When to Hire a Fractional CFO

Every entrepreneur starts their company with their own vision of what the future holds. Maybe you thought you’d just work from a home office, managing every function and loving every minute of it. Maybe you always knew you were going to make it big and would need a suite of executives, a team of sales and marketing professionals, and a whole bunch of support staff to help the whole thing run like a clock.  Whatever you anticipated, if you’ve gotten to the point where your books and your financial planning have gotten beyond your ability, it’s time to think about bringing on someone with more time and experience. While you may be tempted to hire a full-time CFO, there are many benefits to using the fractional CFO services offered by a bookkeeping or accounting firm.

Every growing business needs accurate and timely record-keeping and reporting. But if your needs have grown beyond basic bookkeeping and you need financial insights, accounting management, KPI tracking, and analysis, it’s time to hire a professional. In the past, businesses in your position have had little choice but to bring on a Chief Financial Officer. Today, an increasing number of successful entrepreneurs are recognizing that hiring a virtual CFO — also known as a fractional CFO — makes a great deal of sense. And you can easily access this service by contacting your professional.

A virtual CFO provides outsourced financial services at a fraction of the cost of a full-time employee’s salary. While every business is different and compensation can shift based on years of experience, geographic location, and the scope of the actual work, there’s no getting around the fact that the median salary paid to a Chief Financial Officer in the United States is $417,857. That’s a pretty big hit to take as a new expense, and that doesn’t count the outlay for benefits, bonuses, and associated costs starting with office space and equipment and going on from there. 

While the services afforded by a full-time Chief Financial Officer would undoubtedly be valuable, most businesses have legitimate questions about whether the outlay of cash is worth the price. Now consider instead the option of using your CPA firm’s virtual CFO service. They have invested in bringing on professionals who possess all of the same knowledge and experience, but a fractional CFO service participates on a customized schedule to suit the needs of your company — and charges according to a much more reasonable contracted monthly fee, without the need to pay benefits, bonuses, or other expenses. 

The difference between the two costs speaks for itself. But do you really get the same level of service? And how do you know that you’re ready or have a need for these services?

Most virtual CFOs were either previously employed as Chief Financial Officers but have chosen to step away from full-time work in favor of a more flexible schedule, or they were qualified to be Chief Financial Officers but opted for a different path. Whatever their specific background, your accounting firm has hired them because they have the exact qualifications needed to help small to mid-sized businesses valued between $1 million and $50 million that have needs beyond their management’s time or abilities and the interest in helping your business succeed. 

To get a sense of whether your business needs a virtual CFO, consider these services that they offer and determine whether having them would help you achieve your goals:

• A virtual CFO will provide you with financial strategies and projections to improve your operational performance

• A virtual CFO will prepare in-depth monthly reports that incorporate all of the pertinent data about your organization and use them to identify what is either driving your growth or preventing it.  Beyond simple preparation, they understand what information is important and has meaning and help you make good use of it.

• A virtual CFO will manage your assets and monitor your cash flow to improve your overall standing, minimize risk, and optimize your profitability and ability to grow.

• A virtual CFO will help you create a financial plan that you can follow. They will also track and measure whether you are sticking to the plan and whether it is helping or needs to be revised.

• A virtual CFO will give you the gift of time. Rather than you struggling with these tasks or getting them done while sacrificing time that could be better spent on other things, a virtual CFO will take this task off of your to-do list, and do the job with ease and expertise.

If you would like more information on the virtual CFO services offered by our accounting firm, or any of the other ways that we can help, please contact our office today.