What is a Virtual CFO, and What Does a Virtual CFO Do?

On a basic level, a virtual CFO (aka virtual Chief Financial Officer, part-time CFO) is a financial professional that provides outsourced CFO services. The way we often describe it at Summit Virtual CFO by Anders is this: a virtual CFO performs the same roles that a full-time, traditional CFO and their team would but at the fraction of the cost.

A virtual CFO usually works with a few different clients rather than working full-time for one employer. Often, businesses will seek out a virtual CFO if they have a need for the tasks and strategic advice a CFO would complete while not yet having the budget or enough work to hire a full-time employee.

You might be wondering what the difference between a virtual CFO and a traditional bookkeeper or CPA firm is. That difference is a consultant relationship. Virtual CFOs don’t just meet with you once a year to do your taxes. Virtual CFOs offer advisory services and help you make informed business decisions. They help you plan for business goals by using forecasts and financial documents to run scenarios and make strategic plans to achieve said goals.

Fractional CFO vs. Virtual CFO

In many ways, Virtual CFOs are Fractional CFOs. Fractional CFOs are more known to service a client in person by attending meetings at their headquarters and working on-site in other ways. Virtual CFOs usually provide the same services Fractional CFOs do but do so in a virtual environment. Both roles provide financial health reporting and financial insights that you’d expect from an in-house Chief Financial Officer.

Being a distributed CPA firm that offers VCFO services allows financial professionals to be flexible, guiding each client through every phase of their business journey.  

Services Offered

A traditional CPA firm might just meet with you once a year to prepare your taxes. A virtual CFO takes things a step further. Remember, a virtual CFO is on a mission to help you achieve all your business goals and increase profitability. That means that even taxes become a strategy.

A VCFO will take on tax planning and input that tax information into a financial forecast. Why? Informing clients about their tax obligation helps them plan ahead, and a. find ways to reduce that tax burden and b. prevent surprises that will put unnecessary strain on a small business and sideline business goals.

While virtual CFOs can elevate standard services like tax planning to ensure a client's financial success, these financial professionals also provide support in ways not typically seen by CPA firms. One example is through road mapping. VCFOs use their financial expertise to help clients plan for the future by developing a roadmap to success. This undertaking involves talking to the client about their goals and then working backward to identify one or more paths to achieving them. After a VCFO has identified a path forward to success, a virtual CFO will take on managing bank relationships, weekly financial meetings, budgeting, cash flow management, financial statements, business forecasting, companywide KPIs, financial strategy, financial reports, and other tasks to ensure that clients stay on track to their goals.

Should You Hire a Virtual CFO, Bookkeeper, or a Full-time CFO?

The decision to hire a bookkeeper, virtual CFO, or a full-time CFO can feel complex to business owners. It really comes down to business needs and company scale. Here’s some guidance that might help.

Generally, we’d advise that if your business is under $2 million in annual revenue, a bookkeeper or traditional CPA firm will likely be more cost-effective. However, if your business is over $2 million in revenue and has grown to the point where you need a financial advisor, but your business can’t yet afford a full-time CFO or controller, a virtual CFO is the right fit.

The average traditional CFO salary is now $229,000 not including vacations, bonuses, and other benefits. That gives you a ballpark of whether it’s in your budget to hire a full-time CFO versus a virtual or fractional CFO.

The image below shows our typical client size and the virtual CFO services they generally require at their size.

I hope this blog post helps you better understand what a virtual CFO role is, and which type of financial professional might be right for your business. If you have questions on our virtual CFO services, don’t hesitate to reach out for a free virtual CFO consultation.