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Why the role of virtual CFO is becoming so widespread in current times

Posted by Deepshikha Shukla

February 7, 2022

A virtual CFO is a financial expert whom business owners can bring on board as a consultant, based on their enterprise’s individual requirements. The virtual CFO is typically responsible for managing multiple aspects of the business’s finances, such as addressing financial risks, creating financial reports and keeping records. 

The financial strategy services provided by virtual CFOs also help ensure entrepreneurs make the right decisions to advance their business. In short, hiring a virtual CFO provides startups with sophisticated financial services, but without the salary, benefits and bonuses associated with filling the role in-house. 

Further, as many businesses continue to grapple with the unpredictability of the COVID-19 pandemic, virtual CFOs have assumed responsibility for guiding entrepreneurs through an array of new challenges. Under evolving changes to tax laws, regulatory policies, remote workforce concerns and cultural shifts that affect the bottom line, the CFO's role has increasingly grown into that of a strategic influencer and problem-solver. 

Amid the uncertainty of the pandemic, a virtual CFO is posed to play a central role not only in stabilizing a business’s finances, but also in preparing it for a brighter future when conditions improve. 

These are 11 areas virtual CFOs are focusing on in 2022:

Managing remote employees



As new hybrid work models continue to emerge, a collaboration between the CFO and chief human resources officer is essential to implement the best workforce strategies. CFOs help determine what staff need to create an employee experience that fosters productivity while enhancing job satisfaction.

Digital transformation efforts



Virtual CFOs are well-versed in advising entrepreneurs how much to allocate toward digital transformation efforts, such as cloud and artificial intelligence applications to support hybrid work and drive growth. In 2022, they will guide enterprises through digital transformation by providing advanced analytics and financial tools. 

Improving business processes



Among the business processes that a virtual CFO can help optimize are raising capital, systems analysis and design, cash flow, pricing and growth strategies and implementing more efficient operating procedures.

Mitigating risk



The pandemic accelerated the speed at which risk events occur and the extent to which they influence regulatory changes. An experienced CFO can identify and mitigate risk exposure by establishing appropriate financial and operational controls for your business. A virtual CFO will implement cybersecurity and data privacy measures to protect your business from unexpected risks, fraud, errors and internal and external threats.

Providing financial expertise



A virtual CFO can deliver invaluable expertise, culled from years of experience, for small businesses and startups aiming for growth. A seasoned CFO brings a comprehensive knowledge of business drivers and key performance indicators. They also inform business leaders about changes in tax policy and ensure compliance with new laws.

Financial planning, analysis



A virtual CFO analyzes a business’s financial data with accuracy and speed to provide comprehensive financial reports and metrics, coupled with interpretations of that data to guide action. Their financial strategies and analyses will put your company on a financial path for which its growth and development goals will be achievable. 

Financial reporting, forecasting



Implementing strong accounting and financial reporting systems, in order to ensure entrepreneurs have full visibility into the metrics required to make good financial decisions, falls under the purview of the virtual CFO.  Rolling forecast tables and financial statements that project up to 12 months out will also be furnished to make sure resources are allocated to meet long-term goals.

Cash-flow management



By preparing and regularly assessing cash-flow statements, a virtual CFO develops programs aimed at improving cash flow. They can also attend business meetings with investors and lenders on your behalf to raise funds and obtain favorable terms. Additionally, CFOs can help build the proper asset base by evaluating your financial requirements and suggesting the optimal combination of stocks and bonds. 

Supporting business growth



Performing financial forecasts and risk assessments allows virtual CFOs to support your business’s expansion plans. They can ensure that its financial infrastructure is where it needs to be, help obtain financing and apply for registrations, if applicable.

Tackling financial challenges



Under the guidance of the virtual CFO, businesses can act to overcome impediments to growth, such as high overhead, inability to raise capital, poor cash flow, client churn, and debt management and loan repayment. Part-time CFOs can also help manage expenses by negotiating with suppliers and vendors.

Managing mergers and acquisitions



Virtual CFOs excel at helping entrepreneurs optimize business to growth strategy, including through mergers, acquisitions and IPOs. A CFO has the skills to validate the profitability thesis of a potential merger and acquisition, and to evaluate its risks.

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