Is a Virtual Chief Financial Officer Necessary for Your SMB?

Nowadays, small businesses often encounter financial difficulties. With larger organizations possessing more resources, it can be difficult for smaller businesses to secure market success. In order to cut costs, many business owners attempt to manage their company finance themselves. Nevertheless, without the necessary knowledge or skills, overseeing a business’s finances can be a complex and daunting task. This is why a number of small business proprietors elect to outsource their financial management to professionals. By employing a Chief Financial Officer (CFO), small firms may benefit from improved efficiency in managing financial transactions and investment risks.

Having a Chief Financial Officer (CFO) on staff can be incredibly beneficial for organizations of any size. However, when it comes to smaller businesses, it can be difficult to determine whether the company can afford to hire a CFO, since the financial resources can be limited. That is why it is important to assess the value of having a CFO and consider the potential of hiring a remote CFO for the organization. A professional CFO will be able to ensure the financial health of the company, thereby providing the organization with a competitive edge in the market. Furthermore, having a remote CFO can be cost-effective, as it eliminates the need to pay for office space and related costs. All in all, appointing a CFO, whether in-house or remote, could be a wise decision for any small business.

Chief Financial Officer Responsibilities

As the Chief Financial Officer (CFO) of a company, it is the primary duty to ensure the financial well-being of the firm. The specific functions and duties of a CFO include monitoring the money that is entering and leaving the organization, assessing the financial health of the business, and planning for the future. To summarize, the CFO is responsible for the long-term financial health of the company, and must take all necessary steps to ensure this goal is achieved.

Despite their senior executive status, which puts them in the third-highest tier of a company’s organizational structure, the average annual salary of a Chief Financial Officer (CFO) is a hefty $366,950. This implies that few small firms can afford to employ a CFO on a full-time basis. Nonetheless, there is no need to be disheartened; taking advantage of the advisory services that many CFOs offer is a great way to make sure that your business is still benefiting from their expertise, without the need for a full-time commitment.

The role of the chief financial officer and why it must be filled.

If you are not a professional in the financial sector, it is not advisable to manage your company’s finances single-handedly. Without careful consideration, a financial misjudgement could potentially cause irreparable damage to your business. Yahoo is a prime example of this; since rejecting a $45 billion buyout bid from Microsoft in 2008, the company has seen a steady decline in its fortunes. Now, they are willing to accept any offer to prevent a complete financial cataclysm. In order to avoid such a situation, it is recommended that you hire a Chief Financial Officer (CFO) to assess the financial stability of your business and provide guidance on the best steps to take in order to minimize losses.

If your organization has a global footprint, a Chief Financial Officer (CFO) can be a valuable source of advice when it comes to selecting the most beneficial trade finance solution to reduce any potential risks associated with foreign exchange and procurement financing fluctuations. Moreover, a CFO can assess the viability of a new initiative or campaign for a small company, by providing an analysis of its costs and potential benefits. Additionally, a CFO can provide insight into how to optimize the company’s capital structure, explore different debtor financing options, evaluate potential investments, and effectively manage its cash flow.

Chief Financial Officer, from Afar

It has become increasingly clear that having a full-time Chief Financial Officer (CFO) on the premises is not always a practical solution. However, it is possible to reap the benefits of a qualified CFO without having to incur the costs associated with a traditional full-time hire. Technologies such as fast Internet connectivity make it possible to employ a CFO on a remote basis, enabling substantial savings on both labor and associated overhead costs. As such, hiring a remote CFO can prove to be a much more cost-effective solution than hiring a CFO in a local capacity.

Hiring a Chief Financial Officer (CFO) on a full-time basis requires an organization to cover the salary, benefits and other overhead costs associated with the role. In comparison, when engaging a remote CFO, organizations can benefit from the same level of financial advice, but with the added advantage of not having to commit to a long-term contract. This can prove to be a more cost-effective option for businesses, enabling them to benefit from the expertise of a CFO as and when needed.

See also: Recruiting a Top-Notch Virtual CTO

Find the perfect consultant for your company.

Many small business owners may be tempted to opt for the most cost-effective solution when it comes to appointing a Chief Financial Officer, however taking on inadequately qualified personnel is an extremely risky move. Investing in more specialist advice is always better than gambling with potentially sub-standard guidance. When searching for a Chief Financial Officer, it is essential to verify their qualifications and assess their expertise in accounting and finance, as well as their overall educational and professional training.

It is also essential to establish whether the CFO is working on a fee-or-commission basis. Fee-based CFO services, for example, involve paying the CFO a quarterly fee for their time and expertise. Additionally, you should determine whether or not the financial advisor you are considering requires an initial retainer payment. Furthermore, you should ascertain whether they have experience in working with businesses of your size. This is significant as CFOs who have managed multi-billion dollar companies may be charging an elevated rate for their services.

It is essential for businesses of all sizes to have access to a wide range of expertise. As such, it is strongly recommended that a Chief Financial Planner (CFP) is employed, as this designation reflects that the individual has met additional standards in terms of experience, education, testing, and ethics.

Many small business owners struggle to manage their company’s finances and often attempt to take on the responsibility themselves rather than outsource to an accountant or financial counsellor. However, if you do not have the necessary financial skills and knowledge, it is wise to enlist the help of a professional. It is important to remember that the advantages of having a Chief Financial Officer (CFO) do not have to be costly.

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