Whether you’re starting up, scaling up or selling up, a virtual CFO is a powerful tool at various stages of your SME’s life cycle. They can take your business to the next level – or guide it through a strategic phase – at a fraction of the cost of a full-time chief financial officer. So, how do you know if you need one and when?
A virtual CFO is known by many names: fractional CFO, outsourced CFO, part-time CFO, interim CFO or, in short, vCFO.
They are qualified professionals with advanced accounting, management and financial skills and experience and usually supported by an organisation or team, bringing added expertise and value to a small or medium-sized business.
Bridging the gap between basic bookkeeping and high-level strategy, vCFOs provide expert financial and risk management and advice, often at critical points in a SME’s journey.
Unlike permanent full-time hires, who come with executive salaries, vCFOs work on a remote, outsourced or part-time basis – making them a more affordable and flexible option for startups, as well as SMEs that are under stress or in transition.
A stable financial base is vital to success when setting up a business but, with limited money and resources, many overwhelmed founders ‘DIY’ their bookkeeping (along with every other aspect of their business).
While this may work initially, doing your own numbers can be time-consuming and unproductive – especially if you lack the know-how. And it takes you away from activities that might be better spent on your area of expertise, product or service.
The day-to-day demands of running a new venture also don’t leave much room to focus on the big-picture aspects of sustaining a startup: growth opportunities and strategic planning.
As well as enabling you to optimise your time and talents, an outsourced CFO is a sound investment in the long-term viability of your business. The financial foundation they lay in the crucial early days will futureproof against unforeseen circumstances or economic volatility.
Examples of how a vCFO can add value when starting up:
If you’re ready to expand, growing quickly or experiencing significant change, chances are you’ve outgrown your current systems and processes. Enter the fractional CFO, who can implement all the tools needed to sustainably scale the business and ensure that its financial infrastructure is fit for purpose.
More complexity, however, brings greater risk – making financial guidance even more important. But a vCFO isn’t just an expert in finances; they are a strategic partner capable of safely steering your company through the myriad complexities of growth, from compliance and legal issues to operations and HR.
Similarly, if your business is struggling, a vCFO will step in to improve its financial health before the situation becomes dire. Not only do they bring a fresh perspective to resolving problems, their objectivity is invaluable when it comes to making decisions such as restructuring, investing and cost-cutting.
Examples of how a vCFO can add value when scaling up:
Exiting a business through a merger, acquisition or sale is a highly complex process that requires careful planning, as well as skilful manoeuvring, well in advance of the final transaction.
A vCFO plays a pivotal part during such a transition. Not only do they manage the entire process, ensuring the company is fully prepared for exit, they also have a direct influence on the enterprise valuation and therefore sale price.
One of their key roles is to maximise the value of the business, using financial data to build a compelling narrative for buyers and preventing ‘value leakage’ by identifying and mitigating risks. Their remit includes complex negotiations, financial due diligence, risk assessment and integration strategies for a smoother transition and, ultimately, a successful outcome.
Examples of how a vCFO can add value when selling up:
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"As a small business, you might be missing the strategic advantage that comes with having a CFO. An experienced, part-time virtual CFO could be solution that helps accelerate your financial growth and business success."
Azure Group provides outsourced CFO services through CFO Australia. Our team of vCFOs have a deep understanding of financial markets, industry trends and best practices. Contact us to find out more.
This article is intended to provide general information only and is not to be regarded as legal or financial advice. The content is based on current facts, circumstances and assumptions, and its accuracy may be affected by changes in laws, regulations or market conditions. Accordingly, neither Azure Group Pty Ltd, nor any member or employee of Azure Group or associated entities, undertakes responsibility arising in any way whatsoever to any persons in respect of this alert or any error or omissions herein, arising through negligence or otherwise howsoever caused. Readers are advised to consult with qualified professionals for advice specific to their situation before taking any action.