by Pramod Mishra. 01 September 2020

What is the Right time to Appoint a CFO?

Every business needs to prioritize its finance no matter its size or the field. if you neglect them it can make it harder for the firm to make a decision and can cause serious problems which can let your business go down. Although, managing a business’ finances is a job in itself and can be hard for those without prior experience or knowledge to manage it.

Enter the CFO – a fundamental part of numerous large enterprises is to keep the financial side of the business running. They allocate budgets, keep on top of incomings and outgoings, and generally make sure that the business is making good financial decisions. The only snag? They’re expensive, especially for small businesses.

This is where virtual CFOs come in beneficial. They’re outsourced, often remote, part-time CFOs who work with several businesses, helping them manage their money and exposing their knowledge. They’re a useful resource for companies that can’t afford the overhead of a full-time CFO but need their strategic knowledge and advice. They’ve become popular over the last few years, especially with organizations like The FD Centre helping businesses hire a part-time Financial Director or CFO.

It’s better to get virtual CFO services before you need one, as long-term financial mismanagement can cause further problems down the line. Here are some signs that your small business could benefit from the assistance of a virtual CFO.

Company spending sometimes spikes
It can be hard to implement the right expenses policy for a small business. You don’t want to make it too rigid, but equally, you don’t want staff spending on anything and everything that they want. You need to enable and trust them to make necessary purchases to do their jobs while making sure that they spend within the guidelines.

A virtual CFO can help you manage your expenses policy. They can recommend technology that helps you control your spending by setting limits on debits cards and create an expense management guideline for you to use. Businesses need to concentrate on money coming into the business, but also money going out (i.e. spending), and a virtual CFO will help to make sure you strike the right balance to stay cashflow-healthy.

Your budget, goals, and forecasting aren’t adding up
In order to gain the trust of potential investors, startups need a thorough financial plan with a detailed budget, goals, and forecasting. This is much more granular than the bigger picture business plan that CEOs tend to manage. The expertise of a virtual CFO can help ensure money is allocated to the most business-critical areas. Sales, marketing, and product development are the departments that typically scale fastest in a startup, and are necessary for continued innovation, increased customer acquisition, and, ultimately, turning a profit. They, therefore, must be given the right budget to fuel their activities – and the necessary means to spend it.

You’re struggling to make business decisions
Making decisions for your business is partly down to intuition and experience. But without financial data, you’ll be missing out on crucial insights that could help you to close that deal or avoid that activity that doesn’t align with your overall strategy.   Start making informed, data-driven decisions with a virtual CFO. They’ll give you expert insight into your financial health and will help you make more informed decisions that support long-term goals.

Your processes haven’t changed
Having additional clients, employees and suppliers will change the way you need to manage your finances, as they will naturally become more complex. If your processes haven’t changed, they’re likely to be out of date, they probably won’t scale, and simple tasks will be much more difficult.   Simply employing a bookkeeper might not help, either. Additional processes need to be managed accordingly, and this is where a virtual CFO comes in handy. They can advise on the right technology that you can implement to make these processes easier and will suggest ways to scale your efforts and resources.   All companies, no matter their size, need to prioritize their finances. Working with a CFO will help you understand your current financial position and give you a better idea of your growth trajectory. They’ll also point out issues that needed to be taken care of before you take the next step towards growing your company. If you can’t afford a full-time CFO, a virtual CFO could be the perfect solution for your business.

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