How Much Does a Virtual CFO Cost?
Are you struggling with financial management but can't justify the cost of a full-time CFO? Many businesses face the challenge of needing expert financial guidance without the high-cost commitment of a full-time executive, which can easily start at $200,000 per year. That’s where a virtual CFO (or outsourced CFO, the terms are interchangeable) comes in.
By outsourcing these services, you can access top-tier financial expertise without breaking the bank. But how much does it cost to work with a virtual CFO provider? This blog post details the cost of outsourced CFO services, the different stages of the process, and what you can expect to receive for your investment.
IN THIS ARTICLE
→ Why Do Businesses Seek Virtual CFO Services?
→ The Stages of Working with a Virtual CFO Provider
→ How Much Does a Discovery Session Cost?
→ How Much Does an Initial Review Cost?
→ How Much Does it Cost for Clean-ups, Training, and Implementing Systems?
→ How Much Does Ongoing Maintenance Cost?
→ How Does Billing Work?
→ Summary: What's the Total Cost of Working with a Virtual CFO?
→ Conclusion
Why Do Businesses Seek Virtual CFO Services?
Before diving into the costs, it’s important to identify the key challenges your business is facing, and what you are looking to get out of the process.
Typically, businesses seek outsourced CFO services due to:
- Unclear financial goals and priorities
- Underperforming finance team
- Inaccurate or unreliable financial reporting
- Lack of documented financial systems and processes
- High ongoing costs without continuous improvement
- Business underperformance.
As a result, the businesses we work with engage our outsourced CFO services for:
- Improving finance team performance
- Enhancing financial reporting accuracy and speed
- Increasing cash flow and profitability
- Strategies for growth and generating equity
- Maximising the return on investment of ERP/financial systems
- General business improvement
- Turning around poor business performance.
Identifying your goals ensures you get the most value from your investment.
The Stages of Working with a Virtual CFO Provider
The first part of the process is all about establishing your goals, and this comes before you outlay a dollar.
The Discovery Session
The purpose of a discovery session is for us to understand the specific financial and business objectives you're looking to reach, and to make sure those goals are achievable and appropriate.
Typically, the business owners and leaders we work with come to us for four main reasons:
- Improving finance team performance
- Reducing the cost of the finance team
- Enhancing financial reporting accuracy and speed
- Overall business improvement
Cost: At CFO Dynamics, a discovery session is free of charge ($0).
Stage 1: The Initial Review
During an initial review, we examine all the financial and operational elements of your business and put together a plan. This is a one-time investment that typically costs $4,000 to $5,000 and looks at three key areas: process and accuracy, financial analysis, and training opportunities.
In the initial review, we assess your financial transaction processes to ensure they are efficient and accurate, aiming to provide management with timely and precise financial reports. We also enhance your financial reporting and offer additional options if needed. Last, we identify areas for improvement and incorporate these into team training, implementing systems and processes to embed these improvements into your business.
This process is crucial to identify what you need, what you don't, and set priorities accordingly. For example, if you want to improve your finance team's performance but they're already doing great, we won't suggest unnecessary investments. We don't want you spending thousands of dollars on something you don't need.
Bottom Line: An initial review typically costs $4,000 to $5,000.
Stage 2: Clean-ups, Training & Systems
The "Clean-up" Phase
The clean-up phase addresses any inaccuracies in your financial records, ensuring you have precise and reliable data. The goal is to provide a solid financial foundation that is essential for long-term success.
This area is the one that can have the biggest difference in costs, ranging from minimal to significant investments. If you're looking to improve your reporting, both in accuracy and speed, you might find that your financials are completely inaccurate and need extensive rectification for you have complete confidence in your balance sheet and profit and loss. This could come in at $20,000, or even up to $25,000 in an extreme case. However, we've also seen businesses where the finance team is already providing accurate information, making the clean-up cost redundant (that is, nothing).
Bottom Line: Clean-up costs can vary widely depending on the accuracy of your current financial records, ranging from $0 to over $20,000.
