How a virtual CFO can improve your business forecasting and planning

For millions of small businesses across the country, financing planning, reporting and forecasting is a significant challenge. Many business owners are leading experts in their field — but feel overwhelmed and unsure when it comes to making significant financial decisions, projecting revenue, or filing financial reports.

If you feel out of your league when it comes to managing the high-level finances of your business, you’re not alone. As new business applications are at an all-time high over the past two years, an increasing number of companies are turning to these professional partners to handle their growing chief financial officer needs.

Virtual CFOs, also known as a fractional CFO or an outsourced CFO, perform typical CFO duties for multiple companies on a part-time or as-needed basis. They may be contracted, or on a retainer, and they can set their own rates, based on their experience, background and demand.  

Is a virtual CFO service right for your business?

The benefit of outsourced CFO services is that you choose how often you need your professional’s support. For small businesses that can’t yet afford a full-time CFO, or those that only need these services for a few hours each week or month, the virtual CFO model allows for just-in-time access and ongoing management. When it’s time for reports or if you have a question about a business decision, your virtual CFO is always available and ready to help. 

Typically, outsourced CFO solutions are used by companies with a small team and under $1 million in annual revenue. But any company that isn’t ready for a full-time CFO can benefit from this flexible service. 

How does a virtual CFO service work?

Your virtual CFO may be a single individual with significant experience in the financial and business world, or it may be an entity. If you outsource your CFO services to a CFO team, you gain access to multiple individuals with varied experiences.

The benefit of this outsourced CFO model is that someone is always available to answer questions or support your business. And if one individual doesn’t have the answer to your question, there’s a good chance another team member will.

What can a virtual CFO help with?

Your outsourced CFO can assist with all the day-to-day, monthly, and quarterly tasks a full-time CFO would complete. They can prepare your financial statements, analyze financial reports, help you plan for new product lines, decide when it’s feasible to hire, guide you through business expansions and even offer guidance related to scaling your company or increasing your profitability. 

While a CFO does not typically handle basic business accounting tasks, they can analyze your books to look for efficiency improvements and trends, or to help plan future initiatives. They may work alongside your bookkeeper and other accounting staff to ensure your financial statements are completed correctly, and then close the books at the end of each month. 

One of the most important functions of a virtual CFO is to assist with financial forecasting efforts. Using your financial statements and market trends, your CFO can work with you to understand how your business may grow in the coming months and years based on different factors like hiring a new team member, launching a new product line or expanding into a new market. 

The best benefits of outsourcing your CFO tasks

The biggest benefit to business owners and CEOs is the freedom to focus on what you do best. If managing finances and making money-based decisions isn’t your strength, you may significantly benefit from the opportunity to narrow your focus to the tasks that best align with your skill set. 

A second major benefit of virtual CFO services is direct access to a highly skilled professional or financial team that you otherwise may not have been able to afford to hire. By working with an outsourced professional, you can keep your company’s costs low while still accessing an experienced professional, effectively maximizing your resources in more ways than one!

A third benefit of hiring a virtual CFO is the peace of mind that comes from knowing your business’ true financial standing. If you’ve been struggling to handle these essential tasks on your own, you may wonder if the numbers you see on your financial statements accurately reflect your company’s true health.

You may worry about big financial decisions and feel unsure of the future of your company. But with a skilled CFO on your team, you have an experienced partner there to ensure the accuracy of your financial statements, and to help you navigate your most complex financial decisions.

Key takeaway

Whether your business is in the startup stage or reaching maturity, if you’re handling your company finances on your own, you may benefit from outsourcing your CFO services. Having a professional partner to help manage your business budget, monitor your business’ health, analyze new opportunities and plan for the future not only gives you the time and freedom to focus on the business tasks you enjoy most, it protects you from making a potentially costly decision that could have been avoided with a bit of financial planning and guidance.

Want more? Escalon has helped over 5,000 companies across multiple industries to optimize their business, with our FinOps services (bookkeeping, accounting and CFO services), PeopleOps services (HR, benefits, recruiting and payroll) and Risk services (business insurance). Talk to an expert today.