A virtual CFO (or vCFO) is a common term that can mean very different things depending on where you go.  Your local accounting firm can define it as another offering to provide reports on the back of tax advice and some basic accounting advice.  This service, is only part of the story.

Many businesses struggle with their finances, often putting up with systems that don’t work, financial results that take months to prepare and figures no one really understands.  A lack of trust in the numbers ensues and the business begins making decisions on unknowns that should be knows – long lasting is caused.

In the past, businesses just made do.

A virtual CFO is an outsourced Chief Financial Officer for start-ups and small businesses that often have insufficient resources for a full-time CFO. A virtual CFO is an experienced finance manager, just like you will find in big business, who manages cash flow, assists with business planing, establishes financial procedures and policies, sits on your board as an advisor, prepared budgets and forecasts, analyses results and helps the business raise capital.

Here a five reasons to hire a virtual CFO:

1. A Virtual CFO Gives you back your focus

Every startup and small business needs strong financial management and needs to understand which numbers need to be focused on.  Instead of hiring a professional, the bootstrapped start-up or small business will appoint a member of the executive or founding team to act as CFO.  The business now operates with finances under control.

The problem is managing a businesses finances can be time-consuming, taking the person responsible away from what they do best – grow the business.  A virtual CFO, is a professional finance manager, passionate about growing your business who relieves you of the day-to-day financial management role.   Allowing your team to step back and return to the big picture.

2.  A Virtual CFO improves your businesses value

The first thing many investors, and banks, for that matter, is a founding team that knows what they are doing and who they can trust.  Having a virtual CFO by your side in this process, gives the investors comfort that your financial processes and procedures can be trusted.

The size of your investment or loan often depends on risk, if you can show that your business has lower risk, then chances are you will receive more for less.

3.  A Virtual CFO is a lower cost alternative

Virtual CFO’s are a shared resource, meaning you only pay for what you need.  Often businesses will engage a full-time CFO for a part-time role.  This wastes resources that could be better spent growing the business, with businesses often turning to a lower quality CFO to reduce costs.    A virtual CFO, is a small business specialist, with the skills of a big business CFO, giving you a wonderful opportunity to get a great CFO without the sacrifice.

4.  A Virtual CFO understand tax

Tax is important for all businesses, however, tax is a specialist field with experts covering various nieces.  Your Virtual CFO is not a tax expert, however, you virtual CFO understands how tax works in small business.  This means, your virtual CFO will identify tax compliance issues and work with tax advisors to resolve them, whether this is Fringe Benefits Tax, International Tax or Employee Share Schemes.

Tax is one of those areas that if managed incorrectly can cost the business in the future – we have seen it before – the Virtual CFO worked with the business to clean it up.

5.  A Virtual CFO has a network of legal and corporate advisory specialists

Looking to raise capital, then you will need strong legal and depending on the amount to be raised corporate advisors on your side.  Finding these advisors can be difficult, your Virtual CFO brings a network of working relationships and can take on the hassle of finding the right services.

The wonderful aspect of a virtual CFO, is you are in control, control of the time your CFO spends on your business and control of just what the CFO does for you – it might be financial expert sitting on your advisory board or a complete cloud accounting package.  Your virtual CFO is with you for start to exit.


Also published on Medium.