Most business owners often rely on accountants to assist them with financial management. However, there’s another professional your business needs, especially if you wish to bring in top-tier expertise in financial leadership. A Chief Financial Officer (CFO) can help you develop a long-term strategy that would result in sustainable financial success for your business. This role differs from that of an accountant, whose primary functions include processing payrolls, filing taxes, paying suppliers, and handling other daily business transactions. 

As a business owner, are you wondering whether you need to hire a CFO? You might think you do but can’t afford to have an in-house CFO working for you full-time. The cost-effective solution to this dilemma is to hire a virtual CFO. Also, you don’t need to be a large-scale business to seek such professional services. There are CFO services for small businesses as well. Read on to find out the tell-tale signs that your business needs a virtual CFO. 

1. Increased Expenditure

Finances are what drive any business, without which you can barely function. It goes without saying that it’s critical for companies to manage their expenses. However, managing expenses isn’t as easy as it sounds.

You might think you’re cutting unnecessary costs, but you may be doing it only for the short term without thinking of the long term. Or it may seem that your spending is spiralling out of control, but you’re not sure where and how to make reductions. This is one area where virtual CFO services can help.

The CFO’s financial expertise enables them to monitor and understand your expenditures. They’ll point out the activities that are eating into your profits and those you’re spending on more than you should. With these insights, they can readily devise ways to help you minimize your expenditures and optimize your profits.

2. Lack Of Financial Expertise

In business, it’s always advisable to do what you do best and leave the rest to the experts. It’s the only way to ensure overall efficiency in performing business functions. So, if you aren’t a guru in finances and accounting, it’s time you considered hiring a virtual CFO.

A CFO possesses the requisite financial expertise to steer your business in the right direction. Also, they have gained considerable experience working with other business enterprises. Therefore, they’re intimately familiar with the financial tactics that work and those that don’t. They won’t waste time and resources implementing strategies based on trial and terror as a novice would.

In essence, a virtual CFO will ensure to launch strategies that work for your business.

3. Low Profitability

As a business, there are times when you might be low on finances. Depending on the extent of the deficit, you might be forced to lay off some employees, at least until you get back on your feet. However, you should analyze the reasons behind the decline in your operating profit so these can be addressed. This is where you need the expert services of a virtual CFO.

A financial expert can help you improve business profitability by critically examining three crucial components: expenditure, productivity, and pricing strategies. For instance, they’ll be able to identify possible bottlenecks in production and adjust pricing. With clear insights into profitability, better business decisions can be made.

4. Increased Scalability

Your business may experience rapid growth a few years down the line. Naturally, you want to be ready to handle this growth. Otherwise, there’s a possibility that your business will decline faster than it took to grow.

When your operations scale up, paying careful attention to your finances is crucial. You need accurate financial projections for your short and long-term needs. You might need an infusion of capital to procure automated systems.

Similarly, if your business is planning a merger and acquisition (M&A), certain adjustments need to be made in the allocation of resources. These complexities may be too much to handle for a business owner lacking financial expertise. And this is where the services of an experienced and capable CFO will prove immensely beneficial.

A CFO will plan your operations accordingly, including allocating budgets. With this kind of planning, you’re less likely to stall midway due to a lack of finances. Also, a virtual CFO will help ensure the proper implementation of the plan for business growth.

Conclusion

The discussion above sheds light on the signs that your business needs virtual CFO services. It also highlights how a CFO can help your business. If your company has any of these signs, act accordingly. A virtual financial executive may be just what your business needs to achieve sustainable economic success.

Samantha is an HR practitioner who has worked with several companies to help them improve their HR practices. Samantha has gained decades of experience in handling all HR facets that include managerial relations, labour relations, training and development, recruitment, and compensation and benefits.

When Samantha is not busy at work, she writes articles about the importance of effective HR practices and why startups should always prioritize this area of the business.