Virtual CFO vs In-House, Which is Right for my Business?

Virtual CFO vs In-House, Which is Right for my Business?

Hiring a CFO represents a significant progression in any company’s development. As every business is unique, you do not want to approach the decision from a “one-size-fits-all” mindset. Companies at different growth stages and with different needs will find that certain types of CFOs may be more relevant to their operations than others.

Among your considerations should be whether a virtual CFO or in-house role will suit you best.

Different Types of CFO Hires

While all CFOs will help your business’ financial management systems and processes, you must consider hiring or contracting with a CFO according to your needs. Some of the different ways CFOs work with businesses include:

Full-time CFO – A full-time CFO is what comes to most people’s minds when they think of an in-house CFO. Full-time CFOs will typically be employed at organizations that reach $10million in annual revenue to handle both daily financial management and any scenarios that put operations in flux.

Fractional CFO – A fractional CFO continually works with multiple businesses part-time to fill out their workweek. Organizations that fall under $10 million in annual revenue but require regular CFO expertise may seek out fractional help to address their needs.

Interim CFO – Interim CFOs contract with businesses to manage their financial needs for temporary periods. Whereas a fractional CFO continually fulfills a part-time role, interim CFOs provide part- or full-time services for set lengths of time, commonly one to twelve months.

Virtual CFO – A virtual CFO operates as a sort of hybrid between fractional and interim positions and often interacts with your business via remote work, web conferences, and phone calls. Virtual CFOs may also be known as “outsourced CFOs.”

Note that these different CFO types overlap quite a bit, and sometimes the terms are used interchangeably or with specific scenarios in mind. For example, one could argue that any type of CFO who works on your physical premises could be regarded as “in-house,” and a full-time CFO who telecommutes could be regarded as “virtual.”

Virtual CFO Responsibilities

Regardless of what type of CFO your company chooses to hire or contract with, their general responsibilities and managerial tasks remain the same:

  • Modeling and forecasting financial performance
  • Preparing and analyzing financial statements
  • Budgeting and cash flow management
  • Reporting (e.g., taxes, relevant compliance efforts)
  • Monitoring investments

Most businesses already conduct many of these activities. They only need to hire a CFO once their growth reaches a stage where one employee cannot manage the responsibilities in conjunction with their other assignments or specialty knowledge becomes a requirement.


CFO Specialties

Some CFOs acquire specialty expertise in a given business field, making them a better fit for some companies or one-off projects. For example, financial software systems implementation and mergers and acquisitions represent two of the more common specialties a CFO might have experience with.

Some companies may consider contracting with a virtual or interim CFO who holds a specialty of some kind even if they already employ someone full-time in the role. If your current full-time CFO does not have specialty experience, seeking outside help often proves a good bet.

Virtual CFOs Becoming More Common

The demand for virtual CFO’s has risen over the last few years due to the proliferation of accounting software and startups or other online businesses. Various accounting and payroll software systems have automated a significant chunk of the number-crunching tasks that CFOs of yesteryear lost numerous hours to when completing.

Continually evolving from fingers to abaci to calculators to software platforms and outsourcing allows one CFO to do much more in much less time.

Virtual CFOs help provide necessary guidance while minimizing the costs, especially for startups that operate as lean as possible. Depending on your company’s size, you may only need a few hours of their expertise and efforts per week. With a virtual or interim CFO, you can contract their standard financial services as needed or schedule time to consult with them during any project planning or execution stages.

Prioritize IT Security when Partnering with a Virtual CFO

Many organizations already pivoted to remote workforces due to COVID-19, which required an information security overhaul. Such protections provide employees with secure access to the systems, applications, and resources necessary to fulfill their responsibilities. The same concern must be utilized when contracting with a virtual CFO.

With a virtual CFO, you’ll need to provide them with remote access to your network and financial data. As financial information typically falls under many of the data privacy and security regulations that apply to organizations across all industries, you will need to implement the appropriate protections, such as:

  • Firewalls
  • VPN
  • Multifactor Authentication (also known as Two-Factor Authentication)

Suppose insufficient IT security leads to a data breach that compromises your financial records. In that case, you may need to hire a CFO, if only to figure out how to pay the exorbitant penalties.

Contracting with CFO Hub for Virtual CFO Services

Contracting with a virtual CFO doesn’t have to be like the hiring process for other positions. You don’t need to create a listing and then screen and interview several candidates to find the right one. With most virtual CFOs operating remotely, where would you even go to find one?

Right here.

With CFO Hub, you’re already in the best place to speak with the experts you need. Running the gamut of financial management knowledge, CFO Hub provides contract CFOs, controller and financial reporting, accounting support, and consultancy services. We leverage an experienced team of qualified professionals to address all your financial outsourcing needs or to simply seek a little guidance as necessary.
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