Losing control over your finances? Enter the outsourced CFO

Like many small business owners, losing control over your business’s finances is probably one of your biggest fears. Staying on top of the financial side of things can seem like a daunting and overwhelming prospect, particularly when you’re just starting out. It always seems like there’s so much to do and think about – from setting your prices and forecasting your cash flows to developing financial strategies and finding new ways to increase your profitability.

You probably have a lot of questions too, like:

• How do I set my business up for financial success in the long term?
• How do I maximise my profitability and cash flow?
• How do I know if I’m making good financial decision?
• How do I know if I’m spending too much and saving too little?
• How do I stop my business from losing money?
• How do I make sure I don’t lose control of my business’s finances completely?

Hiring a Chief Financial Officer (CFO) to take care of the financial side of things may seem like an obvious solution to all of these questions and more. However, in today’s economic landscape, where small businesses are constantly under pressure to streamline and cut costs whilst maximising profitability, hiring a financial professional full-time may not be the most cost-effective option. The costs involved in taking on a new staff member in-house can also make this option out of reach for many small business owners.

Enter the Virtual CFO.

The good news is that in today’s increasingly digital landscape, there is another option out there for small business owners. If you’re looking for professional help with your finances, but do not have the budget to take on a full-time CFO in-house, then why not consider investing in a Virtual CFO?

As the name suggests, a Virtual CFO (also known as an Outsourced CFO or Fractional CFO) is a financial professional that serves the same function as an in-house CFO. The only difference is that they are remote-based and offer their services virtually (such as through video calls, phone calls, and emails), rather than being employed by the business in-house and working out of their office.

Virtual CFOs typically work with businesses on a contract basis, rather than being employed by the business full-time or part-time. Because of this, Virtual CFOs offer a much more cost-effective and affordable solution for small business owners, whilst also allowing them to take advantage of the skills and expertise of a professional.

In recent years, more and more small businesses have been opting for Virtual CFOs over in-house CFOs. Research shows that Google searches for the term “fractional CFO” grew by a whopping 535% between 2021 and 2022. From 2019 to 2022, in-house CFO resignations also increased by 27%. This provides testament to the growing number of small businesses who are opting to outsource their financial services, rather than taking on this function in-house.

What does a CFO do?

CFOs (also sometimes called “treasurers”) are responsible for overseeing the finances of a business or company. Unlike accountants and bookkeepers, who are tasked with carrying out day-to-day financial tasks like preparing financial reports, processing invoices, and filing taxes, CFOs are responsible for looking at the bigger financial picture. They are responsible for ensuring the company or business’s financial future by ensuring they remain profitable and financially viable in the long-term.

CFOs are responsible for things like monitoring a business’s financial position and performance, completing financial planning and forecasting, and advising on financial decision making. They are also responsible for ensuring the accuracy and completeness of financial statements and reports, and ensuring they are lodged on time to the relevant authorities or reporting bodies.

Historically, these duties have been carried out in-house by Chief Financial Officers employed by a business or company. In recent years though, there has been a shift to more of an outsourcing model, with many small businesses now seeking the services of Virtual CFOs for help with their business’s financial needs.

So, what is a Virtual CFO?

Virtual CFOs have the same responsibilities and carry out the same tasks as an in-house CFO. This includes things like:

• Overseeing the business’s finances and managing all of the financial actions that they undertake
• Advising on the business’s overall financial position and fiscal health
• Ensuring the feasibility and financial viability of the business’s activities
• Carrying out financial planning, budgeting, financial analysis, and cash flow forecasting
• Monitoring and managing the business’s cash flow
• Analysing the financial strengths and weaknesses of the business and identifying areas for improvement
• Carrying out strategic planning to develop a clear financial strategy for growth
• Managing costs and expenses, and optimising cash flows to ensure the business’s profit exceeds its losses, costs, and expenses (which in turn will ensure it remains profitable)
• Providing high-level advice to the business’s management team to guide decision making
• Ensuring the business remains liquid, and is able to pay off its liabilities and debts
• Assisting with the preparation of financial statements, including balance sheets, profit and loss statements, and cash flow statements
• Ensuring all financial reports are completed accurately and lodged on time
• Interpreting financial data and information, and making predictions about the business’s financial future
• Managing the business’s tax and other financial obligations, and ensuring it remains compliant with its various legal, financial, and regulatory obligations
• Ensuring the business’s finances never full behind (e.g. payroll or tax lodgements)
• Making recommendations for accounting softwares and technologies
• Increasing the efficiency of accounting systems and internal controls
• Conducting risk management activities, and helping the business to safeguard itself against current or future financial risks
• Providing training and management to the business’s finance team

These are just some of the things that Virtual CFOs can help small businesses with.

