Virtual CFO popularity has been increasing in recent years. In particular, small and medium sized businesses are bringing virtual CFOs into their business.
But what is a virtual CFO?
A virtual CFO is an outsourced CFO such as an accounting firm that provides the traditional services of a CFO at a lower cost. Instead of hiring a full time CFO at significant cost, businesses can now hire a virtual CFO at a much lower cost, but still get the benefits of having a CFO.
The virtual CFO sets the strategic direction of the business, which includes virtuaKPIs and financial modeling and forecasting.
Virtual CFOs can often be the make or break factor for many small and medium businesses.
1) They are a cost effective solution
Virtual CFOs are much cheaper than traditional CFOs.
A traditional CFO might cost upwards of $150,000 to employ. That is simple far too expensive to justify the cost for a small or medium sized business. Typically, most businesses turning over less than $5 million wouldn’t want to justify spending $150,000 every year on a CFO.
On the other hand, Virtual CFOs typically are an investment in the range of $5,000 a month, or $60,000 a year. This is less than half that of what a traditional CFO might cost. The lower means Virtual CFOs are accessible to more businesses than traditional CFOs.
Further, businesses can choose to engage virtual CFOs for a limited number of services or for a smaller period of time, say 6 months for example. That means business owners can customise their virtual CFO package to match what they want to improve in their businesses and the cost can match that. This contrasts traditional CFOs who are employed on a full time basis.
Virtual CFO popularity has increased because they are a more cost effective solution compared to traditional CFOs.
2) They provide a competitive edge
Particularly in the pandemic era, businesses are seeking to find their competitive edge.
Innovation and technology is making the markets for all sorts of businesses even more competitive. Business owners are increasingly in a position where they need to be aware of the shifts that are occurring in the way business is conducted in their industry.
The chances are that as a business in the 2020s, if you do not adapt and find your competitive edge, you won’t be in business for long.
Virtual CFOs provide a competitive edge for businesses. They provide critical insights into businesses, and these insights help inform the strategic direction of the business.
When the strategic direction of a business is informed by insights and data, the business is able to find its competitive edge over its competition.
If you are interested in what a virtual CFO could do for your business, feel free to reach out for a no-obligations chat.I’m interested in CFO help