When Can a Business Benefit From a Virtual CFO?

The world has become increasingly connected over the last decade, and the need to connect and collaborate has been accentuated by the advent of the 2020 pandemic.

When Does Company Benefit from Virtual CFO

This agile way of work was adapted quickly because the foundation of its infrastructure has been built over the years. Though the growing pains of virtual work were felt, businesses have embraced remote work as the norm now.

A key benefit is the access to the talent pool that can deliver work from anywhere and more services that can be provided online, bringing down operating costs while keeping margins healthy.

While you can use a CPA for business consulting or be tempted to fulfill the role yourself, you will need a CFO to help you find the right balance for your particular situation so you are able to pivot when the business requires.

However, as experts, Chief Financial Officers do not come cheap and may not be willing to relocate.

How do companies fill this need without a full-time executive?

By using a virtual CFO (also referred to as a fractional or outsourced CFO). But is a virtual CFO the right move for your business?

To help you decide whether your business will benefit from a Virtual CFO, we have gathered an overview below.

Virtual CFO Benefits - U-Nique Accounting

Brief Overview of a Virtual CFO’s Responsibilities

When using fractional or Virtual CFO services you can benefit from their critical business finance skills such as:

  • Growing the business while advising the CEO
  • Maintaining and monitoring budgets and forecasts while keeping an eye on spending
  • Timely revenue generation and collection as keeping the business afloat
  • Validating business strategy, keeping business finance in mind
  • Help the CEO to manage business relationships such as with investors, lenders and key partners to keep the inflow of capital
  • Delivering actionable insights through sound data and analysis
 

When to Consider A Virtual CFO

There are indicators that signal the need for someone in the financial role. Here’s a brief list, followed by a more detailed explanation of each.

  • Your company is experiencing growth
  • Developing new products and offerings, or searching for new markets
  • Managing mergers & acquisitions, or bringing on investors or debt
  • Profitability issues
  • Complex tax planning (claiming the R&D tax credit, for example)
  • Financial modeling (complex budgets, forecasts, etc.)
  • Improving cash flow

 

Your company is experiencing growth

For a company to grow rapidly, an expansion of automated systems and additional capital and financing is needed. An experienced professional with the skill to handle complexity, analyze trends, and manage cash flows is also required.

A virtual CFO:

  • Will interpret the terms of acquiring capital as well as investment and technology
  • Will analyze the company’s current financial position, market trends to implement the best strategies, and improve cash flow and profits
  • Brings crucial experience in allocation of resources, independent thinking, and strategic insight
  • Can utilize their own external networks, having worked with professional services firms such as investment banking, consulting, or private equity
 

You are developing new products, markets, or offerings

The ability to manage in a constant state of flux without losing sight of the big deliverables is critical, especially when you are innovating and broadening the business’s horizons. You can use a virtual CFO to:

  • Track research and development costs (a potential tax credit) R&D costs to maximize tax credits.
  • Conduct profitability and pricing analysis, to ensure the new developments are sustainable
  • Plan for future growth, create and effectively communicate the corporate growth story by identifying new opportunities and transforming the company’s products and markets
  • Make certain that there is a business case for expansion which may also include expansion into the global marketplace. The virtual CFO’s job is to ask questions that revolve around growth.

 

To manage Mergers & Acquisitions, Investors or debt facilitation

During the critical merger and/or acquisition period, a team is needed to evaluate a potential acquisition. This is usually outsourced, and the outsourced firm also performs the financial and regulatory due diligence.

The virtual CFO can help by interpreting the reports from the due diligence team to customize the terms and to communicate these findings to a potential investor or lender.

On the flip side, when seeking to be acquired, a virtual CFO can help improve and position the company’s finances and operations to maximize your business’s enterprise value to a potential buyer.

Your profitability is struggling

A Virtual CFO can improve the business profitability by controlling costs, improving productivity, and analyzing pricing strategies across the company. By evaluating productivity of personnel and operations, the CFO will help the CEO to get a better overview and analyze net income from sales revenues and operational expenses.

There is a need for complex tax planning

The ability to prepare, disclose accurate financial results and uphold tax obligations is critical for any business. A virtual CFO can be the firm’s advisor to help it to:

  • Interpret changes in the law and the decisions that can lead to benefits
  • Analyze the tax benefits of investment, capitalization, and M&A opportunities
  • Provide clarity regarding any financial overlap between owners, shareholders, and the businesses they own
  • Improve current tax positions while building and preserving assets
  • Devise a strategy to save money through tax planning

The right financial model for your strategy is required

Strategic planning is a priority for a company that needs to grow. Investing financially in its people and technology to support business processes such as budgeting, forecasting, and long-term planning are tasks that an effective fractional CFO understands and will balance their role of strategist across the business.

Future cash flows need better visibility

Someone in the business always needs to take charge of your business capital. If your money is not growing, it is an indication that you need an experienced virtual CFO to determine the specific investment strategy and the asset classes to be considered.

They will perform an accurate forecast, evaluate your terms, set up and enforce a payment discipline and segment your customers, suppliers, and inventory.

Work with a Trusted CFO Partner

As company leaders, you may be unaware of the help to understand how margins change, via a CFO. The virtual CFO can introduce the right pricing strategy that can be a significant lever for expanding profit margins and monitoring execution.

In an increasingly complex business world, more experienced professionals are needed to steer the business in the right direction and remain profitable. With a combination of practice knowledge, the use of the correct cloud-based accounting software, mobile technology and modern data analytics, a Virtual CFO will add great value to your business.

And at U-Nique, our experts are ready to help you sort out the data while empowering you to make the right decisions for your business. Get in touch with us today.

Matt C

By MATT CIANCIARULO

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