When do you need a Virtual CFO (VCFO)?

take notes with laptop and cellphone

One of my friends asked me recently "Carol, what's a virtual CFO? We have already hired an accountant and an accounting clerk. But I am not sure whether we need a CFO or not as we just started our business. " A good question! Let me explain in a simple way as follows:

What is a Virtual CFO (VCFO)?

A virtual CFO, also called CFO on-call or outsourced CFO is an experienced financial expert that can function as a Chief Financial Officer (CFO) to help you grow your business but on a part-time basis.

Why do you need a Virtual CFO?

• Save your staff cost

You hire a VCFO to do a CFO's job but you only pay a fraction of a full-time CFO’s cost. It's very cost effective. It's a management consulting service so you don't need to worry about any HR issues.

• Instant access to financial expertise which you and your team don't have

Location is not a barrier nowadays as long as you are using a cloud-based accounting system. A VCFO can remotely access your financial information to support you on a timely basis.

• Flexible arrangement

You pay when you need the service at an hourly or a daily rate or fixed monthly or yearly fees as per the scope of services which are tailored to your needs.

When do you need a Virtual CFO?

• Set up a new business/project - suitable for most start-ups at the business planning stage

• Enter a new market

For example, a VCFO like me with deep knowledge about China can assist foreign companies to underpin strategic planning for getting into China market. A bilingual VCFO like me is able to assist NZ businesses to deal with Chinese investors or guide Chinese investors to acquire businesses or set up businesses in NZ in an efficient way.

• Engage or supervise special projects such as merger and acquisition (M&A) transactions, or independent review financial or internal control process etc

• Monitor and supervise your finance team

You need a VCFO to regularly supervise existing finance team and manage corporate financial performance and strategic planning.

Common Mistakes

• Finance manager or accountant ≠ CFO

I tell my friend that you cannot expect an accountant or a finance manager with 3 to 5 years accounting experience to perform a CFO's role as he or she doesn't have the relevant experience and skill-sets.

I notice that some Chinese companies tend to hire junior staff with limited experience to save staff costs but expect them to deal with complex issues such as M&A transactions or setting up new business. The consequence is that the business owners suffer and end up paying expensive tuition！

• No financial expert involvement at the business planning stage

Small business owners tend to do everything themselves at the business planning stage without consulting a financial expert. However, you don't know what you don't know. Sometimes you just need a fresh pair of eyes to look at things from an independent perspective. Are there any risks or opportunities that you are not aware of?

You can avoid paying expensive lessons if you get a VCFO at the planning stage.

Do you want to improve efficiency and reduce costs? Please feel free to contact me if you want to know more about our VCFO services.

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