Working Successfully with a Virtual CFO

Outsourcing your financial management to a Virtual Chief Financial Officer may make sense.

You may be tempted to be part of the virtual revolution: virtual office space, virtual secretary, virtual business? My partner, Jan Triplett, steps in as a Virtual Marketing Officer for our clients. She helps set up alliances, creates sales channels, runs trade shows, and recommends and implements sales strategy to find right prospects and keep the best platinum profile customers™.

Maybe you’re thinking about it because you…

1. Hate doing books, dealing with collections, payroll, taxes, etc.
2. Don’t understand financial management or are not good at numbers
3. Are too busy to do the recordkeeping, stay up to date and stay in compliance

Successful business owners delegate, they don’t abdicate. You know a lot. It’s important to use that knowledge when it comes to:

1. Your business.
   • Your vision for what you do and how you do it is absolutely critical for making sure your chart of accounts reflects your business and is not some off-the-shelf, cookie-cutter, one-size fits all.
   • You also have to think like an investor. Know how you are going to get your investment out of this company. Ultimately, only two things can happen to any business: it’s sold or dies.
   • If you know your business and your exit strategy, you can meet your obligation of guiding the Virtual CFO. They should set up your books and provide reports that make sense to you and tell you what you want to track. They can make suggestions and should. You still have to make the decisions.
2. Your pricing.
   • You may not know how to create the financials but you do need to be able to completely identify your true total costs. Many times owners leave out their time, travel, or other costs that really impact company profitability.
   • They also are afraid to build in a reasonable amount for profit AND contingency. They may think about profit but it’s often not high enough. They usually ignore “Acts of God” or dumb mistakes — making sure they have enough of a contingency amount to cover the fact that “things happen”.
   • If you can identify your true total costs and build in a reasonable amount for profit and contingency, you can rely on your pricing. Again, the Virtual CFO should advise you on general rules and their experience. You have to evaluate how it applies to your business, agree with the principles, and feel comfortable about the numbers that are used to calculate the financial health of your business.
3. Your customer.
   • When do you really get paid? Immediately? 30 days? 90 days? 120 days? How many contacts does it take to get paid? What are your policies and how do they fit with your customer? These are just a few of the questions a good Virtual CFO should ask you and you need to know.
   • Again, they can and should help and advise you. They can help you determine the system you need to put in place, how to better manage your cash flow, when you need to restructure, seek funds and where, how to cut costs, etc.
   • No one knows your customer better than you do or you should. Again, a Virtual CFO can and should help and advise you. They can help you determine the bookkeeping and recordkeeping system you need to put in place, how to better manage your cash flow, how to improve collections, when you need to restructure, seek funds and where, how to cut costs, etc. Your job is to choose what’s right for your customer and company.

The decision to outsource financial management is scary to do — to open your books to someone outside the business; to have less control than if they were an actual employee. It can keep you up at night wondering if you can rely on a Virtual Chief Financial Officer to get things done. Done right, it can open up all kinds of opportunities. Just remember, if you’re the owner, you can’t leave all the decisions to someone else. You have to stay engaged. The same is true if you have a bookkeeper or an in-house CFO. You’re the boss. You have to have the big picture and direct others.