What is a Virtual CFO?
One of the single biggest mistakes business owners make is that they try and do everything themselves. The reality is, you can’t. At the very least, you shouldn’t.
So, what do you need?
Your own personal chief financial officer (CFO).
A CFO is the most senior executive of a business who is responsible for its financial control and planning. They are in charge of all of the accounting functions of the business, including preparing financial statements and budgets, credit control, monitoring expenditure, managing cash flow, coordinating finance and capital raising, managing investment, managing all taxation and other compliance requirements, and reporting financial performance and financial data to the chief executive officer (CEO).
You are the CEO.
What do you do if you don’t have a CFO? Employ one?
Not all businesses can afford the luxury of employing a full-time CFO, particularly, small- to medium-sized businesses. So, what then?
The answer is simple. You employ a virtual CFO.
A virtual CFO is essentially the same as a CFO, but fills the role on a part-time basis for a fraction of the cost of a full-time CFO.
The virtual CFO is your personal financial adviser – someone who becomes the trusted source for financial perspective. Someone you can trust who works closely with you and your business to help you make the right decisions to improve the financial management of your business, and your business’s performance as a result. They act as a sounding board and provide financial sanity to you and your business. In these tough economic times, a virtual CFO will provide you with the valuable insight you need to navigate your way to success.
Your virtual CFO will enable you to take advantage of a level of expertise not previously available to you, which will now enable you to run your operation while knowing that all your financial matters are being taken care of by a highly qualified and experienced adviser.
Doing so will resolve your financial management issues.
You will no longer have to base all your financial business decisions on gut feel. Instead, you will have sound, informed financial advice at your fingertips.
You will no longer have to worry about what the numbers mean in all those financial reports and tax returns. You will have them explained clearly so you understand what they all mean and why they are important.
You will no longer feel like your efforts are not being rewarded financially. You will have the required expertise alongside you to convert your effort into dollars.
If you do it, you will never look back.
Working with a virtual CFO versus doing it yourself
When should you work with a virtual CFO, rather than doing everything yourself?
If you are an ambitious business owner who wants to truly grow your business in the most efficient way possible, then the simple answer is always.
However, the commercially realistic answer is that it’s time to engage a virtual CFO when you are spending so much time on the financial management of your business that it is taking you away from profit-generating activities, or the sales and operations of your business.
In the early stages of your business, you will have the time to manage the basic financial aspects because you may not be fully occupied every day with actually performing jobs. As your business grows, it might become difficult for you to continue to handle the financial management as you look to grow your business to the next phase. One of the first signs that it is time to consider a virtual CFO is when your attention moves away from financial management. If you have taken on all the bookkeeping for your business, paying employees, contractors and suppliers, receipting payments and managing your cash flow, those responsibilities can fall to the wayside when you get a project or job that seems more important and requires your full attention.
At this point, you know that your business needs to take the next step towards growth, and a virtual CFO is required to help you plan for this growth.
You will also need your virtual CFO for your financing requirements, particularly as your business grows. They will help decide if financing is appropriate and, if so, what type of finance will best suit your business and then prepare you sufficiently for the finance application process to provide the best possible chance for approval.
Even if you have systems in place for your financial accounts, your virtual CFO is able to work with your bookkeeper and finance officer to identify and measure exactly what is driving your business performance and where you should be focusing. Conversely, they will identify what it is that could be causing you problems.
If you have issues with your cash flow, you will generally know that, however, you may not know exactly why or how to resolve those issues. There are many reasons for cash flow problems and some of those you may not even be considering, such as sudden growth or winning a large new client or contract. These things are great, but only if they are managed well financially because they could turn very bad, very quickly. Worse case, you could lose that new client or contract because you cannot manage it well and provide the level of service required.
If your financial reports are not making sense or you do not believe they are correct, you may need some help from an experienced financial adviser. Your virtual CFO will make sure the financial reports are accurate and they will then make sure you understand them and what they mean to your business. Together you will work through them to monitor your business performance and put in place the measures to improve those areas that need attention.
You will know when you are not managing the financial part of your business efficiently enough to help you with your business. All you need to do is be honest with yourself and make the decision to look for that support.
What are the different ways a virtual CFO can help you and your business?
You are able to use the services of a virtual CFO as little or as much as you would like, although the true essence of working with a virtual CFO is an ongoing arrangement so you receive the maximum benefit for you and your business.
The typical working arrangement with a virtual CFO is ongoing monthly or quarterly guidance and advice, including the following services:
The reality is that you can tailor the virtual CFO services to suit your specific needs. Your virtual CFO will take the time to understand your unique challenges and needs, and will help you develop a tailored solution to achieve your goals faster and more efficiently.
One of the benefits of having a virtual CFO is that they are flexible and can adapt to your changing needs. As your business grows, so does their level of service and support because you are not just working with a single professional, you have a team of professionals behind you.
Listed below are the most important attributes you should seek in a virtual CFO:
Qualification: They must be qualified to a minimum level of Certified Practicing Accountant (CPA) or Chartered Accountant (CA). This will confirm that they are educated to a superior level, as these organisations not only require the tertiary qualifications, but they also require postgraduate studies and continued professional development for every year they run their practice. This will provide you with a technically skilled and educated team of professionals to work with you.
Experience: They must be able to display that they have at least ten years of experience working with businesses on all facets of tax compliance, financial reporting and analysis, strategic planning, cash flow management, financing and advisory services. In addition, the more experience they have in your industry, the better service they will be able to provide.
