What is a Virtual CFO?
The practice of outsourcing finance and accounting staff is not a new phenomenon. However, there is a growing assortment of organizations offering the services of virtual finance professionals, including the position of virtual CFO (Chief Financial Officer). So, what is virtual CFO outsourcing? How is it different from historical outsourcing services? Let me see if I can answer these questions and a few others along the way.
The Merriam-Webster Dictionary’s simple definition of “virtual”: Very close to being something without actually being it; existing or occurring on computers or on the Internet.
What exactly does a virtual CFO do for a business?
Many startups and small businesses that can’t afford full time accounting and financial expertise look to outside service providers for daily bookkeeping, accounting and financial reporting services. While accounting firms sometimes fulfill this need, there are many other providers who offer these services, sometimes using the term virtual CFO to define what they do.
How is this considered virtual?
Some outsource providers market their virtual business model by providing the same functions that an in house accounting staff would provide without actually being a part of the company or its employees. They can also offer various cloud based general ledger, tax and other software as enablers of their services. Several offshore companies provide these services and market themselves as virtual CFOs.
Is that all a virtual CFO does for a business?
What many of the aforementioned outsourced service providers don’t offer are the more strategic, transactional and business insights that you would expect from your full time internal CFO. A CFO isn’t just an accounting guru. The competent CFO has extensive experience in financial analysis, systems implementation, financial controls, tax planning, banking, strategic planning, budgeting and forecasting, contract negotiations, benefit plans, raising capital and merger and acquisition transactions, and other business topics.
If the day-to-day accounting duties are not a concern, what can a more experienced virtual CFO add to a business?
Many companies do not need an outsourced provider to handle daily accounting responsibilities. These companies have in-house staff along with a controller and/ or a CFO. But there are many business challenges that arise on a daily basis. Company management may find that it doesn’t have the in-house expertise to handle some of theses challenges. That is when an experienced outsourced or virtual CFO makes a lot of sense.
There are experienced professionals who have been in the CFO seat that now offer their expertise for these exact circumstances. Whether it is for a specific project or on an ongoing part-time basis, having the resource to lean on in various circumstances can be invaluable to a company.
Management may be challenged with a backlog of financial projects that it just can’t get to. Management may lack the experience to handle some of the more complex financial issues challenging the company. Or it may not be the right time for a company to hire a full time CFO because of budget constraints.
These are ideal circumstances when it may make sense for a company to engage a virtual CFO. This individual can provide guidance and leadership, relieve the pressure and help the company avoid making some of the mistakes it might make if it tried going it alone.
Does SBC provide virtual CFO services?
I am an experienced CFO with a background as a CPA (Certified Public Accountant). I provide various types of outsourced CFO services to my clients acting as their CFO without being a permanent full time employee. I provide my assistance on sight when it makes sense but also remotely in order to remain available on a moments notice. I describe my services as an outsourced CFO but recognize that there are other ways to describe what I do: Part-time CFO, fractional CFO, interim CFO and also virtual CFO.
Sometimes new terminologies have a way or redefining or clarifying certain concepts. Consider what image or concept pops into your head when you hear the terms: “cloud”, “data-mining”, “app”, “bandwidth”, or ”photo-shopped” for example. Now think about “virtual CFO” and the mental response that this term elicits after reading this white paper.
This white paper was written by Steven Bell, Managing Director, SBell Consulting LLC (SBC)