Running a business is no small feat, and financial management often presents the most complex challenges. Perhaps you’ve experienced the frustration of not getting timely financial reports, or maybe your finance team isn’t delivering the value you expected. These issues, while common, can significantly hinder your business’s growth and stability. This is where a virtual CFO can step in and make a real difference.
That's why the first question business owners or key decision-makers need to ask before investing in a virtual CFO is what is the problem you need to fix or the outcome you want to achieve?
In this article, we give you a rundown on the most frequent problems businesses seek a virtual CFO provider, why it matters, and how virtual CFO services can help.
→ 1. The business needs to turnaround... and fast
→ 2. Not getting the most out of your finance team
→ 3. Not getting the most out of your ERP and software system
→ 4. Not getting timely or accurate financial reporting
→ 5. Lacking focus and direction
A turnaround situation is a fancy way of saying your business is in deep trouble, and you need help fast. This is not one of the most frequent problems outsourced CFO solves, but it is one of the most impactful. Our goal in this scenario is as quickly as possible to assess the situation and work very quickly to rectify the situation. The goal, transitioning to a healthy, thriving business.
A turnaround situation may be required when a business is in a critical state, facing severe financial distress. This could mean a cash flow crisis, rapidly accumulating debt, or a sudden and significant drop in revenue. Essentially, it’s make-or-break moment.
Turnaround situations are urgent and require immediate action. Without swift and effective intervention, the business risks severe consequences, including potential insolvency or closure. These moments are pivotal; how they are handled can determine whether your business survives or fails.
An outsourced CFO provider steps in to provide the expertise and strategic direction needed to stabilise your business. They will quickly assess your specific situation, identify the root causes of the distress, and implement a structured plan to address the issues. This may include renegotiating with creditors, restructuring operations, or securing emergency funding. The goal is to restore financial stability and set the business back on a path to recovery.
As a business owner, you must be consistently aware of the performance and return on investment of your finance department. Otherwise, the team may not be aligned with the overall business strategy, limiting its contribution to the company’s success. A virtual CFO can help in this goal by helping you train and strengthen your finance team to empower them to increase their return on investment and optimise work processes.
Many businesses struggle with getting the most out of their finance team, whether that's a single person taking care of bank records and accounts payable/receivable or a seven-person department managing everything. No matter the size, challenges within a finance department often result from team roles and responsibilities not being clearly defined, leading to inefficiencies and suboptimal performance.
An underperforming finance team can significantly impact your business’s financial health. Inefficiencies within the team can lead to errors, delays, and missed opportunities, all of which can hurt your bottom line. Plus, without proper alignment to the business’s goals, the finance team cannot provide the support needed to drive growth.
This problem can be solved by a virtual CFO provider helping train and strengthen your finance team to empower them to increase their return on investment and optimise work processes. They will conduct a comprehensive audit of the finance team’s performance, identifying gaps and areas for improvement. Then, they work with team members to clarify roles, streamline processes, and align their efforts with the business’s strategic objectives. By optimising the performance of the finance team, an outsourced CFO helps transform it into a key driver of growth and profitability.
Businesses often invest in ERP systems and other financial software with the expectation that these tools will streamline operations and improve decision-making. However, many find that they’re not getting the full benefits from these systems.
You might ask, “Why is this being included, when a virtual CFO neither sells the software service nor plays the role of IT provider?” This is a valid question. However, there are many scenarios where you as a business owner have already exhausted efforts trying to solve ERP and software system issues with your software providers. Typically, the issue lies in how the software is being used on a day-to-day basis, rather than in the software itself.
Inefficient use of ERP and financial software can lead to wasted resources, operational bottlenecks, and missed opportunities for improvement. When these systems aren’t fully integrated into the business’s processes, they fail to deliver the expected return on investment and can even become a liability.
At CFO Dynamics, the phrase we love to use is: "Your software will most likely have six gears... we want to get it out of second!” A virtual CFO works with your team to optimise the use of your ERP and financial software systems. This involves evaluating how the systems are currently used, identifying inefficiencies, and implementing best practices to ensure that the software supports your business processes effectively. By fully leveraging these tools, an outsourced CFO helps enhance operational efficiency and enables better, data-driven decision-making.
This concern is like getting the most out of your finance team but taking it a step further. Timely and accurate financial reporting is crucial for making informed business decisions. However, many businesses struggle with delays and inaccuracies in their financial data. This can be due to various factors, such as outdated processes, lack of accountability, or underperformance within the finance team.
Let's say it’s the end of September, and you are only getting the reports for June. Would you think this is good? No. Late financial reporting is not good in any way. Delayed financial reporting can spell doom for a business.
On the other hand, say you got your financial report for June only a week after the month ended. Fast, right? But the report does not make sense to you. It is timely, but is it accurate? These two reporting scenarios highlight the need for the right blend of both speed and accuracy. This proper balance can be achieved with a solid system in place, and where accountability is clear for your finance team to deliver fast and accurate financial reports which naturally an outsourced CFO can help to achieve.
Without timely and accurate financial reports, business leaders are essentially flying blind. Making decisions based on outdated or incorrect information can lead to poor outcomes, including financial losses and missed opportunities. Not to mention inaccurate reporting can damage credibility with important stakeholders.
A virtual CFO implements systems and processes that ensure financial reports are both timely and accurate. This involves setting clear deadlines, enhancing data collection methods, and ensuring accountability within the finance team. The result is reliable financial data that supports sound decision-making and builds trust with stakeholders.
Sometimes the biggest challenge a business faces isn’t a specific financial issue, but a lack of clear focus and strategy. Without a well-defined strategy, even the best financial data and the most efficient teams won’t drive growth. Businesses may struggle to align their activities with their goals or to benchmark their performance against industry standards.
There are times when you as business owner simply want to get clarity on the direction you are heading, and if you are getting the best performance from your business in comparison to your goals and the performance of others. Because even if you are already getting the most out of your current finance employees, focus and strategy remain crucial. What happens if your team doesn’t know how to interpret the data or what data to report on? That is a problem an outsourced CFO can solve. The outcome to this comes down to the heart of all your goals, as an outsourced CFO we want to help your business generate more cash, more profit, and more equity. Simply put, we want you to succeed.
A clear and well-defined strategy is essential for aligning your business’s activities with its long-term goals. Without strategic focus, businesses risk stagnation, inefficient resource allocation, and missed opportunities for growth. Plus, benchmarking against industry standards is crucial for maintaining competitiveness.
In this scenario, a virtual CFO provider will clarify your business’s strategy by providing the necessary benchmarking and strategic planning. They work with your key decision-makers and team leaders to set realistic, achievable goals and ensure that every decision aligns with these objectives. By engaging with virtual CFO services, businesses gain a strategic partner that helps navigate the complexities of their industry and maintain a clear focus on growth and success.
The most frequent business problems don’t have to hold you back. By engaging a virtual CFO, you can address these challenges head-on and position your business for growth and success. Whether you need to stabilise your business, optimise your finance team, improve your software usage, or refine your strategy, a virtual CFO provides the expertise and guidance to help you achieve your goals.
If you’re facing any of these challenges, consider exploring how a virtual CFO could make a difference in your business. Get in touch with CFO Dynamics today to learn more about how tailored financial leadership can help you overcome obstacles and drive success.