6 Min. Read

What is a Virtual CFO & How to Become One?

June 27, 2024

What is Virtual CFO & How to Become One?

Until recently, only large organizations could afford to hire a chief financial officer (CFO). Now, smaller businesses can invest in virtual CFOs for a fraction of the cost of a traditional CFO.

CFOs help business owners make sound business decisions through services such as cash flow management, forecasting, and strategic planning.

This post will help you understand what a virtual CFO is, why this concept has become so popular, and how to become one.

Here’s What We’ll Cover:

What is a Virtual CFO?

Responsibilities of a Virtual CFO

Why Are Virtual CFO Roles Becoming More Common?

What do Virtual CFOs Offer?

How to Become a Virtual CFO

Offering Virtual CFO Services

More Resources on Small Business Accounting

What is a Virtual CFO?

A virtual chief financial officer, or CFO, helps a business owner make sound business decisions based on their expertise in financial planning, financial reports, and financial strategy.

When a business starts off, the business owner or CEO generally wears all the hats. During a business’ growing phase, a business owner commonly takes it upon themselves to interpret financial reports to the best of their knowledge.

However, CEOs are also busy running their primary business, so minimal time is invested in learning about key financial metrics and gaining deep insights from financial data.

Responsibilities of a Virtual CFO

The CEO of a growing business can sometimes get away with their limited knowledge until they start running more sophisticated operations as a result of growth. Usually, this is when things start to get overwhelming for a business owner. At this stage, they realize they need more than basic bookkeeping services and they start entertaining the services of a CFO, or virtual CFO.

Unlike a CEO, the CFO is primarily focused on the financial aspects of a business. And unlike the CEO of smaller businesses, the CFO doesn’t wear the marketing hat, the salesperson hat, or the HR hat. Their expertise is focused solely on financial matters, freeing them to be the main financial strategist for the business and a strategic business partner.

Why Are Virtual CFO Roles Becoming More Common?

Traditionally, the CFO position was an in-house, full-time employee position. Until recently, only big corporations and businesses have had the luxury of being able to afford a decent CFO. In fact, the average salary for a CFO in the USA is around $393,400 as of May 27, 2021.

A virtual CFO is a proven solution to close the gap for small to midsize businesses that are growing to the point that they need a financial executive but who don’t yet have the revenue to invest in a full-time CFO. A CFO used to be all or nothing, but now, businesses can hire virtual CFOs on a flexible and part-time basis.

Businesses hire virtual CFOs to go remote

It’s not uncommon for virtual CFOs to have video conferences on platforms such as Zoom once a week or even on a monthly basis, depending on the business’ budget. This makes a virtual CFO a lot more affordable than a full-time CFO.

Another reason virtual CFO roles are becoming more common is because many businesses are looking for ways to lean out, especially as a result of the pandemic.

Many companies now prefer remote contractors vs. employees because of all the benefits that come attached to contractors.

For example, you don’t have to pay virtual CFOs benefits such as paid holiday and paid medical leave, like you would with a traditional employee CFO.

What do Virtual CFOs Offer?

A virtual CFO can help with a mixture of the following:

Budgeting and forecasting
Comprehensive and detailed financial reporting and analysis
Deep insights on business finances
Analyzing large amounts of financial and operational data for trends
Analyze financial trends and budgets to identify issues and opportunities for the business
Review financials, develop insights, make recommendations, and formulate strategies to support business growth and make business processes more efficient
Cash flow management
Identify opportunities for a business to expand and grow
Strategic planning and execution
Advice on the latest software and tools
Preparation and presentation of monthly and quarterly financial reports as well as review end-of-year financials
Identify and evaluate the possible impact of new products, new service offerings, or new business initiatives
Developing reliable cash flow projection processes and forecasting models.
Review debt-reduction strategies

How to Become a Virtual CFO

Most virtual bookkeepers have some type of background in bookkeeping, accounting or a related financial job. Bookkeepers, accounting professionals, and other financial professionals can increase their profit margins while adding more value to their clients by including virtual CFO services.

Employ the right tools

Because of the remote nature of a virtual CFO, a key step in becoming a virtual CFO is to become well-versed in cloud accounting software such as FreshBooks. A cloud-based accounting system allows you to access your client’s data from anywhere in the world.

Software like FreshBooks can also automate many basic bookkeeping tasks once associated with full-time bookkeepers and accountants. So, to get a competitive edge, savvy virtual CFOs leverage software like FreshBooks to add more value to their clients.

Nowadays, clients have access to many new ai-powered tools for analytics, cash flow forecasting, and in-depth reporting, but it’s only helpful if business owners can interpret all of the data and turn it into action.

Here’s where you can come in and help business owners determine what to do with all of the rich data provided by a cloud-based accounting system like FreshBooks.

Develop your offer

The next step to becoming a virtual CFO would be to develop an offering. Not all CFO services offer help with taxes, payroll, or accounts payable, for example. Narrow down on the services you’d like to focus on. Lastly, there are many online courses on how to add virtual CFO services to your existing offerings.

Offering Virtual CFO Services

Virtual CFO services offer a more affordable way for smaller businesses to leverage a CFO’s financial expertise without having to pay hundreds of thousands per year for a traditional CFO.

Offering virtual CFO services is a win-win for both you and your potential clients.

FreshBooks has a free partner program to help you learn the software fast. Joining the free program gives you access to handy tools and resources. Joining the program can even give you access to an active directory where you can be matched with FreshBooks users who may be looking for a virtual CFO in the near future. Visit the program page to learn more.