How small businesses can benefit from remote CFO services
Many small businesses overlook the importance of a Chief Financial Officer (CFO) in their business. Even if they don’t have one full-time, many still need to have one part-time or even outsourcing remote CFO services. As the owner, you might not be able to take on this task yourself, but other options are available to help you get the financial management your company needs without breaking the bank or taking up too much of your time.
What is a remote CFO?
A virtual or outsourced Chief Financial Officer (CFO) is a service that provides financial advice and support to a business, organization, or individual. The tiny portion of remote CFO comes into play because instead of working on-site at your business, they work remotely through phone calls, emails, and other technology. Working with a remote CFO isn’t like having one in-house; it’s more like hiring a consultant to handle specific tasks. Because they’re working virtually, they aren’t legally required to have credentials such as an MBA. Because they don’t need to be licensed in any way, you’ll typically get better rates with a remote CFO than you would if you hired someone local.
Because remote CFOs are working virtually, you’ll typically be able to hire them for less than what you’d pay a local. They’re also not required to have particular certifications or licenses to work, so you don’t have to worry about charging you more because they hold these credentials. However, because they work remotely and offer financial advice and support through phone calls, emails, and other technology, you must make sure you like your chosen consultant before committing. If there’s ever a time crunch or emergency with your business, being comfortable with your remote CFO is vital. A great way to start looking for one is through referrals from colleagues or business associates who’ve used their services in the past.
Working with a remote CFO will differ slightly depending on whether they work full-time or part-time. Part-time remote CFOs typically do their job alongside other jobs, while full-time remote CFOs are solely dedicated to working with your business. Because part-time remote CFOs typically have different careers, you’ll typically be able to find them for lower rates than if you hired a full-time one. However, since they’re already working in other positions, you might have to wait longer for responses or answers. However, if you’re working with a busy individual who doesn’t have enough time in their day to dedicate themselves fully to your business, hiring a part-time remote CFO may be perfect for you.
The role of the virtual CFO
There isn’t much of a distinction between a small business’s owner and its controller when it comes to a small business. The owner typically wears many hats and plays various roles in running their company. Choosing to outsource your financial reporting functions may just be putting another task on your plate. Instead, it would help if you considered outsourcing those responsibilities to a virtual CFO service. The goal of these professionals is to work with you as an extension of your team and provide you with vital financial reporting services throughout each year (as well as full accounting support during tax season). This means that no matter how busy you are or how many hats you have on, a remote CFO service is always there whenever you need them.
Many benefits come with working with a remote CFO service. First, these professionals have your financial records and data at their fingertips—so you never have to worry about losing anything or falling behind on payments (even if you’re traveling!). They also act as an extension of your team and provide you with a level of independence and focus that other companies cannot offer. Finally, working with a remote CFO service allows you to develop a true partnership; instead of just a team member who works for you, these professionals work together toward business goals—and even help set them!
While working with a remote CFO service may seem like an easy decision, it’s essential to take some time to consider a few things. One of those is how you’ll report to your internal team. A virtual company will not be physically present in your office, so you’ll need to work with them on communication methods that are effective for everyone. It would be best to consider whether or not you want these professionals doing your tax planning and preparation.
What to look for when hiring outsourcing a CFO
Small businesses operate differently than big ones. Whereas Fortune 500 companies hire a lot of staff, smaller companies tend to stay lean and try to do more with less. This means that you may not need someone on-site full-time (or ever). You might need an hour here or there each month or once a quarter. Also, consider that you don’t have to hire one person; you could have an entire team of outsourced virtual accountants reporting back to you remotely. Regardless of your situation, you must get what you need out of any arrangement: more free time and more money in your pocket. Here are some things to look for when hiring outsourcing a CFO for your business
Many people are familiar with hiring people in other countries through outsourcing, but not necessarily all of them are aware that you can do it for accounting and finance, too. Having an outsourced CFO for your business helps you because it has a full-time or part-time financial manager who works remotely. They work with you to set goals and benchmarks that help keep your business on track to success without needing someone physically on site. It allows small businesses to be more efficient and spend less time managing their finances by doing everything from tax preparation to long-term financial planning.
There are many outsourcing virtual CFO companies out there, so it’s essential to narrow your options by understanding what you want in a relationship. Is it cost or convenience that matters most? Do you need someone who will stick around for a long time, or do you want a more leisurely, less formal set-up? Do you want someone who will develop long-term relationships with your employees and help them feel comfortable opening up about how they manage their money?
