What is a Virtual CFO and How Do I Know When I Need One?

What is a Virtual CFO and How Do I Know When I Need One?

As a business owner, you probably hold the titles of CEO, COO, CFO, Sales & Marketing, Bookkeeper, HR, and more. John Donne wrote, “No man is an island”, and that sentiment applies to businesses as well. To succeed, you need to surround yourself with a team of people who understand what you’re trying to accomplish, believe in your mission and will work to make it a success.  


One of the most important players on the team of any business is financial leadership. Whether you are a team of 4 or 4,000, the financial leadership of your business can make or break your chances for long-term success. This is especially true for businesses operating in the tech sector, where good ideas must be backed by strong financial know-how.


But what does financial leadership mean, how do you know when your business is ready for it, and how do you find the right person?



What is a CFO?


A Chief Financial Officer (CFO) is the financial leader of the company and works in collaboration with owners and stakeholders to strategize, plan, and execute financial goals.


They plan and strategize for a variety of future situations:


  • Short term: Prepare financial statements, and assess Cash Flow for payroll, AP, and loan servicing.
  • Medium-term: 3-5 year planning, which may include capital investments, funding rounds, and growth strategy.
  • Long-term: sale, succession, IPO preparation.


A CFO may have accounting credentials, but they do not act as the accountant of their organization. CFOs tend to be more future-focused, while accountants take the forensic information of the year or period ended and create the reporting the CFO requires to plan ahead. Accountants also do the compliance work, such as tax returns and GST reporting needed to keep the company in good standing with the government.


When does a company need a CFO?


Not every company needs a CFO right away. Most small business owners act as CFO, CEO, COO, Payroll, HR and more when they’re first getting started. When their companies begin to experience growth or when they are dealing with large amounts of money, either through funding, grants, or private investment, the stakes are higher, and so the strategic direction of an experienced financial leader might make the difference between failure and success.


A CFO can establish systems and processes that secure the financial activities of your business. Putting systems in place that prevent fraud, increase efficiency, and reduce errors means that your business will be able to send invoices regularly, receive payments efficiently, and always have money for payroll and other AP while simultaneously working toward meeting goals and targets beyond the month, quarter and year.


Not only does this financial leadership help streamline and secure internal financial processes, but having an experienced CFO at the helm helps your shareholders, investors, and even your customers feel stability and security in your company. Investing in financial leadership tells lenders that you’re serious about the future of the company and can make them feel better about their investment with you, knowing that a return on that investment is more likely.



Why should I choose a Virtual CFO?


Full-time CFOs with decades of experience rightfully expect a salary that makes it impossible for small or growing businesses to afford the help they need. Because small businesses are less structurally and financially complex than large multi-stream national or international organizations, they may not require that degree of full-time financial guidance.


A Virtual CFO addresses both these problems by bringing expertise and experience in your specific industry, but at the scale you need. Because of this, they become much more affordable, and you aren’t wasting your money paying a full-time salary for someone you can’t keep busy.


“A Virtual CFO brings expertise and experience at your scale and your budget.”


Both individuals and firms can offer VCFO services. The benefit of choosing a firm over an individual is that you get not just one mind but many. Firms like Crescendo Accounting & Consulting often meet as a team to discuss client needs, problems, and successes, and from these meetings, their clients benefit from the experiences and insight of the whole firm.


The firm VCFO approach can also be useful to business owners when thinking about growth. Firms often have excellent relationships with a variety of complementary industries, such as insurance, lenders, and law, and the more people you have going to bat for you, the higher your chances are at finding the right person to help your business.


In summary


If you know your tech startup needs financial guidance but you’re not at a point where hiring a full-time CFO makes sense, you may want to consider a Virtual CFO. They can work at your pace, within your budget, and bring a wealth of knowledge and experience to your business.


Crescendo Accounting and Consulting offers Virtual CFO services to growing businesses in Alberta and Western Canada.  Our team brings expertise and strategy from a variety of complementary industries.


If you would like to explore how we can help your start-up grow, get in touch with us at reception@crescendo-cpa.ca or call 403-261-7766.

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