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Significance of Virtual CFO Services

Significance of Virtual CFO Services


Virtual CFO (Chief Financial Officer) services have been in trend for a long, and it has garnered much-deserved attention during these tough times when people are maintaining social distance and working remotely.  


Defining virtual CFO services 


Let’s understand what virtual CFO services are. To understand this term, we would break it first. A chief financial officer (CFO) is a member of a business entity who manages and controls the entity’s financial activities. While doing so, he/she ensures to moderate the risks to your cash flows and budgets to accelerate your efforts to reach the strategic goals. CFO services include planning, implementing, managing, and running an entity’s financial happenings, including but not limited to budgeting, negotiations for pricing, forecasting, strategic financial analysis, and many others.  

Virtual CFO services are no different, except for the fact that these are outsourced CFO services. Services provided remotely, on a contractual basis for a fixed number of hours. Virtual CFO services fall under the ambit of a company’s strategic business unit, but externally. Unlike accounting, which focuses on recording and reporting financial transactions, virtual CFO services underline the importance of gathering all such financial information to draw insights and recommend actions. Generally, the accounting and bookkeeping firms expand their range of offerings to include virtual CFO services.  


Understanding the importance of virtual CFO services 


Any business that lacks financial decision-making abilities and looking for someone to make decisions for the growth of the entity can use the virtual CFO services. They use accounting software and systems that do the transactional accounting functions and generate data that requires insightful analysis. Some of the ways in which virtual CFO services can help organizations are as follows: 

  • Financial guidance for some specific operations of the entity 
  • Cash flow management and control 
  • Providing operational advice based on financial data 
  • Budgeting and forecasting 
  • Financial risk management 
  • Analyzing the KPIs of the business and deciding incentives 
  • Cost and productivity management across the company 
  • Assistance in tasks such as M&A, capital allocation, or investments 
  • Administering funding and debt management 
  • Support in specialty finance roles such as audit, investor relations, or any other 
  • Evaluation of financial statements 
  • Developing tax strategies 
  • Strategic decision making that can help the entity’s growth plans 

What does a virtual CFO do? 


A virtual CFO will work towards achieving the following tasks for you depending upon the scope of work decided: 

Interpretation of accounting results and reports

A virtual CFO can be involved in managing the bookkeeping and accounting department of the entity. The accountants will continue doing their work; however, the virtual CFO will ensure it is done well. The virtual CFO will interpret the results and reports to identify their strong points, where they are lacking, and what strategic actions are required for the growth ahead. They must hold a meeting with the stakeholders and discuss the recommended courses of action that will generate positive results for the entity.  


Creating the budget and supervising the entity’s compliance with the budget 

Budget is the most crucial part of any business entity’s operations. If done correctly and followed sincerely, it can keep the extra expenses in control and ensure that all the necessary payments to employees, vendors, and taxes are done on time. The virtual CFO must be capable enough to create the financial budget that will enable the entity to reach its financial obligations. The financial budget must be in alignment with the business goals and must be based on these goals as well as the historical financial performance.  

Another task that the virtual CFOs do is comparing your budgeted performance with your actual performance to identify the variances. Such variance analysis allows you to understand the discrepancies, where you are going wrong, and what steps can be taken to overturn the situation. The virtual CFOs must produce such reports monthly or quarterly, depending on the frequency of your transactions. These reports let you assess the areas where you need to control your expenditure and where you need to raise your spending to achieve the business objectives.  


Managing cash and projecting business cash flow needs

Like budgeting, cash management is a key task for any business. Cash management is an important task that falls under the purview of virtual CFO services. The virtual CFOs manage your cash as well as forecast your cash flow needs based on the budget and your business goals. They ensure that you have enough cash on your hand until the year-end to satisfy all your business-related expenses. They also manage it well so that when an uncertain event such as a decline in the economy or any other, the business can cope with the cash needs.  

Even in such difficult times, when you see the cash going down, the virtual CFOs work up their way with strategies to obtain external financing, expedite the collection of cash from some functions, or delay the payments to suppliers. Therefore, the virtual CFO services include the management of an entity’s cash flow with robust business strategies that do not dissuade you from the goals.  


Negotiating for fundraising and corporate restructuring activities

Virtual CFOs have the expertise and experience of handling all kinds of corporate restructuring activities. They can identify the right restructuring required, the subject company, analysis of the financials, and negotiations to seal the deal. They provide advisory and consulting services to the senior management and key decision-makers based on the analysis of the company’s current situation, financials, and goals for the future.  

Furthermore, virtual CFO services might include the preparatory meetings, data and insights, and pitching required for the company’s fundraising. They may not help with the entire process, but they can be the person to attend such meetings to answer any questions related to the financial implications of such borrowing. They provide the financial insights, operational impact, and business implications for any such decisions taken at the top management level to gauge business growth.  


Providing the required guidance in decision making 

Entities must make sure to select a virtual CFO who has the professional knowledge and industry experience of making financial decisions. Someone who understands the finances, who can take decisions, and is aware of the implication of financial decisions on operations would be the right choice for a virtual CFO. Despite these professional qualities, the virtual CFO must be such a person whom you can trust for the financial decisions he/she takes for your company. He/she must be able to understand your industry, your internal business processes, and the goals you intend to achieve.  

