“Elan, you do all that? I had no idea!” It’s not a surprising remark. To be honest, it’s something I hear quite a bit from potential clients, during functions and at networking events. Lots of people are unsure of what a virtual CFO does. Are we Accountants? Bookkeepers? CFO’s? Or All of the Above?
What is a Virtual CFO?
VCFO is an acronym for Virtual Chief Financial Officer. Put simply, we are on-call CFOs, an effective way for businesses to gain solid financial support without the commitment and cost of a full-time CFO. Here's a good summary of the difference between a VCFO and CFO. But how is this different from an accountant or bookkeeper? I hear you ask. Outsourcing a CFO helps businesses strategise and operate to maximise their financial advantages. We look behind the numbers and make sure business owners understand all their financial information so they can make informed decisions. We can even sit in on planning and management meetings so we are across all aspects of your business.
Types of Virtual CFO Services and Packages
Most Virtual Chief Financial Officers offer the following:
- Management reporting and dashboard reporting
Management reporting gives businesses a financial view of how they are performing. They put systems and tools in place, including dashboard reporting – a visual representation of business key performance indicators (KPIs) – to measure and generate this information, which is regularly reviewed with the owner.
- Cashflow modelling, reporting and management
Cashflow is critical to business success. A Virtual CFO will implement, update and monitor cashflow forecasting and modelling, and work hand-in-hand with business owners to create strategies to manage cashflow and assist in business growth.
- Budget and forecasting preparation, analysis and tracking
A Virtual Chief Financial Officer will review and analyse a businesses’ prior financial results together with their strategic plans. They work with business owners to ensure their budgets drive towards the businesses’ future directions and goals.
- Finance process reviews
Review current finance processes and policies and implement improvements to allow the businesses to operate more efficiently and effectively.
- Cloud accounting advice
They will find the most suitable provider and solution to fit a business’s needs and help with integration and implementation.
- More speciality services
So how can a Virtual CFO help your business?
- Help me! My business has no finance support
A start-up has been managing its own finances, grappling with its financial records and no time to plan future growth.
- Take control of finance requirements to eliminate concern about who is responsible for their accounting function
- Implement processes to streamline their accounting function
- Implement cloud accounting to enable the business owner to access their accounting records on any device, at anytime, anywhere
- Implement basic reporting, so the owner understands how the business is performing.
- But I already employ a bookkeeper
A thriving small business or SME employs a bookkeeper, who is overseen by the business owner. As the business grows, the owner needs advice about their increasing financial responsibilities and business direction. A Virtual CFO will:
- Review accounting systems and processes and ensure the correct systems and processes are in place for a streamlined accounting function
- Implement a reporting framework including a KPI dashboard to assist in monitoring business performance
- Implement a cashflow forecasting model to ensure the business stays on top of cashflow, given increased expenditure and monitor regularly
- Review payroll compliance and ensure all record-keeping is in place.
- I’m sorted. My business already employs a bookkeeper and accountant
A national business has engaged a bookkeeper to maintain its income statements and balance sheets and an accountant to help with tax and compliance. The owners want to expand, but feel they need extra support to do so. A Virtual CFO will:
- Implement and expand on all tasks for businesses with a bookkeeper outlined above
- Work with the business and build a budget/forecast for the financial period. This budget would include a profit and loss, balance sheet and cashflow (three-way model).
- Assist in developing their financial strategic plan during expansion, which would include a three- to five-year financial model. This model will be based on key business metrics.
- Work with the business to source finance via banks or potential investors and act as their advisor in these transactions.
Hiring a Virtual Chief Financial Officer can be a game-changer for most businesses and SME's, but usually works best for businesses between $1million and $20million in revenue as a cost-effective way to get expert advice and take your business to the next level.
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