Why Your Company Might Benefit From A Virtual CFO

By Linda RoperApril 26, 2023

In the past, many businesses, particularly small ones or those just starting out, couldn’t afford a full-time chief financial officer (CFO). However, the rise of remote working and advances in technology mean that a skilled and knowledgeable CFO is no longer the preserve of large businesses. 

Organisations of all sizes can invest in a virtual CFO and reap the benefits of doing so. This guide will explain what a virtual CFO is, how you can hire one, and how they can help your business thrive.

C, F, O letters on cubesTable of Contents

What is a Virtual CFO?

A Chief Financial Officer (CFO) is a senior executive within a company who manages the financial side of the business. Typically, this includes financial planning, reporting, and strategy, as well as tracking cash flow and keeping an eye on the company's financial performance, and making recommendations to improve it.

The CFO is often a permanent full-time position within a company, but compared to virtual CFOs, there’s one major difference. The clue is in the name - ‘virtual.’ A virtual CFO undertakes the same job as a typical CFO. But unlike a traditional CFO, a virtual CFO carries out the role remotely on a contractual part-time basis.

What Does a Virtual CFO Do?

The main goal of a virtual CFO is to provide expert advice on matters relating to the financial side of a company, helping the business to grow and thrive.

The contribution of a virtual CFO is key in helping business owners make well-informed financial decisions for their companies. As part of their role, a virtual CFO can take on a range of key responsibilities essential to the success of a business, including:

Budget Management

By managing the financial budgets of a company, a virtual CFO can help business owners allocate proper resources where they’re needed most.

Financial Planning

As well as taking care of financial aspects in the here and now, a virtual CFO can help companies look ahead and plan for the future by predicting future revenues, expenses, and cash flow.

Financial Strategy

Having a sound financial strategy that allows a company to achieve its goals is essential for its overall success. A virtual CFO can use their knowledge and skills to create a financial strategy that helps companies maximise return on investment and mitigate risk.

Streamlining Financial Processes

A virtual CFO can use their expertise to find ways of streamlining the financial processes of a company and make them more efficient. They can do this in several ways, such as implementing better software or engaging cash flow management, which can save time and money.

Support During Critical Times

If you’re looking to acquire or sell a business or are going through a period of significant business change, a virtual CFO can support you through challenging times when expert advice and knowledge around financial matters is vital. A virtual CFO can ensure an acquisition process runs smoothly or analyse how upcoming changes will affect a company financially.

Female virtual CFO checking papers from her desk at homeWhat Are The Benefits of a Virtual CFO?

Working with a virtual CFO offers a range of benefits to companies, especially smaller ones, who historically might not have been able to afford a CFO. The rise in flexible working means that hiring a virtual CFO is a practical choice for more businesses. A few of the benefits are:

Saving Money

Full-time CFOs come with a hefty price tag, with salaries in the region of thousands of pounds. For smaller businesses, this is a financial hit they just can’t take. A virtual CFO, on the other hand, can offer the same services as a full-time CFO for a fraction of the price. This is because virtual CFOs work on a part-time basis, so you only need to pay for them when you need them. This makes them the perfect solution for start-ups and small companies that can’t afford to hire a full-time permanent CFO.

Increased Flexibility

Compared to an in-house employee, virtual CFOs can be hired on a basis that suits the company’s needs. You can hire them for a short-term project or agree to a long-term contractual arrangement. They can also scale their services up or down to match the needs of a business. As your business grows, a virtual CFO can step up the level of support. What’s more, you only pay for the services you require.

Expert Knowledge

Virtual CFOs have experience working in the financial arena. They’ve probably honed their skills in permanent CFO positions in other organisations in the past, so they can bring a wealth of knowledge and expertise to the table. Their skill set allows them to provide more in-depth strategic financial advice that goes beyond what a general accountant could provide.

How Do I Hire a Virtual CFO?

If you’re looking to hire a virtual CFO, it’s important to hire someone with the right skills and knowledge for your business. Before taking on a virtual CFO, consider what you need a virtual CFO for. Whether you’re looking for help with financial planning and forecast, or risk management and strategy, decide what you need support with before hiring a virtual CFO.

It's vital that your potential virtual CFO has the skills, experience, and knowledge required to carry out their duties. Look for someone who has relevant experience in your industry, as well as appropriate qualifications. Conduct thorough background checks before you hire someone. Ask for examples of their earlier work to ensure they have a good track record.

They may be working remotely on a contractual basis, but a virtual CFO will work closely with you and your team, so it’s essential that they are a good fit, not just for the role, but for your organisation. Spend time getting to know them and assess their communication and collaboration skills carefully. You should put as much time and care into hiring a virtual CFO as you would for a permanent full-time member of staff.