Although the duties of traditional CFOs and virtual CFOs are the same, there are a few key differences. For example, instead of being employed by the business or company and working out of their office, Virtual CFOs work remotely and deliver their services virtually.

Some of the other key differences between traditional CFOs and virtual CFOs include that virtual CFOs typically work with businesses on a contract basis, rather than being employed by the business full-time or part-time.

Also, virtual CFOs will also usually work with and offer their services to a number of different businesses, rather than working exclusively with just one business as a traditional CFO would.

Virtual CFO services can be an ideal solution for small business owners who are feeling daunted by the prospect of managing their own finances. They can also be a great option for business owners who are scared of losing control of their finances or losing money, or who are simply unsure about how to tackle their business’s finances moving forward.

Virtual CFO services are just one of the services we offer here at 2account. Your 2account Virtual CFO will take care of your business’s finances, and help you to get back in control of the money side of things. They will help you to review your business’s financial strategy, develop strategies for profitability, maximise your cash flow, and make good financial decisions – all the while helping you to move closer towards achieving your goals, whatever they may look like for your business.

Key Services

As you will have seen in the previous section, there are a range of different financial tasks that Virtual CFOs can help small businesses with. Handing over your business’s finances to a professional can help to take the hard work out of running your business from a financial point of view, and save you a whole lot of stress, hassle, and headaches along the way. Best of all, it will also free up more of your time so you can spend more time doing the things you do best – like running your business!

If your biggest fear is losing control of your business’s finances, some of the key services offered by 2account’s Virtual CFOs that you are likely to be interested in include:

• Budget preparation and cash flow management: Your 2account Virtual CFO will work with you to design and implement a budget to help you minimise your expenses whilst maximising your profits. They will also monitor your financial performance on an ongoing basis, and use variance analysis to compare your actual expenditure against the prepared budget to identify areas for improvement.
• Identifying opportunities for growth: Your 2account Virtual CFO can also help you to explore new opportunities for growth, including by forecasting the profitability and financial viability of each one. This will help you to identify the most financially worthwhile growth opportunities for you and your business.
• Financial forecasting: Your 2account Virtual CFO will analyse your current and past financial performance, and use this to create cash flow forecasts and other types of forecasts to show you what your business’s finances are likely to look like in future. They can also help you to come up with a plan of action to increase your profitability and position your business for maximum growth.

With that said, many Virtual CFOs offer a diverse range of financial management services. When you work with 2account, your Virtual CFO will work with you to custom design a tailormade package that aligns exactly with your business needs and requirements. This way, you can ensure that you’ll be paying for only the services that you need, and not the ones that you don’t!

The Benefits of Hiring a Virtual CFO

There are numerous benefits that can be enjoyed by small business owners when they decide to engage the services of a skilled and experienced Virtual CFO. Here are some of the big ones:

• Cost-Effectiveness: One of the biggest benefits of opting for a Virtual CFO over an in-house CFO is that it is much more cost-effective, making it an affordable option for smaller businesses who may not have the budget to take someone on full-time in-house. Many Virtual CFOs offer their services for as little as $1,000 – $3,000 per month (depending on the amount of work required), compared to the hefty six figure sum that would come with hiring one in-house.
• Expertise: Hiring a Virtual CFO can be a great way for small businesses to access the knowledge, skills, and expertise of a highly experienced financial professional without the significant financial outlay that can come with hiring a full-time employee in-house. By hiring a Virtual CFO, small business owners can take advantage of the same level of professional expertise at a fraction of the cost.
• Diverse Experience: Because Virtual CFOs typically work with a number of different clients rather than exclusively with one client, they will usually have experience working across a diverse range of industries and sectors. This can be of great value to small business owners, as it is likely that your Virtual CFO will have prior experience working with and ensuring the financial success of businesses in your industry.
• Flexibility: Virtual CFOs can also offer a greater degree of flexibility to small businesses. With the Virtual CFO model, you will typically only pay for the hours or services that you need – unlike with the traditional CFO model, where you would be paying for the full-time employment of someone in-house (taxes, super, and all!), regardless of the amount of work that you actually need done at any given time.
• Scalability: When you hire a Virtual CFO, you can take them on for as few or as many hours as you like. You can take them on for more hours when you need their help, and less when you don’t! Because Virtual CFO services are so flexible, it is much easier for them to scale with your business as it grows, with your Virtual CFO providing you with more or less support as needed.
• Opportunities for Customisation: The flexibility of Virtual CFO services also means that you can pick and choose the services you want them to offer and tasks you want them to complete. This means that you’ll never be stuck paying for services that you don’t want.
• Fresh Eyes: Because Virtual CFOs are not directly involved with or employed by the business, they can offer a more objective, unbiased opinion than someone who works within the business. As a small business owner, this can offer you a set of fresh eyes and new perspectives and insights when it comes to your business’s finances.

