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What is the difference between a Virtual CFO and an Accountant?

What is the difference between a Virtual CFO and an Accountant?

Many businesses employ an internal Accountant who reports to the CEO or they use their Chartered Accounting Firm who does CFO Services.  Neither provide the strategic financial insight that a Virtual CFO provides which leaves the CEO at risk, co-ordinating an ever complex accounting & finance function and not getting the critical strategic financial information to make key commercial decisions for their business.

So what is a Virtual CFO and how can it help you ?

A Virtual CFO is the use of a Commercially experienced CFO who is dedicated to your business under contract, whether at a regular weekly or monthly cadence or on a transaction basis if you are coming up to a large M&A deal or listing on the ASX.    This CFO can work with your current internal Accountant or bring in their own ‘outsourced’ back-office team if required.  They work directly with the CEO and Executive Team, can form part of your Board to provide financial insights and oversee the whole finance function.

The advantage of a Virtual CFO is that you have a highly experienced & commercially seasoned financial executive dedicated to your business as and when you need them.  This reduces the per annum cost of hiring a CFO, takes the risk out of hiring the wrong CFO resource and also allows you to be more agile as to the cyclical nature of finance and reporting requirements.

These days there are many Chartered Accounting firms providing ‘CFO services’ which are not commercially experienced CFO’s but one of their Accountants preparing month end financial reports and budgets.     This is not a CFO but merely an expensive resource focused on producing monthly financial reports from the accounting data into your accounting system – recording history.   From our experience this doesn’t assist the CEO to develop business strategies or initiatives that result in increased business value over time.

So what role does the CFO play?

They oversee the financial reporting of your business however their intention is to streamline & improve the processes to ensure that it is cost effective and accurate, in addition they want the financial reports to support internal decision making and provide key financial insights that assist CEO’s to manage their businesses. They may re-work the chart of accounts or reporting formats to assist here, they may add additional financial data to the management reports, add non-financial KPI’s and provide benchmark’s.

CFO’s prepare financial models (annual budgets, quarterly forecasts, cashflow forecasts, valuation and IRR models, KPI analyses, contribution margin analyses, NPV & investment decisions, etc.) to support key business decisions.   CFO’s provide the data & insights that support the CEO to make effective decisions that impact the value of a company.

CFO’s oversee ESOP’s, share issues and manage capital tables plus taxation and compliance services.   They review working capital management and cash conversion cycles to maximise operating cashflows and balance sheet risks.

CFO’s work with your external service providers and ensure that their services are timely and accurate.   They produce the majority of workpapers and reports so that the external providers costs are minimised.

CFO’s take a key executive leadership role and lead key initiatives in finance that support the overall strategic goals and provide clarify around future funding requirements and any working capital issues and shortfalls.

CFO’s oversee the taxation and statutory reporting across the company, assist with mergers and acquisitions, business valuations.

CFO’s lead the accounting & finance functions of your business and report the key findings in executive summaries to the CEO each month.    They prepare the finance section of the Board report and attend Board meetings to provide financial insights.   This trusted relationship between the CFO and CEO is critical to achieving profitable growth.  Many CEO’s whom we work with highlight that for the first time they are able to trust in the numbers and make key strategic decisions to achieve success.

A Virtual CFO is not just an accountant, they are a trusted strategic financial partner for a CEO and essential if you want to increase the value of your business.