It’s time to work with more than just historical data. Our Virtual CFO services are built around a proactive approach to your business’s financial health through analysis, forecasting, budgeting, and more.
What is a CFO?
When you imagine a Chief Financial Officer, you might picture a full-time C-suite executive in their corner office of a high-level corporation. You may think that CFOs are only necessary for major companies, or that your business isn’t at the level to utilize one.
In reality, businesses of all sizes can and should be utilizing a CFO.
A CFO is simply the primary manager of a business’s finances, including for planning, strategy, and trusted advisement.
While large companies may have that full-time corner-office exec, smaller companies can get the benefits and experience of CFOs at a smaller cost by hiring a Virtual CFO (also called ‘Outsourced CFOs’, ‘Fractional CFOs’, or ‘External CFOs’).
Chief Financial Officer vs. Accountant
Despite some overlap in responsibilities, CFOs are not accountants.
One of the most simple ways to understand the difference is that accountants are responsible for the past while CFOs are responsible for the future.
Typically, accountants (with the support of bookkeepers) are responsible for maintaining your financial records as things happen. They will maintain your books with your income and expenses; they will generate reports to keep you informed of your business’s financial health; and they ensure that all data is up-to-date for month- and year-end processing (including for things like taxes).
On the other hand, a Chief Financial Officer is responsible for interpreting that historical data to take a proactive approach to bettering your business’s financial health. For example, they may take the reports generated by an accountant (under the CFO’s management) to create a budget, forecast your cashflow, or create a plan to maximize profits.
A Chief Financial Officer's Responsibilities
In addition to overseeing the full finance team of your business, a CFO may be responsible for the following:
- Monitoring Financial Performance
- Financial Statement Analysis
- Comparative Reporting
- Annual Budgeting
- Pricing Analysis
- Forecasting
- Strategic Planning
- KPI Development
- Cash Management
- Financial Contingency Planning
- Overseeing Mergers, Acquisitions, and Expansions
- Financial Technology Management
- Financial Process Management and Improvement
- Audit Support
- SWOT Analysis
- Measuring ROI
Why a Virtual CFO?
Although your business should be utilizing a CFO, we know that the cost for a full-time executive can be prohibitive, especially when a full-time presence isn’t necessary.
A Virtual CFO is a great opportunity for a more flexible and affordable arrangement that is tailored to your unique needs and workload.
Virtual CFOs are qualified Chief Financial Officers that work with your business as independent contractors, which means that you have a formal working agreement without hiring them as an employee. This gets rid of additional payroll taxes, insurance premiums, benefits packages, and other costs typically associated with new hires.
Aside from the cost benefit of going virtual, this arrangement also means that you are not limited to hiring from within your local community; you can find your best-fit CFO anywhere in the world. And since Virtual CFOs are already working remotely, you don’t need to have your work virtual work infrastructure in place before hiring them.
What should you consider before hiring a CFO?
Hiring a Chief Financial Officer for your company is a big commitment. There are at least three things you should keep in mind as you search for your Virtual CFO:
Budget
Virtual CFOs are typically paid on a monthly basis. Depending on the firm, this may be a set number of hours you pre-pay for every month, or it may be a retainer priced based on your unique services. Determine how much you are willing to invest monthly, being sure to consider the growth you expect to see under the advisement of your CFO.
Timing
How soon are you looking to hire a CFO? Some firms may have a waiting list; are you willing to pause hiring until they have room in their roster, or are you wanting to hire ASAP? Additionally, what are your expectations of the timeline once the CFO is hired? Are you willing and able to attend regular meetings with them? Be sure to discuss anything that will be expected of you before making your final decision.
Needs
Any potential CFOs you meet with should be helping you determine the specific services your company needs, but you should still do your own research. Look over your financial statements for the past year and be sure to have an idea of where your business feels stuck, whether you need to increase profits, improve your cashflow, or better manage your data.
How Hiring Works
Once you’ve considered your budgetary, time, and service needs, it’s time to start meeting with firms to determine whether they’ll be a good fit for you and your company.
Since Virtual CFOs are not employees, most of the hiring and onboarding processes will be driven by them. For example: You will likely be signing their engagement letter, rather than drafting your own contract; you will pay them through their invoicing software, rather than through your payroll software; and you will be scheduling meetings according to their schedule, rather than including them in your standing team meetings.
This can be great, because these firms will (or should) have standardized processes and agendas that they use for all potential clients.
Typically, your first meeting with the firm will be a complimentary call named a “consultation” or “discovery” call. This is where the firm will get to know you and your business and will, ideally, help you determine whether you will have an enjoyable experience working together. If the firm is comfortable that they can meet (and exceed!) your expectations, they’ll often create a “quote” or “proposal” that details the specifics of your potential agreement. Depending on the firm, this may include a contract and payment option so that as soon as you accept the terms of the proposal, your relationship officially begins.
From there, you can expect quite a bit of homework, including uploading financial records, granting the CFO and firm access to various software, and meeting with your need finance team.
This is the process we use at Anne Napolitano Consulting. You can expect this to take 1-2 weeks, depending on the complexity of your business.
Ready to Get Started?
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