What Is a Virtual CFO (and Why Are Businesses Hiring Them)?

what are virtual CFO services

Credit: Morgan Housel

More entrepanuers and business owners, amid an inflated economy and tight labor market, are searching for things like what are virtual CFO services, why hire a virtual CFO, and a timeless favorite, why you need a virtual CFO, so clear and concise answers to those questions become even more important.

As a financial services company focused on taking the sting out of all things finance for business owners, we aim to provide just that.

Here are 5 reasons why you should hire a virtual CFO.

#1 – Cheaper

Virtual CFO fees range across the board, but it’s important to look at the impact instead of just the raw virtual CFO cost. It can take over 90 days to find, interview, verify, and onboard a C-suite executive.

Most small and medium-sized businesses cannot afford this type of time and financial investment.

The cost to pay an executive search firm is also huge: according to industry averages, up to 50% of the executive’s first-year salary is often average for compensating the recruiter, and that becomes costly quite quickly.

#2 – Takes Less Time Than Hiring a Full-Fledged CFO

So, what are virtual CFO services, and what do they cover? A virtual CFO will still focus on the 50,000-foot view of the company’s financials by…

  • Monitoring the company’s financial health;
  • Providing expertise and insight for better financial decision-making;
  • Managing the books and all traditional duties of a CFO.

…all at a fraction of the cost of a full-time, in-house CFO.

They’ll examine the company’s health by the numbers, identify waste, and help free up resources so that business owners can put them where it matters.

Misallocation of resources is one of the top reasons why so many businesses end up not hitting revenue goals, or worse, going out of business completely.

Side-stepping that fate by getting expert outside help is a great idea.

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#3 – Offers Fresh Perspectives With Minimal Bias

While it’s impossible to completely remove human bias from the decision-making process, the reality is that a third party has a completely different perspective compared to someone that works in the business internally.

One of the hardest things for businesses to do is pivot in uncertain times. Far too often, it’s difficult to change processes away from the tried-and-true.

Virtual CFO rates, when viewed against the impact the professional’s perspective has on the organization, are truly a bargain. What is it worth to finally watch a great business become greater?

#4 – Is More Impactful Than Trying to Cross-Train Internally

When there isn’t a CFO already in place, it becomes tempting to try to go to the drawing board and cobble together a solution created from the talents of multiple people.

Maybe that’s leaning on the accountants already in the office, or perhaps it’s trying to upskill financially-minded analysts.

Either way, this is not as powerful as having a virtual CFO. Not only are they bringing experience, but they already conduct the type of deep research necessary to grow their skills.

They keep up with current news, trends, and issues that business owners are facing.

Skipping over this deep well of experience in favor of cross-training people may appear to save money, but it adds too much complexity. Hiring a virtual CFO is the better option.

#5 – Provides Both Generalist and Specialist Knowledge

A virtual CFO will, most likely, have worked with multiple companies across a variety of industries, from manufacturing to IT.

While every industry has a unique focus, the reality is that strong financials are strong financials regardless of the vertical.

This focus on overall strategy is what matters, and virtual CFOs bring multiple years of specialist experience in finance and generalist knowledge of multiple industries.

That type of perspective is valuable for businesses looking to grow, as well as companies that are in the recovery phase and looking to climb forward to victory.

From in-depth cash flow analysis to complex financial modeling, the modern fractional CFO is positioned to move well with companies of all sizes.

How Much Does a Virtual CFO Cost?

According to industry averages, a virtual CFO can cost between $3,000 and $10,000 a month. The range is so wide because it is customary to build a personalized package based on your own business needs. We can price our engagemnts hourly or as a retainer depending upon your needs. Either way, the goal is to get to the right asnwers quickly and help get you to the next stage of growth for your company.

Like many professional services, virtual CFO pricing varies based on the complexity of the business, the number of employees, the specific tasks requested, and the experience of the professional you bring in We work with many CFOs with lots of wide-ranging experience.

Good for Recovery, Great for Growth

Do businesses hire a virtual CFO? Yes, they do, and here’s the good news: virtual CFO solutions are flexible, cost-effective, and fluid.

Whether you’re looking at a virtual CFO for startups or even just a part-time virtual CFO, there’s never been a better time to explore the power of targeted, movable expertise coming into your organization.

Not only is that good for business recovery as the nation transitions into its post-pandemic economy, but more growth potential will present itself as company time and resources free up as a result of side-stepping the urge to hire an in-house CFO.

Get Cost-Effective Virtual CFO Services From indinero

indinero is a financial services company that specializes in providing real-time, fluid, flexible, and dynamic solutions prominent in leading virtual CFO companies today.

If you’re ready to have a fresh pair of eyes on your financials, reach out for a free consultation today.