Communication: They must be good communicators and be able to clearly explain and demonstrate the advice they provide so you are able to clearly understand that advice. They should not only be able to work well with yourself, as the business owner, but also with all your key employees that they are likely to liaise with over the life of the relationship.
Analysis: They must be analytical in nature. Any accountant who has the relevant qualification and experience is able to prepare annual tax returns. CFOs, however, are much more. Not only are they able to prepare all of your compliance requirements, they are able to review and assess the financial position of your business and provide feedback on which areas need attention. Having done that, they will then offer different solutions.
Strategy: They must be strategic thinkers, always looking towards the future and to you achieving your goals. Your virtual CFO should be able to work with you to develop strategies that suit your long-term vision and then help you deliver those strategies. Having delivered those strategies, they need to be flexible and adaptable to be able to cope with changing competitive dynamics, differing customer needs, new technologies and the ever-changing regulatory environment.
Risk: They must be very mindful of all the exposures to risk in your business. Risk is rapidly becoming one of the most important factors in business and, with continued regulatory changes and restrictions, it must be front of mind at all times in every facet of your business. The ability to make your business resilient and strengthen your structure and processes is a key trait to look for in a virtual CFO.
Technology: They must be up-to-date with all relevant technology that can assist you in the financial management of your business. Technology continues to evolve and you want your virtual CFO to be able to evolve with it. This will not only create efficiencies in your business, it will also provide opportunities to innovate.
Passion: They need to care about you and your business and your continued growth. This will ensure they do everything in their power to help you reach your goals.
Before deciding on your virtual CFO, you should do a little research on them. What you should be looking for is whether they meet the criteria listed above. Some of those attributes can be easily determined, such as their qualifications and experience. However, the remaining attributes will require meeting with them.
Before deciding on your virtual CFO, you should do a little research on them. What you should be looking for is whether they meet the criteria listed above. Some of those attributes can be easily determined, such as their qualifications and experience. However, the remaining attributes will require meeting with them.
Listed below are the most important attributes you should seek in a virtual CFO:
Qualification: They must be qualified to a minimum level of Certified Practicing Accountant (CPA) or Chartered Accountant (CA). This will confirm that they are educated to a superior level, as these organisations not only require the tertiary qualifications, but they also require postgraduate studies and continued professional development for every year they run their practice. This will provide you with a technically skilled and educated team of professionals to work with you.
Experience: They must be able to display that they have at least ten years of experience working with businesses on all facets of tax compliance, financial reporting and analysis, strategic planning, cash flow management, financing and advisory services. In addition, the more experience they have in your industry, the better service they will be able to provide.
Communication: They must be good communicators and be able to clearly explain and demonstrate the advice they provide so you are able to clearly understand that advice. They should not only be able to work well with yourself, as the business owner, but also with all your key employees that they are likely to liaise with over the life of the relationship.
Analysis: They must be analytical in nature. Any accountant who has the relevant qualification and experience is able to prepare annual tax returns. CFOs, however, are much more. Not only are they able to prepare all of your compliance requirements, they are able to review and assess the financial position of your business and provide feedback on which areas need attention. Having done that, they will then offer different solutions.
Strategy: They must be strategic thinkers, always looking towards the future and to you achieving your goals. Your virtual CFO should be able to work with you to develop strategies that suit your long-term vision and then help you deliver those strategies. Having delivered those strategies, they need to be flexible and adaptable to be able to cope with changing competitive dynamics, differing customer needs, new technologies and the ever-changing regulatory environment.
Risk: They must be very mindful of all the exposures to risk in your business. Risk is rapidly becoming one of the most important factors in business and, with continued regulatory changes and restrictions, it must be front of mind at all times in every facet of your business. The ability to make your business resilient and strengthen your structure and processes is a key trait to look for in a virtual CFO.
Technology: They must be up-to-date with all relevant technology that can assist you in the financial management of your business. Technology continues to evolve and you want your virtual CFO to be able to evolve with it. This will not only create efficiencies in your business, it will also provide opportunities to innovate.
Passion: They need to care about you and your business and your continued growth. This will ensure they do everything in their power to help you reach your goals.
Before deciding on your virtual CFO, you should do a little research on them. What you should be looking for is whether they meet the criteria listed above. Some of those attributes can be easily determined, such as their qualifications and experience. However, the remaining attributes will require meeting with them.
Before deciding on your virtual CFO, you should do a little research on them. What you should be looking for is whether they meet the criteria listed above. Some of those attributes can be easily determined, such as their qualifications and experience. However, the remaining attributes will require meeting with them.
Director
Tony has over 30 years’ experience as an accountant, and over 15 years’ experience as a CPA.
His first 18 years’ experience involved financial, management and operational accounting roles at a senior management level, in the security, transport, and forensic accounting industries.
Director
David has over 30 years’ experience as an accountant, and over 20 years’ experience as a CPA.
His first 17 years’ experience involved financial, commercial and operational accounting roles at a senior management level, in the general insurance, and telecommunications industries.
Successful oversight, planning and management for over 100+ businesses
AD Partners is entirely focused on achieving the best possible results for you, our client. After all, making sure your balance sheets and profit margins are up to date and accurate is just the start. We also make planning a lot easier for you by adjusting and streamlining your systems to match your business processes.
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