With so many benefits to be enjoyed by small businesses, it’s not hard to see why so many small business owners are making the switch to Virtual CFOs.

Achieving Best Practice in Financial Management

A proper accounting and bookkeeping is a must when it comes to financial management for small businesses. Fortunately, there are a number of user-friendly softwares on the market today that make managing finances a breeze for small business owners. Xero, MYOB, and QuickBooks are just a few of the options available to small business owners in Australia.

With that said, in order to be able to get the most out of your financial management software, it is important that you know how your chosen platform’s features and functionalities work. It is also essential that you have proper accounting and bookkeeping systems in place that reflect current best practice. This is another area where the expertise of a Virtual CFO can come in handy.

Setting up proper financial management processes that are well-informed by best practice is another thing that your 2account Virtual CFO will be able to help you with. Not only will they show you how to take control of your back end systems and make them work for your business, but they will also ensure your team have access to the training and support they need to implement these systems effectively and with confidence.

Who Needs a Virtual CFO?

Some businesses carry out their financial functions themselves, and hire an in-house accountant or other financial professional to help them with this. Others may engage the services of an external accountant or bookkeeper to help them with this. However, if you feel like you’re losing control of your finances and are looking for a fix-all way to get things back under control, a Virtual CFO may be the perfect solution for you.

Given the diverse range of responsibilities and tasks that a Virtual CFO can help with, this service can be a great fit for small businesses who are looking for someone to take their business’s finances off their hands completely. When you hand the reins of your business’s financial function over to a skilled and experienced 2account Virtual CFO, you can rest assured that you are working with a team of professionals who are as invested in the financial success of your business as you are.

Although there is really no set in stone rule when it comes to when to hire a CFO, a general rule of thumb is that most businesses with less than $1 million in turnover may be able to manage their own finances with their own bookkeeper or accountant in-house. However, for businesses who are making more than this in turnover, it is highly advisable that they seek the services of a professional, like a 2account Virtual CFO. That’s not to say though that smaller businesses cannot also benefit from the services of a Virtual CFO – in fact, Virtual CFOs represent a gold standard, all-in-one solution that will make sure all of your financial bases are covered, whatever the size of your business.

When you work with a Virtual CFO, you will have access to a clearer picture of your business’s overall financial position and health. You will also have access to expert advice on how to improve your cash flow and profitability, to help your business become more profitable so you can enjoy the best possible financial health and overall financial position. You’ll never feel worried or overwhelmed about your business’s finances again!

How We Can Help

As you can see, Virtual CFO services can have a number of benefits for small business owners who are worried about losing control of their finances, but who don’t have the budget to hire a full-time CFO in-house.

At 2account, we offer a range of long-term and short-term solutions for small business owners looking to outsource their finances to a professional.

When you choose 2account’s Virtual CFO services, your Virtual CFO will always be on hand to provide you with expert, growth-focused advice on your business’s finances. They will also work with you to:

• Review your short and long-term financial strategy
• Make a budget and track your income and expenses
• Prepare cash flow forecasts
• Make educated and well-informed financial decisions
• Identify ways to increase your operational efficiency
• Develop strategies to maximise your business’s profitability
• Find ways to increase and manage your cash flow
• Recognise and take advantage of opportunities for financial growth
• Implement proper accounting systems and practices

Free Resources for Small Business Owners

At 2account, we also have a range of other online resources and tools available for small business owners.

Let us help you take back control of your business’s finances.

Get in Touch

To find out more about how 2account’s Virtual CFO services can help you and your business, book in for a free no-obligation consultation with us today. During this call, we will discuss your business’s requirements and create a tailored CFO package that works for you. For more information, get in touch or give us a call on 1800 795 661.