There are few things worse than a cash flow problem. So it’s no surprise that’s what usually drives high-growth companies to look for a virtual CFO.
When you’re already challenged with more than you can get done in a day, spending your nights worried about profitability makes it worse. You’re maxed out. Your team’s maxed out. And while everyone knows the bottom line is critical to your growth and success, nobody in-house has the right skill level or experience to lead the path forward.
If you feel like you’re the only one facing this, we can assure you that you’re not. After more than 10 years of working with high-growth companies, we’ve seen how much stress cash flow can cause. This is especially true for technology and software companies because staying lean is one of the key components to profitability. Eventually, though, you need more sophisticated financial expertise to ensure you can grow profitably. At this stage, a virtual CFO might be the answer.
What’s a virtual CFO?
A virtual CFO (sometimes called a fractional CFO) is the finance arm of your business. The only difference is that they work part-time or tackle your priorities on a project basis rather than joining your team full-time.
They can handle all your strategic finance needs, like accounting, budgeting, and forecasting. If you need day-to-day operations support to monitor cash flow and manage payroll, virtual CFOs can do that as well. It’s like having an experienced CFO and a finance department without building one yourself.
What are the benefits of working with a virtual CFO?
Here are the themes we repeatedly hear from prospects, clients, and industry colleagues about how working with a virtual CFO improved their business and helped them grow.
Benefit #1: Cost
When you’re a lean team, the cost of adding even one more person can be entirely out of reach. For example, in the tech space, you’re looking at a minimum $160,000 investment to get a full-time person who understands high-growth finance. But what if you could add just part of someone’s time? Suddenly, getting the experienced talent you need is back on the table.
Benefit #2: Ability to scale
Scale is related to cost, but there’s some nuance here. If you’re in growth mode, starting with a virtual or fractional CFO is easier. This allows you to add more or different services as needed or as your strategy evolves. Keeping a finance resource busy full-time is hard until you hit the $10 million mark. Adding an FTE too soon means you’re paying a full-time salary when it may not be necessary for your business stage.
Benefit #3: Outside perspective
When you’re passionate about your business, you’re close to it. Really close. That means you may not have the best vantage point to identify certain issues. An outsider can be direct and honest about the numbers in a way that insiders sometimes can’t. (Who wants to ruin the vibe among their colleagues or give bad news to the boss?)
A virtual CFO is removed from the inner workings just enough to bring an outside and objective perspective to your challenges and opportunities. We’re not in the weeds, and that’s a good thing.
Benefit #4: Emotion
This business is your baby. We get that. Ledge Financial is our baby, too. But when you’re a founder/owner/CEO, sometimes you need a financial partner who’s less connected to the pure passion you have – someone who can take the emotion out of it and tell you what you need to know.
On top of that, money itself can be an emotional topic. Each of us has our own money stories – fears, insecurities, and concerns. It can be heavy stuff to navigate on your own. You want a virtual CFO who can be part coach, counselor, and confidante so you feel emotionally safe putting it all out there.
Benefit #5: Industry knowledge
When you work with a virtual CFO specializing in your market niche, you’ll have a partner who knows where to start, what to look for, and how to put the pieces together. Fast. That’s because a niche-specific virtual CFO has already seen what strategies get ROI for similar companies and can get you to actionable insights and perspectives more quickly.
Benefit #6: Clear next steps
You carry an enormous internal burden when you have cash flow problems or other financial issues. It’s draining. And it’s distracting. But it can improve more quickly than you think.
An experienced virtual CFO can assess your entire financial position and give you a clear plan forward with detailed next steps. With this clarity, you can focus on what you love: people, processes, technology, and strategy.
Benefit #7: Range of expertise
Top-tier fractional CFOs have a team of subject matter experts who bring different backgrounds, skills, and experiences to their client relationships. At Ledge Financial, we work as a team and bring in the necessary resources to fulfill our client’s needs. This is another way you get the value a CFO and finance team would deliver, but you don’t have to invest in building an entire team.
Need financial advice?
Need someone to counsel you on the financial side of the business and offer you honest, forward-looking financial advice that helps you grow?
We’re known for being real people who just happen to be super smart numbers geeks. We can look at the whole picture of your business, from monthly books to tax implications, so you have a financial plan that actually works. Let’s connect.
