Why should you have a virtual CFO in your business

What even is a CFO? A CFO is a Chief Financial Officer or Finance Director (FD).

Every big business has a finance director or CFO and they are needed to keep the financial affairs of the business in line and to provide valuable financial management information to the business. They are your trusted adviser and translator of the numbers!

In small businesses you don’t need a full-time FD/CFO but you do still want to know what your numbers look like on a monthly basis and have someone checking on a regular basis.  People often think that they can’t afford to have finance support in a business.  This is very different from a year end accountant where they are producing the statutory returns for your business.  They are not there to analyse your business and understand your business in detail but merely to submit the tax and legal requirements.

If you just have a year end accountant, this can mean that you only look at your accounts once a year, around nine months after the year-end. However, in small businesses where cash flow is often tight, you may need to know your numbers more frequently and keep a very close eye on the forecasting of those numbers.

You also need to understand key numbers in your business such as revenue, margin, profit and cash flow. Cash flow forecasting is critical in any business and a virtual CFO could help you to manage your cash flow going forward.

If I was your virtual CFO I would be looking at your accounts monthly and understanding where you’re making your money and what’s the most profit margins and also looking forwards in your business to understand where there might be a pinch points in cash and where there might be some problems in the future.

I use a system called Futrli, which is an easy system to put your numbers into and look at different scenarios in your business.  I can therefore offer this service much more cost effectively than in the past, where it would have taken me ages to model this previously, costing the client time and money.

If you were a larger company, you would need to employ somebody full-time and experienced finance directors are pretty expensive. However, if you just need half a day a month or a day a month support for your numbers because you’re a small business and it’s relatively simple, a virtual CFO can be a really useful resource.  It would just be a part time resource. So, I have clients where I make sure their accounts are up-to-date and produce their forecast each month and after initial set up this can be done sometimes as little as half a day a month.

However you do need to be looking at these numbers really closely, particularly if your business is not paying you enough or if you need to look at employing staff and so on.

It’s also a good idea to have these things if you are looking to expand your business, so if your business is growing rapidly and really needs extra support this can help you to look at various scenarios. It could also help you to decide whether to expand your team, whether you can afford to, whether you want to go into new territories or just expand into new lines.  It will also help you look at what you are offering. Are the products or services you offer making money?  This can help you focus on the things that make you more money in your business. I would also help you look at pricing which is a key part of any business numbers.

If you want to know more about how this might work in your business, book a discovery call here: https://calendly.com/sallyfarrant/discovery