Virtual Chief Financial Officers (CFOs) help you achieve more for less – offering expert financial help without the hefty price tag of an in-house financial team.

With decades of experience working as senior financial controllers, we’re all too familiar with the financial issues and pain points that Perth businesses face. We’ve seen first-hand when businesses become in need of our outsourced CFO services, and the consequences of when they let their financial issues drag on for too long.

But when do you know that you’ve hit that point? We’re going to help you stay ahead of the market, and on top of your finances, by sharing 6 key indicators that it’s time for you to consider a virtual CFO.

What Is a Virtual CFO?

The first step to understanding if you need a Virtual CFO (VCFO) is understanding exactly what a VCFO is and the role they can play in your business.

Virtual Chief Financial Officers (also known as outsourced CFOs or virtual CFOs) help businesses manage their finances without the cost of employing a full-time Chief Financial Officer. They go above and beyond the role of outsourced bookkeeper by providing strategic guidance to the businesses they work with including assisting with forecasting, business strategy and optimisations. They act as a key part of your business but at a fraction of the cost of a full-time financial team.

Key Indicators That You Need an Outsourced CFO

1. Your Cash Flow is Lagging Behind

Profits are great, and business is booming, but you are met with an interesting problem – your cash is falling short.

When business and profits are soaring high, the optimisation of cash flow can too often fall into the background. With enough clients and new contracts coming in, it’s easy to reason that the business will soon be flooded with cash, but this isn’t always the case. Without optimising your cash flow processes, you can move through dozens to hundreds of contracts, without collecting the cash to back it up. This process results in a huge liability for your business.

How this happens

When businesses have a disconnect between their cash flow and profitability, there are usually a few key issues:

  • An overall lack of visibility within their processes.
  • A misunderstanding as to which factors are driving their cash flow and which are driving their profitability.
  • A lack of understanding regarding the relationship between their profitability and cash flow.

How a Virtual CFO can help

A Virtual CFO can help by providing your business with the clarity it needs. This includes:

  • Helping you understand what is happening with your business’s current cash flow and providing necessary visibility over your financial processes.
  • Revealing the root cause(s) that are causing a cash flow problem.
  • Providing forecasts, including those of up to 12-13 weeks, to understand how your cash flow and profits might move over time.
  • Improving invoicing and financial processes to improve cash flow.

2. You’re Not Seeing Enough Profitability

If you think your business is running well but you’re not seeing any profits, it might be time to get an expert in.

From helping businesses all across Western Australia we’ve seen how processes can be optimised to turn revenue-strong businesses into profit-strong businesses. With the right expertise, a VCFO can help your business get back on the right track.

How this happens

Businesses that have strong revenues can often be met with confusion when it’s not reflected in their profits. Errors around pricing, forecasting and the quoting process can quickly develop into large profitability issues.

How a Virtual CFO can help

Virtual CFO services can help by reviewing your business processes to maximise their potential profitability. Some of the services offered in this area include:

  • Identifying and solving pricing issues.
  • Improving the processes for quoting new work.
  • Ensuring that your revenue growth is reflected in your profitability.
  • Providing insights around reporting, and customer or product profitability.
  • Reviewing monthly or quarterly to assess how clients, costs and revenue impact on profitability.
  • Providing financial models that help business owners understand the impact of their decisions and pricing process, providing a big-picture analysis.

3. You Need to Secure Funding

If you need to fund your business growth or secure more assets through the injection of capital, a virtual CFO can help. When turning to investors, businesses are often required to present a three-way forecast that links their profit and loss, balance sheet, and cash flow projections. Doing this provides a clear financial case to your investors, and a professionally developed one will improve your likelihood of receiving funding.

How a Virtual CFO can help

Virtual CFOs can provide your business with a professionally presented three-way forecast to help investors understand and believe in your business. They can work with you on an ongoing basis to continue refining this forecast as your business expands and grows, ensuring that you’re always bringing your investment A-game.

4. You Feel Like Your Losing Control

As much as it might not feel like it now – this can be a great sign that your business is on the path to success if you get the right help. Our team of VCFOs are all too familiar with the struggle of the booming business founder who finds their finances getting ahead of them. With a strong pipeline of sales and work, handling the finances can easily fall behind, but this can be a detrimental mistake for business owners.

Some signs you’ve reached this peak in your growth phase include:

  • Financial deadlines, tasks or discussions dropping out of your agenda.
  • A feeling of uncertainty about your finances and financial operations.
  • Trouble identifying which parts of your business are and are not working well.
  • Your business has surpassed $500,000+ in annual revenue.

How a Virtual CFO can help

When you lose sight of your finances, it’s always best to get an expert in earlier rather than later. Reaching out to a VCFO now can:

  • Allow you to put the focus back onto growing your business.
  • Remove unpredictability from your business operations.
  • Ensure that you are prepared for and aware of upcoming expenses (such as a large upcoming tax bill).

5. You’re Not Always Sure What’s Coming

Living in the moment can make for some good life advice but it isn’t what you want from your financials. If you’re not sure what the future of your finances looks like, including incoming costs, predicted revenues and predicted profits, you can’t accurately set yourself up for success.

How a Virtual CFO can help

A virtual CFO can help you stay ahead by providing financial forecasting that helps you prepare for the future. Part of this forecasting includes assessing upcoming expenses and potential liabilities, detecting any issues with your current cash flow or revenue, and ensuring the financial health of your institution.

6. You Lack In-House Financial Expertise

Managing the finances of a business, especially one that is demonstrating strong or fast growth, is a difficult task requiring specialised attention. If your business is lacking in-house financial expertise you may be losing out on opportunities without realising it. In these situations, having a virtual CFO oversee your finances can return significant returns on investment.

How a Virtual CFO can help

Virtual CFOs are unique in that they are highly strategy-oriented with the ability to understand your business on a granular level while providing big-picture insights. With a VCFO you introduce a whole new level of expertise that can:

  • Assist with budgeting, forecasting and reporting.
  • Provide customised solutions that help your business grow.
  • Implement systems or processes that improve your business potential.
  • Address any detected or undetected financial problems.

Wondering How a VCFO Could Transform Your Business?

As every business is unique, the advantages an outsourced CFO could provide change on a case-by-case basis. While some businesses may see the biggest benefits in the added financial clarity a virtual CFO can provide, others will find that the forecasting and strategy assistance is what’s most valuable.

In our VCFO team, we have over 300 years of combined experience. As a result, we can quickly detect which of our services will help businesses the most, providing a custom and tailored solution to every problem we approach. If you’re wondering how virtual CFO services can help you, talk to our team, and we’ll provide an expert-led solution.