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All businesses have to start somewhere. As they grow, the needs and processes of the business change. As do the financial demands and compliance requirements.

While the business owner usually manages much of the company operations and admin initially, there are too many aspects and complexities to handle alone. The most significant and vital is the business’s financial performance. 

This is when a Chief Financial Officer (CFO) is usually onboarded to drive the organisation’s success further and use financial data to influence operational decision-making.

These financial experts can be in-house, which can cost money in recruitment and salary. Many small to medium businesses often don’t have the capacity. This is where virtual CFOs can be extremely useful.

 

What is a Virtual CFO?

A virtual CFO is an outsourced financial consultant providing the same high-level financial assistance but more flexibility. They could be contracted for as many or as few hours as the business needs. They can also take on the accounting overflow of tasks such as bookkeeping and tax preparation. 

Therefore, small businesses can pay for the time and products needed while maintaining the experience, expertise, and knowledge received.

 

What does a Virtual CFO do?

Initially, the CFO managed the company’s finances, from bookkeeping and compliance to financial planning and corporate investments. However, in recent times, and thanks to the advancement of technology, CFOs are expert financial strategists. 

Their roles and responsibilities could include any of the following: 

  • Budgeting
  • Payroll
  • Cashflow statements
  • Raising capital (equity or debt)
  • Creating financial forecasts
  • Identifying emerging industry trends
  • Financial and ASIC Reporting
  • Financial modelling 
  • Aligning business strategy with financial strategy
  • ATO compliance and reporting
  • Or specific project work such as technology implementation and training, loan applications or Advisory Board work.

 

Why hire a Virtual CFO? 

A significant benefit of utilising virtual CFOs is guaranteed financial health and security. Business owners can leverage the data provided by the virtual CFO and make favourable business decisions—all of this top-level financial expertise minus the heavy price tag.

Virtual CFOs can tailor their services to meet the requirements of the specific industry and business lifecycle while helping manage risks and capitalise on opportunities. They will also hold you accountable for your business’s financial and strategic goals.

Some businesses need top-tier strategic advice. Others, whose financial processes may not be appropriately organised, require an outsourced financial executive to help set things straight. They can help you understand your organisation’s financial goals and contribute to your business in those critical areas.

Moreover, a virtual CFO will be impartial to your business and able to recommend strategies without bias.

 

When is the best time to hire a Virtual CFO?

SME businesses usually hire virtual CFOs with limited employees. Your business may be experiencing significant growth, undergoing many changes or finally reaching a revenue milestone. 

As your business grows and becomes more complex, there are many more facets, and you may need to receive timely or meaningful reporting on the performance of your business. This would be a great time to outsource a financial expert.

Alternatively, suppose you plan to sell the business in the next three to five years. In that case, it is an excellent time to ensure your business has all the financial evidence for valuations or needs strategic guidance in the short term. 

This service can also be provided temporarily. For example, if your CFO is on extended leave, such as long service or parental leave, and when you need to fill the CFO role temporarily while you hire a permanent one.

 

What should you look for in a Virtual CFO?

We at AFP may be biased as we think our Virtual CFOs are outstanding. But in case you need some assistance in choosing the most appropriate CFO for your business, here are a few points to look out for: 

  • Relevant industry knowledge and proven financial management skills in said industry.
  • Ability to organise and manage your financial resources to maximise efficiency.
  • Ability to offer financial insights and guidance on diverse company needs.
  • Well-connected with other professional service providers such as tax consultants, corporate finance, lawyers and insurance specialists.

 

If you are interested in how AFP Accounting, Tax & Business Advisor’s Virtual CFO services can further develop your business, contact us at enquiries@afpaccounting.com.au or call (02) 7804 1849.

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