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FOOD FOR THOUGHT

Why more SMEs are choosing a virtual CFO

Posted by Matt Bellingham on September 05, 2017

A virtual CFO is more affordable, faster, more specialised and more independent than a physical CFO. Don’t believe us? Here are the facts:

WHY MORE SMES ARE CHOOSING A VIRTUAL CFO


Read more: Introducing a new breed of CFO

 

Affordability

 

For a fulltime CFO, you pay on average just under $140,000 in salary alone. Now take into account the hiring costs, sick days, paid leave and the additional benefits that come as part-and-parcel of a C-level position, and the costs start mounting up significantly.

Virtual CFOs are considerably cheaper to hire than their fulltime, physical equivalents. How much less? According to our experience, as much as half the cost of hiring a regular CFO.

Small businesses often simply don’t have the funds to hire a regular CFO, and a virtual CFO has everything they need to be successful—at a far lower price point.

A virtual CFO can be utilised on a needs basis and therefore it works on a variable cost model for your business.

 

Fewer obligations

 

One of the defining characteristics of a virtual CFO compared to a regular, full-time CFO is the fact that they are not an employee of your business.

That is, you do not have to worry about insurance payouts, employee satisfaction, training and career progression or even HR issues.

You do not have to worry about insurance payouts, employee satisfaction, training and career progression or even HR issues.

These are dealt with by the virtual CFO agency. You have far fewer obligations and potential pain points with a virtual CFO, meaning you’ll be spending less time putting out fires and more time growing your business.

 

Specialist skills

 

Regular CFOs are experts in their field. But there’s only so much a single person can learn. They might be a specialist in strategy, forecasting, maybe even the legal side of your business; but what if you need a tax expert? Or do you want to diversify your business?

A virtual CFO solves that simply: you get a team rather than a single CFO. This way, you get a diverse skillset without having to hire third parties or rely on the weaker side of your CFO’s abilities.

In other words, your “virtual CFO” is actually many different experts packaged into one contract. No more trying to find the “general practitioner” of CFOs; you have specialists across a range of industries at your fingertips.

 

Responsiveness

 

Here’s a nightmare scenario for you: you’ve encountered a serious issue with your business finances. You might have found a hole in your cash flow, your most recent project might be haemorrhaging capital, you might even be selected for an audit and need to ensure you’ll pass. Normally, your CFO would be able to help—but right now, they are either sick, away, or otherwise unable to assist you.

Here’s a nightmare scenario for you: you’ve encountered a serious issue with your business finances. 

Such scenarios can easily end in disaster. The modern business landscape changes rapidly, and you need a CFO that is able to respond to such issues quickly and efficiently. But even the best physical CFOs get sick or go on holiday. Not so with a virtual CFO.

Because virtual CFOs work in teams, you’ll always have someone on hand to help with whatever issues you might be dealing with. No more waiting, you get the help you need immediately.

 

Independent perspective

 

Objectivity is a difficult commodity to come by, but a virtual CFO can provide it. A regular CFO who is engaged with your business on a daily basis benefits from their sense of responsibility for your success, but is also affected significantly by this proximity. It can be hard for such CFOs to provide a financial report that is more negative than positive—particularly if it is the result of a project they had a personal hand in.

A virtual CFO, on the other hand, doesn’t have to suffer through this “crisis of ego”. They work in teams, and work remotely, so they are able to remain more objective when viewing your business numbers.

As a result, you get a consistently clear picture of your financials, good or bad, and are able to take the actions necessary to rectify these issues.

 

Summary

 

In short, there is very little that a physical CFO provides that a virtual CFO cannot. They are cheaper, more specialised, more responsive and more independent. Perhaps most importantly of all, they are accessible to small businesses in a way that physical CFOs rarely are.

Now, your small business can reap the same benefits as large enterprises. What are you waiting for?

 

To find out more about virtual CFOs and how to make the most of them, read our free guide below.

The Modern CFO: What business leaders need to know

Topics: CFOs