5 Key Functions of a Virtual CFO

Chief financial officers are relied on by larger companies to take on, manage and control the financial aspect of the business. For smaller companies, the cost of an in-house, on-staff CFO is often prohibitive or unfeasible. This is when a virtual CFO can step in and provide assistance for a business owner to reach profit goals and focus on numerous administrative functions for a company’s financial success.

There are five major functions that an outsourced CFO generally perform to set themselves apart from the other top-tier executives: bookkeeping, information sharing, compliance issues, internal audience assistance, and serving as an important strategic advisor to the business owner.

1. Keeping Up with the Books

A virtual, outsourced CFO of a company ensures that the financial records are kept up-to-date and in good order. Many small businesses struggle with anything more sophisticated than knowing “how much money is (or isn’t) in the bank.” Going the next step, the virtual CFO assists the business owner and key employees to develop budgets and forecasts as a business scorecard.

A major expense often overlooked as routine by the business owner is risk management.  Protecting the company’s assets can be confusing and time-consuming. Having accurate records allows your company to have confidence in the financial health of the business and increase business success!

  2. Spreading Information Around

Sharing information between the virtual CFO and owner and key employees in an understandable format is critical in the decision-making process. An outsourced CFO plans meetings and leads the strategic planning process to relay key data in order for management to make successful, well-informed decisions. Examples of key data include: How is the company doing in comparison to our business plan and budget? In comparison to the competition? In comparison to last year?

3. Making Sure You Stay Compliant

No matter the size or type of company, there are always compliance issues to address: the owner’s interest, working with the company’s CPA for IRS reporting, and state and local licenses. There are a host of compliance details that wind up either being overlooked, or distracting a business owner’s focus, and oftentimes both. When dealing with compliance issues, the CFO identifies internal and external opportunities that allows growth for the shareholders and the business, collectively.

4. Managing Internal Audiences

CFOs have a role in assisting a company’s internal “customers,” such as employees and operating managers, from whom a business needs buy-in to be successful. Many CFOs focus more on the accounting and finances of a company, but in the recent years that thought process has shifted, due to the ever-evolving challenges and opportunities a company faces.

Although presenting balance sheets and cash-flow statements can be helpful in increasing financial success, an effective virtual CFO uses those tools to develop a high performing team for the company. In a small business, it’s important for everyone on the team to understand how their position contributes to the financial success of the company.

5. Delivering Strategic Guidance

Many times, a small business owner has difficulty finding people who really understand his or her business.  If their close friends work for someone else and don’t have an entrepreneurial mindset, they simply don’t understand the most basic issues a business owner faces, i.e., how am I going to make payroll this week?

Whether it’s creating a dashboard that communicates critical financial information, addressing organization structure questions, or acting as a sounding board on how to deal with a “policy” issue, the outsourced CFO has the experience and insights to help the business owner.

Every company can benefit from a virtual CFO when it comes to making strategic decisions. The financial analysis and benchmark results, provided by the CFO, allows actionable insights to be communicated to the CEOs and shareholders of the company.