Understanding Virtual CFO Services and Their Benefits

What is a Virtual CFO?

A virtual chief CFO differs in a few key ways from an in-house, full-time CFO. As the name implies, virtual CFOs provide their services remotely. They also often serve as a startup’s external partner and work with multiple clients.

However, despite these key differences, virtual CFOs can provide the same level of service as conventional CFOs — yet at a fraction of the cost. It’s a big reason many startups look to virtual CFOs for their financial management, reporting, strategic planning and guidance, especially in their early stages. However, virtual CFO services aren’t just intended to be short-term solutions. Such services can adapt and evolve as your startup grows, representing a long-term partnership.

The Role of a Virtual CFO

A virtual CFO does the same things that a conventional CFO does — just on a part-time basis and remotely. Some of the core responsibilities include financial leadership, providing strategic advice and scaling financial services as your startup grows.

Virtual CFOs can handle financial reporting, budgeting and forecasting. Financial planning is another key competency of a virtual CFO, as their leadership is key to helping startups make better and more informed decisions about their future. Lastly, Virtual CFO services are scalable and able to provide the level of service a startup requires at a specific moment in time.

How Virtual CFO Services Can Benefit Your Business

Trying to determine whether a virtual CFO is right for the financial leadership of your startup? Here’s a look at some of the key benefits of this type of partnership:

• It’s cost-effective: One of the biggest benefits of working with a virtual CFO is the cost savings versus hiring a full-time, in-house CFO. This can help your startup avoid the expense of bringing on a full-time professional in a period when it’s likely strapped for resources, saving on overhead.
• Services are scalable: If you have an in-house financial team and require more employees to handle such matters, the typical solution is to hire more people, which adds to overhead. Virtual CFO services, conversely, are scalable and able to grow with your startup while remaining a cost-effective option.
• Leadership and Expertise: the right virtual CFO can offer strategic financial planning, risk and cashflow management, financial reporting, budgeting, and forecasting, and capital raising to guide startups through various growth stages.  
• Access to financial expertise as you need it: Finally, one of the biggest benefits of working with a virtual CFO is that this partnership ensures you have access to high-level financial expertise when you need it. Your startup won’t sacrifice quality of service for cost savings when you work with the right partner.

When to Hire a Virtual CFO

There’s never really a bad time to consider hiring a virtual CFO, but there are some instances and periods in your evolution where it may make more sense. Some of these situations include:

• If your startup is in a growth period: If your startup is in a growth period, there’s a good chance you no longer have the time to manage finances on your own. To continue your startup’s growth, it’s often best if you’re able to focus on doing what you do best and leaving finances to someone who’s an expert in accounting.
• If your finances are getting more complicated: Another situation where it makes sense to hire a virtual CFO is if your finances are becoming too complicated and you’re no longer comfortable or confident in your ability to adequately handle them. A mistake could potentially set your startup back.
• If you require flexible accounting services: Finally, one of the biggest benefits of a virtual CFO is that they’re able to scale with your startup as it grows and evolves. For instance, you may only need a few hours of accounting services per week at one period and then tens of hours of services as your startup grows. Virtual CFOs can provide this type of flexibility.

What are Virtual CFO Services?

Virtual CFOs essentially do the same thing as a conventional CFO, except they serve as an external partner and operate on more of a part-time basis. Key competencies include financial strategy, including cash flow management, financial reporting and business forecasting. Advisory services and operational support are also often included in their work scope. Advisory services include strategic advice on scaling, financial planning and mitigation risks, while operational support may include supporting clients with KPIs, business analysis and tax planning.

Virtual CFO vs. Traditional CFO

A traditional CFO is a full-time, in-house professional that manages a startup’s finances, while a virtual CFO is an external partner that provides similar services, albeit on more of a part-time basis. Virtual CFOs are also often referred to as “fractional CFOs.” Some of the key differences between traditional and fractional CFOs include:

• Cost: Virtual CFOs tend to be much more affordable than a conventional CFO. That’s because rather than pay a full-time professional, you’re working with an external partner on more of an as-needed basis.
• Flexibility: Virtual CFOs perform remote services, while conventional CFOs tend to work in-person. Virtual CFOs tend to be much more flexible than conventional CFOs, who work on a more fixed schedule.
• Scalability: Conventional CFOs tend to work more fixed schedules, while virtual CFOs can work with startups of any size and in any stage of their evolution.

How Much Does a Virtual CFO Cost?

How much can you expect to pay for virtual CFO services? While it’s well established that virtual CFOs represent a cost savings versus hiring a full-time, in-house CFO, cost tends to vary based on the specific provider. Some firms may charge based on the startup’s size and the level and intensity of the service that’s required. Others may charge on a tiered plan scale based on how much service your startup needs in a given week or month.

For example, Graphite Financial’s virtual CFO packages start at $1,250 per month and allow startups to upgrade as they grow.

Graphite’s Virtual CFO Services

As experts in startup accounting and financial services, Graphite has been providing virtual CFO services to thousands of startups in various industries. We offer more than industry expertise, Graphite specializes in growth-stage startups and their unique needs. We can tailor our financial services specifically to the various stages of a venture-backed startup and we strive to be a long-term partner thanks to our ability to provide scalable solutions.

Enhance Your Business with a Virtual CFO

As a leader in startup accounting, we’re poised to help your startup with our virtual CFO services in the same way we’ve helped thousands of others. Our cost-effective, high-level financial services are designed to help your startup grow and thrive. Contact us today to learn more and to schedule a consultation.

FAQs

What does a Virtual CFO do?

A virtual CFO does the same things that a conventional CFO does — just on a part-time basis and serving as an external partner. Some of the key core responsibilities include financial leadership, providing strategic advice and scaling financial services as your startup grows and evolves.

How does a Virtual CFO differ from a traditional CFO?

A virtual CFO serves as an external partner to your startup that operates on a part-time or as-needed basis.

What are the benefits of hiring a Virtual CFO for my business?

Arguably the biggest benefit of pursuing virtual CFO help is the money you can save. Other key benefits include flexibility and the ability to scale services as your startup grows and evolves.

When should I hire a Virtual CFO?

There’s never really a bad time for a startup to hire a virtual CFO, but some situations may make more sense than others. Some situations include growing startups with increasing financial risks in need of risk management, more specialized financial support, strategic financial planning and more flexible financial services.

How much do Virtual CFO services cost?

Cost tends to vary based on the specific provider. Some firms may charge based on the startup’s size and the level and intensity of the service that’s required. Others may charge on a tiered plan scale based on how much service your startup needs in a given week or month.

What services does a Virtual CFO provide?

A virtual CFO provides the same services as a conventional CFO. This includes financial strategy, analysis of financial statements, operational support and advisory services.

Can a Virtual CFO help with tax planning and financial forecasting?

Yes, a virtual CFO is able to support all tasks related to your startup’s finances, including tax planning and financial forecasting.

How can I find the right Virtual CFO for my business?

Search for the right virtual CFO the same way you would any other partner. Look for virtual CFOs that have expertise in your industry, have a solid level of experience and who are a good cultural fit for your startup.