Virtual CFO Services: How can accountants add more value to their clients?
Many influencers and conferences today rave about the importance of value-based billing and accountants offering Virtual CFO services.
So, why is there so much hype around these aspects now?
Well, the short answer is the cloud.
Cloud technologies have transformed accounting and accounting practices. With the help of the cloud, accountants have automated many laborious tasks such as bookkeeping, bank reconciliation, accounts payable, and accounts receivable, and are now more efficient and productive. The wide range of tools available in the cloud allows accountants to leverage their knowledge and expertise and to act as virtual CFOs for businesses.
So, if you are contemplating to add more offerings to your service portfolio or planning to become a virtual CFO then, we’ve got you covered.
This post talks at length on how you can leverage the cloud to become a trusted financial advisor for your clients.
Who is a virtual CFO?
Large companies have CFOs to manage the financial affairs of their business. CFOs are C-class executives who manage the company’s overall financial health and offer strategic financial advice for the company’s well being.
With the advent of the cloud, small businesses have started to outsource their financial operations to focus only on their core services. This phenomenon resulted in heavy competition among accountants and reduced the value of the outsourced services.
At the same time, the cloud opened up new and attractive avenues for accountants. Many menial tasks such as payroll, bank reconciliation, etc. have now been automated, leaving accountants with more time to offer valuable financial advice to their clients and become virtual CFOs to small businesses that can not afford to on-board a full-time CFO.
A virtual CFO is a person or an entity that offers financial advisory services to small businesses, who otherwise can not afford a full-time CFO.
As the name suggests, virtual CFOs are not a part of the company. They work from a remote location and offer various services such as:
Analysis and monitoring of the financial health of a company
Offering expert advice on strategic decisions, investments, and expansion plans
Managing payroll, ledger, books, monthly reports, contracts, customer invoices, etc.
Developing tax and financial strategies
Monitoring financial information to oversee risks
Leveraging industry knowledge to set benchmarks and develop best practices
Why do small businesses need Virtual CFO services?
Studies show that most small businesses struggle in their initial years for carving a niche for themselves and for establishing a competitive strategy that sets them apart in the market. However, because of budgetary constraints, it is tough for small businesses to hire full-time CFOs. Such firms can leverage the assistance of their accountants to avail CFO services at a fraction of the hiring costs. Virtual CFOs, along with the outsourced services, offer many services that full-time CFOs offer.
Services offered by Virtual CFOs
Back-office functions
Virtual CFOs offer many back office services such as account reconciliation, managing accounts and ledgers, accounts payable, payroll processing, etc. depending on the specific needs of the clients.
Cost savings
Hiring a virtual CFO helps small businesses to avail CFO assistance at a fraction of the cost compared to hiring a full-time CFO. Also, companies do not have to plan for bonuses, retirement benefits, or healthcare. The virtual CFO role is extremely flexible. Businesses can hire a virtual CFO according to their requirements, even for a shorter duration.
Advisory Services
Accountants who store financial information on the cloud can leverage that information to offer valuable advisory services to their clients. The cloud also allows accountants to analyze and build comprehensive dashboards to highlight business challenges that require immediate attention. These dashboards will be useful while approaching VCs for funding and for setting other strategic non-financial goals as well.
Cash Flow Forecasting
Virtual CFOs help small businesses to understand the inflow and outflow of their money. They also provide annualized projections to ensure that there is enough cash to cover all future business expenses. During crisis, virtual CFOs will help you to visualize short-term cash flows, identify opportunities to reduce costs, and help you to raise additional funds.
Cloud accounting solutions for Virtual CFOs
Cloud technologies and automation make accountants more efficient and productive. Accountants can leverage cloud technologies to:
Collaborate with clients at ease and offer better service
Create, assign, and tracks every task with ease
Gain a comprehensive view of the business landscape
Gather real-time insights into the client’s financial situation
Collect, Share, and manage documents seamlessly using bank-level security
Integrate payment gateways to bring transparency into the process
Workflow automation for standardizing processes, eliminating errors, and for improving productivity