There comes a time in the lifespan of any business where a certain degree of professional advice is needed regarding where to go next. This is particularly true in terms of cash flow, where expertise and insight are necessary to help keep things moving forward at an appropriate pace. Often in the world of business, the CFO or "chief financial officer" fills this role. The downside of this is that, according to a study conducted by Investopedia, the average CFO receives over $436,000 a year including salaries and bonuses.
For organizations that can't necessarily afford this type of expense, however, there is still hope. The role of the virtual CFO has emerged in recent years to the benefit of small and medium-sized organizations in particular. Scaling your business with the help of a virtual CFO brings a host of unique benefits to the table that can't be ignored.
Keeping an Eye Towards the Future
In many ways, a virtual CFO can help you scale your business the same way an in-house CFO can: by always keeping focus not on where you are, but where you're going. A virtual CFO, working remotely through the benefit of cloud-based software, can help improve not only the timeliness of financial information but the quality of it as well.
Not only does financial reporting get completed better and faster, but forecasting and analysis are received sooner as well. This puts actionable, valuable financial data in the hands of organizational leaders as soon as possible, allowing them to make the smartest strategic decisions in a fraction of the time it would take without a virtual CFO at their "side."
KPIs: Key Performance Indicators
To that end, a virtual CFO can be a huge help in terms of setting up and managing KPIs because they can help make sure you're actually measuring something meaningful. One of the biggest mistakes that small businesses, in particular, can make is to assume that "data" and "actionable data" are the same thing. KPIs need to be laser-focused. They need to be clearly linked to what your long-term strategy actually is. They need to be representative of the tangible goals you're trying to accomplish, letting you know how close or how far you really are.
If one of the goals of your organization is to reduce the total number of dissatisfied customers you have by X%, for example, one KPI your virtual CFO could help you track would be the total number of customer issues or support tickets that go unresolved at the end of a certain period. By honing in on this KPI and reducing that number by Y% over the given period of time, you could continue to use analytical data provided by the KPI to see how far along you've come toward your goal moving forward.
This is just one of many, many examples of how a virtual CFO can help assist in this regard.
Cash Flow Improvements
Another way that a virtual CFO can help scale your business has to do with the ways in which they can enhance your cash flow. Virtual CFOs can help with everything from the management of cash with an emphasis on liquidity to tax planning and beyond. This, coupled with the strategy and insight they bring to the table, helps make sure you're spending money in the right ways and that your planning is in line with where you actually hope to end up.
These are just a few of the major benefits that virtual CFOs bring with them that small and medium-sized businesses, in particular, can't afford to ignore any longer. Because virtual CFOs help you stay current on your financial reporting to enhancing growth, the biggest tangible advantage these positions bring with them involves putting your business in the position it needs to be in today to accomplish the goals of tomorrow.
About Bob Mason, CPA
Santa Cruz based Bob Mason, CPA (Coast Financial Services) has been providing the people of Santa Cruz with years of expertise in the tax and accounting industry. He provides a broad range of accounting, bookkeeping and small business services to help your business succeed. Using their expertise in technology they have built an intuitive website with useful tools and calculators and a monthly blog which they post to on a frequent basis. Check back weekly for their next tax or accounting topic.
