Despite requiring access to an adequate level of financial expertise, as an SME, you might not have the financial prowess to hire a professional financial resource.  However, the SME’s continuously requires financial advisory services round the year to handle various aspects of their business. Such advice is usually financial in nature, but can also cover things such as the strategic direction of business, staffing issues and much more. Additionally, SME owners usually feel isolated during running their businesses. It is not often appropriate for them to discuss their business issues with their staff or other family members.

This is where virtual CFO services step in. A virtual CFO service can provide the level of expertise you need as a part time outsourced resource. Such CFO’s will work with small and medium businesses to manage and build their business by ensuring that their financial resources are well managed and are available whenever the business owners require them. Each outsourced CFO Service will tailor their services to meet the needs of SME’s requirements and following are a list of business areas that one should always discuss with their virtual CFO’s.

1.     Business growth

With quick growth sometimes come quick mistakes and a small business owner needs to keep this in check at every point in time.  Even if the accounting transactions of a company are well managed, a lack of senior level financial oversight may prevent business growth. A virtual CFO service offers senior level advice and guidance that every SME requires, without having to hire a full-time employee. Virtual CFO services consulting provide advice from financial lens to small business owners or their management teams. This provides a balance and strength to the management of the business and is the key to building value.

2.     Changing business environment

Change is the only constant which is applicable to the world of business. The business environment is extremely dynamic and keeping pace with the same can become challenging for the business owner. Whenever a business is going through a period of change, the business owner requires the financial information to be more relevant and timely. A virtual CFO in business works closely with the SME’s to identify and measure the key factors that drives business performance. This aspect is applicable to all types of businesses, whether for profit or non-profit and each would need to deliver efficiently and effectively.

3.     Monthly financial reports and analysis

There are times when the existing book-keeper or the financial managers require additional senior level support and guidance, especially with respect to taxation and compliances. There might be a knowledge gap, too many changes in laws or too high a workload which makes dealing with such issues more challenging. A virtual CFO’s services consulting can support improvement in the confidence in financial reports and its analysis. By working with many clients across sectors, virtual CFO’s bring a breath of experience and knowledge that would otherwise could not be accessible.

4.     Setting and Monitoring KPI’s

Since the virtual CFO consulting is involved in the business goal setting and planning process, an important activity to be jointly discussed by business owners with them are the key performance indicators (KPI’s) of the business and key employees. Such KPI’s need to be monitored and jointly reviewed every few weeks so as to ensure that the business is achieving their planned goals and/or if there are any deviations from the defined KPI’s. Such deviations, if identified in time, can be corrected with the proper course of action so as to ultimately ensure the achievement of business goals.

5.     Cash flow and large customer business

Cash flow is one of the biggest reasons why most of the businesses close down and managing them effectively is one of the most important tasks of the virtual CFO and business owners. If at any point, the cash flows of the business are getting tighter and the business is expecting a new order from a very large customer, then taking financial advisory services of a virtual CFO is imperative. As a business owner, one needs to know well ahead of time when cash might be tight or the options are becoming limited. The right data enables a business owner to better manage their cash and strengthens the position with a potential lender or investor.

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6.     Staff remuneration and incentives

Usually, business owners are in the greed of achieving their business goals faster and at any cost, which sometimes leads to promising high remunerations or incentives to their employees. Such numbers need to be first vetted by the virtual CFO and needs to be understood whether it makes financial sense to hire a particular resource or offer them a particular amount of remuneration. Though it is important to be a little liberal with sales incentives, rationalizing the returns on investments and business is an important indication that virtual CFO’s can provide to business owners.

7.     Business Processes

One of the major impacts on the financial management of any company is due to the business processes. Such processes need to be timely reviewed and suitable actions need to be taken. These processes could include vendor payment cycle, debtors, pricing of products or services, etc. Jointly discussing and reviewing such processes along with the virtual CFO can help in identifying areas of improvements and allow business to function more successfully.

8.     Budgeting & Forecasting

A virtual CFO extends support in reviewing and analysing the previous financial results of a company along with the strategic plans. Based on this review. they create the budget and forecasts for the forthcoming year. It is important to discuss such plans regularly to keep the growth in check, identify deviations (if any) and take proper financial decisions to ensure that the financial goals of the company are met. A virtual CFO works with business owners to ensure their budgets drive towards the businesses future directions and goals.

9.     Business Goals

Answering questions like where does a business owner see the company 5 years or 10 years down the line is imperative. Creating business goals and then putting a business plan together that helps in realising the goal is an important activity between business owners and virtual CFO’s. A CFO in business can guide the owner to decide if it is time to scale up the business, expand to other verticals or opening up in another location. In fact, most of the SME’s are busy catering to their existing customers and often fail to conduct a planning activity, which an outsourced CFO services can assist with.

Even though every virtual CFO service provider offers a varied sets of skills and experiences, the above listed activities form the core of what an SME should expect from anyone providing such services. The price that an SME has to pay for such services largely comes down to the expertise of the person they are working with and the amount of time they spend working with the business owner each month.

Either way, subscribing to such financial advisory services represents an excellent investment for businesses looking for additional support and advice, especially those who cannot afford a full-time person in that role. Hiring an outsourced CFO services can be a game changer for most businesses, but usually works best for SME’s and startups as a cost effective way to receive expert guidance and scale business to next level.