The researchers have found that inefficient fund management is one of the crucial reasons why startups fail in their early stages. With the increasing difficulties in economics, there is an ongoing demand for financial experts to handle the business’s finances. Hiring a full-time, experienced CFO is not feasible for most startups since it takes a lot of company resources, which might cause more harm than profit, and that’s where a virtual CFO comes in. Taking Virtual CFO services can help businesses significantly manage their business in the most economical way possible. A virtual CFO is a financial specialist who can be hired as a consultant for a company and is accessible as a part-time resource dependent on the firm’s needs. So the business owners only have to pay them based on their work.
In this digital era, everything is going digital rapidly, and one thing that comes well out of COVID-19 is that people have started to realize that many jobs can be done remotely without any need to go to the workplace. Research has found that around 37% of the job in the USA can be done remotely. The work of the CFO is among them. If you use outsourced CFO services, they can take care of your whole financial management, the difficult financial jobs, the research that you might not be able to accomplish in-house, the reporting and suggestions for future business development, and be a sounding board for you and be present when you need them. When you don’t, they’re not on your payroll. Let’s understand more briefly how rapidly virtual CFO services are rising and the reason behind it.
Saves Money and Time
Cost is always the first benefit of having a virtual CFO. On the one hand, the expense of hiring and training a full-time in-house CFO, especially for a start-up or a small or medium-sized corporation, might be expensive. A virtual CFO, on the other hand, maybe recruited as needed.
With the virtual CFO services, the business owners can enjoy the benefit of having an experienced and professional CFO working for them for a fraction of the cost that you would have been paid to a full-time CFO. Moreover, their diverse experience of working with different industries allows them to have a broader look at the sector; this makes them most suitable to handle your finances.
A virtual CFO also saves time for business owners by overseeing financial procedures that they previously handled internally, such as paying bills, payroll, budgeting, and managing financial paperwork, among other things.
For a business to be successful and efficient at its operations, it should have a solid business model that considers elements including industry forecast, internal and external resources, consumer demographics and behavior, a clear financial strategy, and competitive positioning.
The demand for adaptability becomes increasingly crucial as firms develop and evolve. This trend may be seen in current COVID-19-related developments and periods of significant growth or large market transitions. Virtual CFOs with full-stack capabilities have more excellent resources and knowledge to assist firms in being flexible and providing more options to change rapidly and be proactive.
The CFO must have a thorough awareness of what drives change and the primary business drivers and analytics. The CFO’s job has evolved from a standard financial planning and analysis group to a financial data and analysis group, allowing the CFO to assist direct other departments based on financial benchmarks deeper inside each function. The availability of data and the capacity to analyse it accurately and quickly allows for far more detailed action items. The CFO must comprehend these takeaways and then teach the executive team to assist them in making the best decisions possible to bring the company ahead.
Virtual CFOs use financial monitoring and audit tracking processes to eliminate financial mistakes and assure the correctness of all accounting data. This overall increases the efficiency of the business and reduces the chances of financial loss due to such errors.
Financial Planning and Strategy
One of the most vital factors that contribute to the success of a business is effective financial planning. Without financial planning, the company can go into chaos and fail. It is for that reason a professional person must do financial planning. With the virtual CFO, this becomes possible in a feasible way. Data from the organization’s many operational components are used to create business cases for cash management, borrowing, stock offerings, and restructuring, among other things.
Moreover, they help you by developing various strategies such as
- When will the business be able to generate funds?
- What is the burn rate, and how aggressively does the company need to meet its goals?
- Where can resources be reallocated without constraining growth?
With proper planning, strategy, and insightful data, a CFO can maximize a company’s profitability by making a better decision for improving operational efficiency and reducing costs wherever possible.
Filing annual tax timely and correctly is an essential thing for any business and organization. A mistake in tax filing will not only lead to financial loss but can also tarnish the reputation of your business. Thus, tax planning is an essential part of an organization. Taking the service of a virtual CFO can significantly help you since they have expertise in this field and are updated with all the rules and regulations changed or updated by the government. On top of that, there are many other benefits of having a virtual CFO in terms of tax planning, such as analysis of tax advancement and capitalization, advice on financial issues, increased tax position, and creating and retaining assets.
Lack of transparency can be disastrous for any business. Not only does it make the company more vulnerable to fraud, but also there are chances that the decision-makers would take inefficient and wrong financial decisions. With outsourced virtual CFOs, this issue can be minimized since they help create better transparency of cash flow within the organization.
A virtual CFO may assist in preparing cash flow statements that include, among other things, shareholder equity, long-term assets, net income, and liabilities. They also assist in developing cash improvement strategies by assessing cash flow figures regularly. A virtual CFO can also attend investor and lender meetings to obtain funds for expansion.
Scale the Business
A virtual CFO can help start-up owner scale their venture by providing the right direction and a healthy and feasible action plan. By performing risk assessments and financial forecasts, they can support the expansion plans. It ensures that the economic infrastructure is up to par, assisting with finance and loan applications, identifying the most cost-effective tax structure, and, if necessary, filing for multi-state registrations.
Here you can read about 6 Virtual CFO Services For Small Businesses To Outsource And Maximize Profits
A virtual CFO can significantly help a start-up or a business handle all of its finance-related operations and issues. Virtual CFO provides the leverage of a professional, experienced CFO at a fraction of the cost of hiring a full-time CFO. For that reason, their outsourcing services are rising rapidly, and people are taking benefit from it. There will be more rise in this industry in the upcoming time since people get high output delivery with less investment than hiring a full-time CFO.
Do you want to outsource your CFO work to industry experts with world-class experience? We can help you with all of your finance operations. Call us today at +1 201-778-0509 or reach out to us at [email protected].