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Financial
Aug 1, 2015

The Role Of A Virtual CFO

Sponsored Content provided by Adam Shay - Director of VCFO Services, Red Bike Advisors

While the term “virtual CFO” may be overused to a certain extent, it's frequently referenced because it is an important role in today's business environment. Many small and medium-sized businesses may not have the in-house financial staff necessary to take the business to the next level. This can often be because the size of the company does not support the cost or dedication of time of a full-time chief financial officer (CFO). Many companies have a good bookkeeper or accountant but don't have that person who can bridge the gap between the numbers, operations and strategy.

What is a virtual CFO?

A virtual CFO is someone who serves part-time as the CFO of a business. A CFO's main roles are to oversee all things financial in a company – think accurate financial reporting – and to be responsible for tying together finances, strategy and financial forecasting. These items go hand-in-hand as you need accurate historical data to know where you've been to realistically plan and lay out a road map to where you want to be. The combination of these items can really help propel a company to the next level in profitability and growth.

What a virtual CFO is not

A virtual CFO does not do day-to-day accounting data entry or reconciliation. That is the role of a bookkeeper or controller. A virtual CFO may work closely with the accounting staff. A virtual CFO is not dedicated to one company but will be able to pull experience from working with other companies to benefit the companies engaged.

Advantages and disadvantages of virtual versus in-house (full-time)

A virtual CFO can be more cost effective than a full-time CFO as the partial allocation will reduce costs.  You can get someone with a strong skill set who can bring experiences from working with other clients.  A virtual CFO isn't as dedicated to a company as a full-time one would be. While virtual CFOs can be real responsive, they can't always drop other things they are working on and one company isn't that person's only focus.

How can a virtual CFO drive value for your business?

A virtual CFO can add to the bottom line of a business in three main ways:

  1. A virtual CFO can work hand-in-hand with a business owner to formulate strategies to increase the profitability and growth of the business.
     
  2. A virtual CFO can ensure accurate historical reporting and add value to the borrowing or fundraising process.
     
  3. Finally, a virtual CFO can improve business processes to allow the business to operate more effectively and efficiently.
What's the sweet spot?

We have found that serving as a virtual CFO works best for businesses between $500,000 and $15 million in revenue. Companies below that range generally don't have the resources to support one. Companies above that range may be approaching the size to require a full-time CFO. Within this range there is a good opportunity to have a significant impact on improving a company's bottom line and growth.

My goal today was to educate entrepreneurs on the pros and cons of engaging a virtual CFO.

Adam Shay, CPA (NC License Number 35961), MBA, is managing partner of Adam Shay CPA, PLLC. He focuses on minimizing taxes and improving the financial results of entrepreneurs, and is actively involved in supporting the Wilmington entrepreneurial and startup community. For more information, visit http://www.wilmingtontaxesandaccounting.com/ or email him at [email protected]. He can also be reached by phone at 910-256-3456.


 
 

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