The "Train Up" Phase
During this phase, we train your team members, whether they're in finance or operations, to achieve the objectives outlined in the initial review. Training your team can cost between $2,000 and $10,000 or more, depending on your business’s complexity and the existing competencies of your staff.
The goal is to ensure your team is confident and capable, with robust systems in place to maintain consistency. But we wouldn't expect a bookkeeper with one year of experience to suddenly perform like a CFO. Instead, we focus on understanding their strengths and weaknesses and working with them accordingly.
Bottom Line: Training costs range from $2,000 to $10,000+, depending on the complexity and existing skills of your staff.
The "Systems Up" Phase
The next step is systemising your business, capturing and documenting financial and operational systems and processes. This ensures each role is done well and consistently, and your business doesn't fall apart if a key team member leaves.
The cost for this phase can range from $2,000 to over $10,000, depending on the complexity of what's needed and the competency of your team. If your team is already highly skilled, they might need less hands-on training compared to someone more junior who needs more time and support.
Bottom Line: Systemising costs range from $2,000 to $10,000+, depending on the complexity and existing systems.
Stage 3: Ongoing Maintenance & Improvements
Regular maintenance is crucial to prevent backsliding into poor financial practices and to keep your business on the path to success. The last thing you would want as a business owner is to invest thousands of dollars into improving your financial systems, only to see it all fall apart within a few months.
Most businesses settle into this maintenance phase after the initial review and clean-ups and training stage. At this level, you're looking at costs ranging from just under $2,000 to over $6,000 per month, or annually around $25,000 to $75,000, depending on several factors. Thus includes the complexity of your business, how much work the outsourced CFO does (the more your team handles, the less you pay), and any additional projects you have.
For instance, you might start by focusing on improving your finance team, but six months later, you decide to take on a significant operations project. This will increase your ongoing investment with the outsourced CFO.
Bottom Line: Ongoing maintenance costs range from $2,000 to $6,000 per month or $25,000 to $75,000 per year, depending on your business's complexity and needs.
Ensuring Transparent and Fair Billing
At CFO Dynamics, we believe in transparent and fair billing. We charge an hourly rate and provide detailed invoices, so you know exactly what you're paying for. This approach ensures you get value without any hidden costs.
Here’s how we maintain transparency and fairness:
- Hourly rate: Charging by the hour means you only pay for the time spent on your business.
- Detailed invoicing: We break down our invoices to show exactly what services were provided and how much time was spent on each task. This way, you understand what you're paying for and why.
- No long-term contracts: We avoid locking clients into long-term contracts. This keeps us accountable and ensures we continually add value to your business.
Bottom Line: At CFO Dynamics, we use an hourly rate with detailed invoicing to ensure transparent and fair billing, avoiding long-term contracts to keep adding value.
The Total Cost of a Virtual CFO
Investing in a virtual CFO provides expert financial guidance tailored to your business, improving your financial management and decision-making without the high expense of a full-time CFO, which can cost you upwards of $200,000 per year. Here’s a summary of the costs you can expect when hiring virtual CFO services.
One-time costs:
- Discovery session: $0 (free of charge)
- Initial review: $4,000 - $5,000
- Data clean-up: $0 - $20,000+ (varies based on accuracy)
- Team training: $2,000 - $10,000+ (varies based on complexity)
- Systems implementation: $2,000 - $10,000+ (varies based on complexity)
- Total: $8,000 - $45,000+
Ongoing costs:
- Maintenance: $2,000 - $6,000 per month or $25,000 - $75,000 per year
Bottom Line: In total, expect a once-off investment of $8-45K, depending on the complexity and needs of your business, and ongoing maintenance costs of $2-6K per month.
Conclusion
Hiring an outsourced CFO can be a game-changer for your business, providing expert financial guidance at a fraction of the cost of a full-time CFO. By understanding your needs, conducting an initial review, cleaning up financials, and training your team, you can achieve significant improvements. And with transparent, fair billing, you can trust you’re getting value for your investment.