What to expect from remote CFO services
If you’re operating a smaller business, you don’t have much room to spare in your budget. It might be worth considering outsourcing some of your accounting needs. Using an outsourced financial expert for tasks like tax returns, monthly reports, and payroll management can save time—and money—over having these tasks done internally. One type of service that makes sense for many small businesses is a virtual controller. Virtual controllers help by managing financial records and filing taxes on behalf of clients while they remain independent contractors. For example, the CFO will use their work in conjunction with what employees already do in your company’s accounting department.
That said, if you’re looking for a more dynamic relationship and need to be able to call on your accountants frequently, a virtual controller isn’t what you want. Instead, you may be better off choosing an outsourced chief financial officer. By hiring a remote CFO, whether full-time or part-time, business owners can ensure they have more time to focus on running their company while having someone else look after finances. Outsourcing a CFO is often preferable to hiring one full-time—whether it’s needed 40 hours per week or only 20.
Another significant advantage of hiring a virtual CFO is that they know exactly what to expect and how to handle business owners. As a result, they have more motivation to solve problems before they arise, which frees up time for your management team. Some companies prefer or need more face-to-face interaction with their accountants than a remote CFO service can provide. In that case, another option is to hire an external bookkeeper who takes care of tasks like creating financial reports but doesn’t work on other company matters.
Fractional CFO benefits
If you’re interested in what is known as fractional CFO or fractional financial management, there are several options available. Fractional CEOs and General Managers have been famous in industries like technology and media, allowing businesses to hire just enough expertise to support their goals. A fractional CFO works on a similar principle: bringing on experts who only take responsibility for certain aspects of your business. This allows companies to access critical information without needing an entire team at their disposal. Having a fractional Chief Financial Officer means you don’t need an in-house controller or full-time Finance Director, freeing up valuable time and resources that your business can use elsewhere.
While fractional CEOs and other non-management staff are relatively common, many firms are still unsure about fractional CFO. In most cases, those who doubt its effectiveness tend to misunderstand what a fractional Chief Financial Officer is meant to do. As we’ve mentioned, having an in-house controller or part-time Controller will free up your company resources and time for more profitable endeavors. This is because you don’t need a full Finance Director: a fractional CFO manages cash flow and financial reporting for your business and pays particular attention to improving profitability across all areas of operations. If you aren’t sure that adding a resource like a one-person accounting department would be worth it, consider adding one part-time at first.
In addition to cost savings, fractional CFOs offer several other benefits. Having an expertly trained Controller who spends their time working on your business’s most pressing issues will help you overcome problems quickly, focusing on more critical tasks that contribute directly to your bottom line. Fractional financial management will also allow you to get an overview of your finances in real-time. If any problems arise, you’ll be able to address them promptly and effectively. Additionally, fractional financial management will help you meet all accounting deadlines and produce accurate monthly financial reports.
How can outsourcing improve my finances?
From day-to-day bookkeeping to business-wide financial planning, many companies are finding that outsourcing their financial management is a more cost-effective and productive way to stay on top of their books. For example, for about $4,000 per month, you could have a dedicated part-time CFO who will help you create and implement a thorough business plan, manage your books and records on an ongoing basis (including tax filing), and address your most pressing questions. That’s around $100/hour—half what it would cost if you hired someone in-house. And there are many hidden benefits to outsourcing, like freeing up time for your leadership team to focus on strategic initiatives or freeing up cash flow by paying in stages.
Getting your finances in order and creating a plan for success is crucial if you want to grow and stay profitable. If you’re having trouble keeping up, don’t waste another minute! You may not realize it, but there are many cloud-based accounting tools available that do all of what your accountant or in-house bookkeeper does—and more—for less than $1,000 per month. With so many options available, why not try something new? There are many benefits to outsourcing, like saving money on overhead costs or freeing up time for strategic initiatives by paying in stages. It doesn’t matter what type of business you run or how much cash flow you have; there is something for everyone!
Some people choose to outsource their financial management. Hence, they have more time for strategic initiatives, others do it to save money, and still, others want to make sure that their accounting is always handled on time. No matter your reason, though, you’ll find lots of benefits—and not just for you! Just think about how happy your leadership team will be when they don’t have one more thing on their plate. With cloud-based solutions becoming more popular by the day, there has never been a better time than now to try outsourcing. Are you ready?