Virtual CFO: Role, Services, Benefits & How to Become One

As the business expands, managing its financial operations becomes a full-time responsibility and demands the attention of expert professionals. However, for micro, small, and medium (MSME) sized business owners, hiring financial officers or CFOs can be a costly affair. So, many of them prefer to choose Virtual CFO (VCFO) services. 

This article discusses the unique benefits of virtual CFO services and also guides you on how to become a virtual CFO.  

What is a Virtual CFO?

A virtual CFO or Chief Financial Officer in a virtual form is a remotely outsourced professional who supports a business owner in managing his or her day-to-day financial processes and financial accounting, provides guidance on financial management, and helps make strategic financial decisions. The roles and responsibilities are similar to those of a full-time CFO, except for the costs of hiring a full-time traditional in-person CFO.  

Such remotely outsourced services are best suited for startups that require full-time expert financial supervision in their business but cannot afford the costs.

Virtual CFO Roles and Responsibilities

A virtual CFO can play multiple roles and serve different responsibilities in a company, just like a traditional full-time in-person financial officer. Their jobs are far more strategic than tallying numbers, retrieving reports from accounting applications, keeping track of cash flows, or filing tax returns.  

Some of the standard roles and responsibilities of virtual CFOs are: 

• Financial MIS management 
• Forecasting revenue and expenses 
• Cost management 
• Working capital management 
• Risk analysis and management 
• Taxation management 
• Liaise with investors 
• Liaise with lenders and banks 
• Regulatory compliance management 
• Strategic financial planning 
• Advising on adopting tech tools 

What Services does a Virtual CFO Offer?

Despite working remotely and offering services at a fraction of the costs of full-time traditional CFOs, a virtual chief financial officer can add value to a company’s business in multiple ways. 

Any competent VCFO can offer a host of services, including: 

• Budgeting financial resources, forecasting revenue, and setting accurate profit targets
• Detailed financial planning to estimate future escalations in expenses 
• Data-based financial modelling for assistance in scenario-based risk evaluation and management 
• Preparation, monitoring, and presentation of periodic financial reports to stakeholders 
• Financial performance analysis based on business-specific KPIs 
• Monitor and exercise controls on expenses with strict adherence to business goals
• Projecting working capital requirements and guiding businesses to source working capital in the most cost-effective ways 
• Guiding businesses in maintaining a balanced capital structure 
• Taxation and regulatory compliance process supervision and management 
• Evaluating and strategic guidance on investment and capital expenditure decisions 
• Managing communications with a business’s internal and external financial stakeholders 
• Providing guidance on technology adoption in business processes 

Benefits of Hiring a Virtual CFO

Healthy finance is critical to remain competitive while ensuring business growth for startups or small companies. However, an entrepreneur or a startup owner may not have the time or means to do justice to the finances of his or her business. For them, virtual CFO services can offer multiple benefits, like: 

• Free up owners’ and entrepreneurs’ time to focus on fields of their expertise in the business. 
• Strengthen the financial health of the business with dedicated resources for regular oversight of financial processes.   
• Streamline communication with banks, lenders, investors, and other financial partners for effective stakeholder management.  
• Make strategic financial decisions in consultation with the best financial experts at an affordable cost.  
• Save on fixed costs with a flexible portfolio of financial services as per the scale and needs of the business.   
• Make financial processes future-ready with the capability to integrate a wide variety of existing and upcoming technologies.  

How to Become a Virtual CFO? 

Do you have a degree in finance? Or, years of experience in the finance department of a small, medium, or large company? Or you may be dreaming of building a career in corporate finance. Any one of you can be a virtual CFO providing services to startups and individual business owners. 

Things you will require to become a virtual CFO:

• Education in finance - Chartered Accountant, Cost Accountant, Bachelor in Finance, MBA (Finance), CPA, CFA, or any similar.
• Experience - 5 to 10 years in accounts, finance, or management 
• Core skills - proficiency in practical business finance, tech, data analysis, and key understanding of business operations   

You can independently offer your services to companies or join companies offering virtual CFO services. As an independent virtual CFO, you should learn to market your business and manage sales also. 

How to Offer your Virtual CFO Services? 

To offer services as an independent virtual CFO, you can follow a few steps:

1. Choose the services you can offer.  
2. Fix the rates/prices you will charge. 
3. You may operate a business in your name or open a company (many choose to open One Person Companies)
4. You should have a GST registration for the services you offer.
5. Get licenses to accounts and finance software applications. 
6. Market your services - having a website and a business email, active professional social media presence, sales through classified.   
7. Maintain relations with prospects and clients.