by Arron Bennett, Founder of Bennett Financials
One of the most common reasons for a business to fail is mismanagement of finances, with 82% of businesses failing due to cash flow problems. For small business leaders, their current company is likely their first foray into managing business finances, and it can be difficult to navigate all the financial and regulatory challenges associated with managing a business.
However, hiring an in-house financial expert to manage the business’s finances may not be within reach for all business leaders. According to Indeed, the average base salary for a Chief Financial Officer in the United States is $154,348. While this number will be affected by factors including company size, small businesses may not be able to afford the cost of having a CFO on staff at all times.
Virtual CFO services are companies that provide a seasoned financial expert to handle the duties that would typically be assigned to a traditional CFO without the need for dedicated office space, other physical requirements, or even a dedicated salary. Although virtual CFO services are likely not an ideal solution for large enterprises with complex financial needs, they are an ideal alternative for small and medium-sized businesses that find themselves in over their heads managing their finances but cannot afford the salary of a full-time CFO.
Why virtual CFO services are great for small businesses
One key benefit of virtual CFO services — particularly for small and medium-sized businesses — is that they present a scalable, flexible solution based on the company’s unique needs. Financial needs vary from company to company. While some businesses might need someone to help guide their financial decisions weekly, others may only need a little assistance with essential functions.
Since virtual CFO services are billed hourly or by project, a small business can hire help for precisely what they need on a continual or as-needed basis. Virtual CFOs can help business leaders do anything from setting up bookkeeping and creating budgets or forecasts to monitoring finances. Essentially, the scope of a virtual CFO’s services is much the same as that of a full-time CFO: ensuring that the company does not overspend or underpay for any of its financial requirements.
What virtual CFO services do for small businesses
The core function of a virtual CFO is to manage a company’s finances, but this is a broad description comprising several duties, including (but not limited to) budgeting, forecasting, cash flow analysis, and accounts receivable and payable. An essential goal of a virtual CFO is to ensure the company has enough money to cover its expenses and debt payments while looking for ways the business can improve its cash flow situation.
As an outsider looking in on the company — often with years of financial experience to back them up — a virtual CFO is also uniquely positioned to help companies with financial risk management. By providing accurate data and financial insight into the company, virtual CFOs can calculate risk exposure and identify potential risks, helping leaders make better decisions about their company’s future.
Virtual CFOs can also be a valuable resource for companies to complete their financial reporting, such as preparing financial statements and other reports. This process is one of the most time-consuming for many business leaders, but it is also incredibly important since businesses are subject to regulations to which they must maintain compliance without incurring fines or harsher financial penalties. With their experience in finance, virtual CFOs can ensure no oversights are made that could cause a business to fall out of compliance.
Beyond core essential operations, virtual CFOs can also serve as valuable and trusted advisors to business leaders. For example, many virtual CFOs serve as de facto financial planners for the businesses they work for, offering advice on how leaders can maximize their business and increase profitability. Some virtual CFOs may even guide their clients through investment decisions, analyzing the business’s cash flow to ensure that the leader is making the best possible financial decisions for the company.
Finally, virtual CFOs provide strategic advice to business leaders, helping them set financial goals and ensuring that performance and goals are aligned with the business’s long-term strategy. Thanks to their extensive financial knowledge and outsider perspective, virtual CFOs have a better understanding of what is necessary for a business to grow and scale without affecting its day-to-day operations.
Virtual CFOs present a more affordable yet still scalable option for business leaders who need help managing their business finances but cannot afford to hire a full-time, in-house expert to handle their financial needs. If you are a small business leader looking to propel your company forward and usher in a new period of growth, now is the time to look into enlisting a virtual CFO service.
Arron Bennett founded Bennett Financials with a mission: to help businesses save substantial amounts on taxes through advanced tax strategies that are typically reserved for ultra-high-net-worth individuals (UHNWIs). Over time, Arron expanded the firm’s services to include Fractional CFO roles, guiding clients on how to reinvest tax savings into strategies that skyrocket their profitability and accelerate business growth. With more than 14 years of experience in the tax industry and an accounting degree, Arron has helped Bennett Financials save clients over $15 million in taxes.
