3 Signs It’s Time to Hire a Virtual CFO

3 Signs It’s Time to Hire a Virtual CFO

Signs You Need a Virtual CFO
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If you’re reading this article, chances are you’ve got a few things on your plate right now. It’s likely that you’re feeling overwhelmed or even confused by your finances. Perhaps you’re growing faster than you anticipated and are worried that growth is not sustainable. But, you’re not entirely convinced that you need a full-time CFO. Here’s how to know if it’s time to hire a virtual CFO:

What’s covered in this blog?

How to Know if You Need to Hire a Virtual CFO

Here are some frequent things that clients are looking for when they want to hire a virtual CFO:

  • better financial insight
  • getting their books caught up
  • regular reporting
  • bookkeeping and accounting management
  • financial planning and analysis
  • KPI tracking and reporting

But many entrepreneurs know this is what they want. But a.ren’t sure when the right time is to make the jump and hire a CFO. And here’s what I tell many small to mid-size businesses: you need about 10% strategic insight and 90% execution. Before you hire in-house and find yourself paying a salary over $300K, check first to see if your needs would be met by hiring a fractional CFO. Here are 3 signs it’s time to hire a virtual CFO:

1). Time is an elusive mythical thing like a unicorn or a centaur

You’re the CEO or COO and time is money. You don’t have time to read our article about basic accounting terms, nor do you have time to dive deep on how to put your financial reports to work. This is when you should bring in an expert to look after all your finances. In fact, a good virtual CFO should be able to provide financial strategy, projections, modeling and investor reports. Plus, we are in the business of making accounting processes more efficient. So, even if you have items that you do still want to keep your hands on, we guarantee that they will operate faster than they did before.

Quick Time-Saving Tip:

Move your accounting to the cloud for anytime, anywhere access. Many cloud solutions and ERPs like NetSuite also have a phone app that lets you see real-time dashboards.

2). You keep talking to QuickBooks like it’s Siri

When you need a real person to give sound financial advice about things like pricing strategies, inventory turnover, or equity and debt health, it is time to hire a virtual CFO. We might work remotely, but we are real people looking after your books. QuickBooks can’t tell you when to scale at the appropriate time. You need monthly reports that measure and identify key growth drivers to support your business plan. Once a company has outgrown QuickBooks, it simply will not provide you with the in-depth financial information you need. A virtual CFO is your on-demand answer.

Time to hire a virtual CFO? Outgrowing QuickBooks checklist via NetSuite

Quick Financial Analysis Tip

For a better financial breakdown, use cohort analysis whenever possible so you can isolate the main drivers behind an improving key performance indicator (KPI).

3). Cash is Exactly What it Sounds Like…Cash, Right?

If only it were that straightforward. Cash is not simply the money your business makes. Depending on whether you are operating in the black or red, your free cash flow could either be an the enticing carrot or a warning sign for investors. If you’re consistently running into cash flow issues or don’t know what to do with any surplus of cash, it’s pretty clear that you should hire experts to come in and look after your business financial health. Or worse, if your business is not profitable, a virtual CFO will monitor your cash flow, help manage your assets, implement a strict accounts receivable cycle and mitigate your risks with internal controls.

Related Read: CFO vs. Controller: Which one should you hire?

Quick Cash Management Tip

Take a small portion, 10%, of your monthly revenue and set it aside. Take the majority, or other 90%, and sit down with your virtual CFO to draft a budget for how that revenue is spent on operational costs. With the 10% that you are accruing, you have a nice back-up fund for things like taxes, paying off debt or simply growing it as savings for future reinvestment.

90/10 rule for cash savings infographic: 90% operations, 10% back-up fund for taxes, debt etc.

If you opt to hire a virtual CFO they should adapt to your business needs without the full-time commitment of another executive. But a virtual CFO should not simply be an accountant. A good virtual CFO should be a strategic partner enlisted to help smooth business operations and protect your assets, so you can grow in a sustainable, profitable way.

4). You still want to save money on an in-house CFO.

Speaking of 90/10, I’m going to refer back to my earlier statement about what most businesses need which is 90% execution and 10% strategy. I’m referring to companies in the $5-$50 million in revenue range. If you go out and hire an in-house CFO but don’t have the processes in place to run the day-to-day accounting needs then you are, quite simply, wasting a C-suite salary.


How much does it cost to hire a virtual CFO?

A CFO’s salary can range from between $299,478 and $500,033, according to salary.com. A virtual CFO can save you money compared to hiring a full-time CFO. Learn more about our outsourced accounting pricing. Our standard outsourced CFO rates fit within many budgets and start at $4,000 per month.

Ready to add a strategic partner to guide your sustainable growth? Click here to book your free consultation today.

What does a virtual CFO do?

Our outsourced CFOs will look after:

Related Read: Our clients saw an average revenue growth of 25% from 2019 to 2020 (even mid-pandemic!). Learn why our clients chose to hire an outsourced CFO.

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