A CFO (Chief Financial Officer) is responsible for making sound business decisions. The job is like analysing all the pros and cons while sitting on the hot seat. There will be times when the CFO has to rely on his intuition or experience that he has gained over the years.
It sounds like a piece of cake when we put it like that, but what about the times when you need to be one hundred percent sure of your decisions? Certain choices are going to affect your financial outcome, like:
- How much cash will you have in the bank if you reduce the inventory, or the price of saleable goods, or settle debts within a week?
- Are the estimated annual profits close to the actual figure? If not, then how do you make it right?
- Would a new salesperson help you sell more? If yes, then will the profits cover the costs of hiring and maintaining the sales team?
- What will be the cost recovery rate if you purchase new equipment or technology?
Your in-house accountant or bookkeeper may help you manage invoices, accounts, and numbers, they will not be able to make big business-building suggestions.
For instance, when you have to make a quick submission to the lender or bank, you need not only accurate numbers and presentation but also a thorough ROI analysis. Also, you must be smart enough to explain the ratios to finance companies, so they approve your loan.
This is where a CFO comes to your rescue. He's like Robin to Batman-a reliable right-hand to the boss, with big solutions and numbers. Someone who has worked with multiple companies and is skilled in business will certainly positively affect your decision-making process.
Aside from the strategic management of your business' growth, if you still need reasons for hiring a virtual CFO, you may want to consider these aspects.
Healthier Cash Flow
You must have the healthy cash flow for new product acquisitions and business expansions. The virtual CFO can deploy essential strategies to improve your daily cash flow, such as implementing electronic invoicing, determining if it's indispensable to use the company credit card and overseeing collection effort before the holidays.
Providing Fact-based Judgements
An in-house CFO is vulnerable to internal influences, but a VCFO provides you with an unbiased analysis of the finances.
Any business requires flexibility in the decision-making process. A full-time professional may cost you around $1,500,000-$1,800,000 (with on-costs), but a virtual CFO works on a fixed-scope basis.
They handle a limited number of tasks, like management reporting, corporate advisory services, budgeting, etc. so you just have to pay them for the services you need.
With the VCFO busy with major financial issues, the senior staff can focus on core business activities. It will help you build better relationships with the banks, finance companies, insurers, human resources, advisers, legal consultants, and employees, and increase overall efficiency. In a nutshell, a VCFO works alongside business owners, sales directors, HR directors and COOs. They're skilled at balancing expenses with sales goals, thus, making your life easier.