A person who looks after the finances of a company is known as Chief financial officer (CFO). A CFO is responsible for preparing the company’s budget, examines financial data, keeps a track on the cost and presents financial performance of the company to the stakeholders.
Unlike big companies, small and medium sized organizations do not have enough resources to hire a CFO, despite the need to have an expert opinion for improving the companies’ finance. So, a company can hire a virtual CFO on a part time, hourly or contractual basis and reap the benefit of expertise knowledge to manage, evaluate and improve their finances. Virtual CFO is also called Partial CFO. A company can have access to expert service at flexible time with the help of a virtual CFO despite having an expensive and full time CFO.
There are many reasons for small and medium sized organization to hire a virtual CFO:
- Business growth: A virtual CFO provides you higher level guidance and foresight to improve your business without incurring cost of a full time CFO. They work with the management teams and furnish business guidance from the point of finance which in turn provides strength and balance to the business management and builds value to the company.
- Pace of change in Business: If a business is in the phase of change, it needs to have more relevant and timely financial information. A company needs a senior finance expert who can closely work with the finance team, or accountant, and helps to find and calculate the key components of business performance.
- Cash crunch or big deal: If a company has started facing cash crunches or will receive a big contract that has never been handled before, then it is the time the company needs to hire a virtual CFO. It is necessary for the company to have beforehand knowledge of shortage of cash or limited options. With the help of discussion with virtual CFO a company will be in a better position to manage their cash and improve its negotiating position against potential investors or lenders.
- Adjustments in the financial reports: For making any adjustments in the financial statements, the accountant or the finance team of the company needs added higher level guidance. Accountants or the finance team may have knowledge gaps, or frequent changes in the manpower, and a high amount of work can create difficulties in dealing with these issues. Some expert level advice can aid and boost the dependency and reliability of the financial reports.
- Hindrance in smooth functioning of the business: Sometimes it is good for business to get expert advice with an unbiased guidance without any lasting commitment.
Benefits of hiring CFO:
- Flexibility: Virtual CFO is hired with a pre-determined cost and time according to the need of the business. This means that the company will receive the service of VCFO at a particular set of time which can be altered as per the requirements. VCFO gives flexibility to the company to grab senior level financial service whenever required without incurring cost of permanent CFO.
- Diversified knowledge and experience: Mostly VCFOs work with various companies which help them to get diversified knowledge and insights of opportunities and various challenges of discrete industries. So virtual CFOs can provide a distinctive approach with their experience and knowledge.
- Reputation: Virtual CFO has proven accomplishment with numerous clients. So, the company should hire a virtual CFO having faithful clients along with their testimonials to ensure VCFOs credibility.
- Ability to deal with all situations: Working with various types and sizes of the organization, virtual CFOs have experienced to tackle all kinds of financial issues with their wisdom.
- Network: Expert CFOs have been in business long enough so they will not only bring their financial expertise. They will also have a robust network of organizations and individuals you can leverage from. Some of them may include lenders, industry experts, and financiers.
As there are various needs and benefits towards hiring a virtual CFO, so small and medium sized companies can hire them and reap the benefits of higher-level finance expertise with a cost-effective method.