaller firms, hiring a full-time or even part-time CFO to provide advice on those decisions might not make financial sense.

You know, virtual CFO services are a smart way to deal with this problem without breaking the bank. When you outsource your financial management, it's not just about saving money—it's also about being able to actually use the advice you get.

It is obvious that hiring a virtual CFO can be a big help for your team. They can show them how their daily decisions affect your finances and give tips for the future. Sadly, smaller firms often miss out on this because hiring a full-time CFO can be too expensive.

Small businesses often get stuck at a certain level of revenue or productivity. It could be because the business owner isn't using their financial information effectively. If you're busy with production or delivering services, you might not have the time or expertise to manage your finances well.

Therefore, you should hire virtual CFO services if you really want to break the chains of stagnation and move your business forward.

6. Access to advanced tools and technology

Here's another awesome thing about small businesses today: You can handle pretty much everything online. Whether you need software, tools, a chat with your CFO, or work delivered, it's all right there on the internet.

I can tell you for free that the internet is a massive advantage for businesses, especially those that haven't set up their own office yet. Even if they do, the last thing they want is to spend more money renting space just to hire someone. Software and hiring a virtual CFO already add up as expenses. But if they can handle it all without raising their fixed costs, then having a CFO service is even more valuable.

The virtual CFO firm comes equipped with some software and tools to help small businesses reap all the benefits at a fraction of the cost. And here's the best part: the business owner won't even need to worry about buying their own software to work with the CFO—it's all included.

Those software and tools are like an extra hand for the small business, especially if they never plan to hire someone for an accounting or finance role, which is the case for many small businesses—they just can't afford it.

Here's a scenario: Let's say you run an e-commerce business and you're used to running reports out of QuickBooks. Your virtual CFO might recommend more advanced software like Netsuite. Why? Because Netsuite can do sound forecasting, budgeting, and CFO-level financial analysis. The virtual CFO will handle all the setup, teach you how to use it, and give you analysis and recommendations based on the data from the software.

Conclusion: Hire Virtual CFO Services for Small Businesses

Running a small business means you're the captain of the ship. Every little decision counts, whether it's hiring a part-time employee or choosing where to set up shop—it all shapes your future.

As you're busy working hard to grow your business and maximize profits, it's essential to try as much as possible to understand your company's financial situation.

Given your small business's limited resources, hiring a full-time CFO would be prohibitively expensive and require certain financial stability. However, neglecting financial planning is not an option. Virtual CFO services offer a part-time commitment and provide valuable insight into future financial trajectories, unlike accountants, who focus on past records.
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