Only with all this knowledge, the virtual CFO would guide you, mentor you, and coach you amidst the stressful business situations for the growth path ahead. The virtual CFO must have the financial acumen to understand your financial situation and make strategic decisions for you so that you grow exponentially.  


Making the finance function a profit centre of your entity

Virtual CFO services, if provided efficiently and effectively, can generate opportunities for growth for your entity. Virtual CFOs work towards cutting any wastage of money, identifying and negotiating deals that make profits, saving cash through budgeting and cash flow management, strategizing for tax savings and benefits, and other tactics.  

They review the financial statements and financial reports generated by the accounting team to identify the areas where major improvements can lead to profitability. You gain a competitive advantage over other market players through strategic planning, effective cash management, and proficient annual budgeting. Therefore, they make all the efforts to put the finance function as the key profit centre of your business.  


Making the finance function a profit centre of your entity

Virtual CFO services, if provided efficiently and effectively, can generate opportunities for growth for your entity. Virtual CFOs work towards cutting any wastage of money, identifying and negotiating deals that make profits, saving cash through budgeting and cash flow management, strategizing for tax savings and benefits, and other tactics.  

They review the financial statements and financial reports generated by the accounting team to identify the areas where major improvements can lead to profitability. You gain a competitive advantage over other market players through strategic planning, effective cash management, and proficient annual budgeting. Therefore, they make all the efforts to put the finance function as the key profit centre of your business.  


Are you really in need of virtual CFO solutions? 


Businesses must understand whether they really feel the need for outsourced CFO services. The expanse of services included in the virtual CFO services is quite huge; still, it is the entity’s duty to understand if their operations need the help of a virtual CFO. Probably, your business scope is too small currently to even consider CFO services, as your business is sufficient with the basic accounting and bookkeeping activities.  

Probably, you already have an in-house finance expert or CFO, to be precise, to take care of all the activities included under virtual CFO services. Whatever the case be, it is on the entities to decide whether they need the virtual CFO services or are sufficient with the current arrangement. However, we can help you with some of the factors that can give you an idea regarding the need for and importance of virtual CFO services: 

Your financials need an urgent check

outsource virtual CFO services

A business entity faces many ups and downs in the course of its operations. However, if the downs go on for a long period, it is time to take action. If you cannot understand the reasons behind this dip in performance, you must outsource virtual CFO services. If the entity feels that the financials are all showing negative returns for the business, you must gear up and call for a virtual CFO’s help. These are the situations when the right virtual CFO can save you and take you to the shore.  


You do not have the financial acumen to make decisions

There are times when you have the data with you, annual reports, and business figures; however, you still can not draw conclusions and take market-worthy decisions. You do not know what costs to cut, what corporate restructuring is the best, how to save taxes, how to comply with the budget and similar business-centric decisions. This is where the role of a virtual CFO becomes significant.  

The virtual CFO services include giving such financial visibility to you to understand the numbers, based on which you can decide. They help you with robust, reliable, and informed decisions with the backing of your business’s

role of a virtual CFO to make decisions

financial data so that you achieve high profitability. In the process, you also learn to understand the numbers and draw conclusions from them to take clear, sound, and strategic business decisions. 


Your business processes are getting intricate

When your business starts, it is simpler with few processes, few vendors, few employees, few customers, and few requirements. As and when it grows in scope, the needs increase to suffice additional functions and operations. At that time, you need more raw materials and more suppliers for an increase in production, more employees to handle operations, and more processes to handle the demand, leading to more customers and more sales. 

All of these lead to increased accounting requirements and the need to take financial decisions to keep the growth in progress. These are the times when you need expert virtual CFO services to make sufficient financial decisions for the entity’s accelerated growth. 


You are in need of risk management skills

When your business is growing and increasing in scope, your risks also start to increase. You have to manage multiple risks such as operational risks, financial risks, fraud risks, competition risks, economic risks, and many others. If you are prepared for these risks, then it is well and good. However, if you are caught off-guard, all your budgets and growth plans become valueless.  

A virtual CFO can help you sail through these tough times with his risk management skills. They have the capability and experience to deal with such potential risks so that the entity’s normal operations are not affected. At such time, the virtual CFO services become all the more important for the entity.  


You are looking for opportunities for growth

When your business is at stability for quite some time, you start looking for growth opportunities. A virtual CFO can find such opportunities for you. They have experience in varied industries, multiple economic situations, and different stages of business operations, and hence, they are better equipped to identify the opportunities for growth for you. They can find the untapped markets for you, the new customer segment that can be targeted, and the strategy to handle the increased demand. Such times call for virtual CFO services. 



Businesses must understand the significance of CFO services for their financial decision-making. Since it is costly to hire a capable and experienced CFO on a permanent and regular basis, a virtual CFO can serve the purpose at reduced pricing. Furthermore, it is best if you hire your accounting firm’s virtual CFO services, as they are already accountable for your business financials and hence, would be able to provide you valuable services at the least possible pricing.  Therefore, get additional value for your firms through virtual CFO services and come out stronger than ever.  



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