Outsourced CFO (Virtual CFO) - More Important Now Then Ever

Val Steed, CPA, MA, CITP

Director Accountants – Zoho Corporation

www.Zoho.com/CPA

August 10, 2020

A while back, I attended a training event and ran into an old colleague from my Deloitte, Haskins, & Sells days. Yes, that does date me, but stay with me here. 

I knew he had accepted an industry job and worked as a CFO for a very large company in Salt Lake City, Utah. My old colleague informed me that he had changed jobs and set out on his own providing CFO services to about four different clients. I was quite stunned that he could make a good living with just four clients. 

And then he shared a bit of the bigger picture with me. 

Every business needs a good accountant. 

Despite all the issues in the current marketplace, business is still being conducted. Businesses of all sizes need quality accounting advice now more than ever and often cannot afford a full-time CFO position. 

That’s where an outsourced CFO comes in. 

Virtual CFOs have become a rapidly growing trend around the globe, with start-ups and even established businesses choosing to hire part-time virtual CFOs to oversee and undertake key business tasks. One of the top-selling points for outsourcing your CFO is that great accounting skills can be had on a part-time basis. Contact points can be daily, weekly, monthly, or quarterly. They can be a mixture of virtual and face-to-face. It all depends on what the company needs and asks from the virtual CFO.

So, how important is it to have good financial records and good accounting knowledge quickly available to business managers? Just look at the recent Paycheck Protection Loan application process.

Businesses that were well organized and applied quickly received needed funds to continue business and also now stand in line for all the funds to be forgiven. 

An outsourced CFO would be a star in these types of situations. 

Accountants right now have the chance to grab this market before others do, and it’s a great way to expand a client base and specialize your skills. Many outsourced CFOs focus on specific industries and markets. 

With our ability to work from almost anywhere now, a virtual CFO can help businesses worldwide. However, one thing to note is that too many time zone differences can make scheduling more difficult. Some consultants prefer to only have local clients so they can also provide face-to-face services where and when it makes sense. 

In general, there are three traditional roles for the outsourced CFO:

● Bookkeeper

● Controller

● CFO

A bookkeeper records transactions, prints financial statements, and at times will file forms but usually not tax returns. They do some level of business advising at times but are usually just worried about record keeping and financial statements. 

A controller role includes all the above for a bookkeeper but usually focuses most of their time reviewing company policy, comparing financial results, preparing forecasts, setting budgets, and keeping an eye on cash flow and credit ratings. Controllers will often file tax returns for income tax, sales tax, and property tax. 

A CFO, like a controller, spends their time comparing company policy with financial results and examines key transaction details. The CFO is distinguished by involvement in broader company decisions like financing, IT security policy, hiring, product and service offering decisions, KPI analysis, strategic planning, as well as plant expansion and fixed asset purchase decisions. 

There is also an additional opportunity for accountants to help clients with accounting system implementations and recommendations. This role, however, requires much more than just an accounting background and can be extremely lucrative or extremely risky. 

In a recent survey, 85% of firms reported regularly receiving queries from clients about technology. The majority (69%) report one to five queries per month and some receive more than 20. The most common concerned the selection and implementation of third-party apps but people also asked about a range of ancillary services. 

Technology is a concern for every small business, and as accountants automate their processes and integrate many of the data flows across their stacks of applications, they develop expertise that can be converted into an advisory service. 

So, what do you need to get started as an outsourced CFO? 

Here is the list of recommended hardware:

● Cell phone that can enable a hot spot with a strong data plan

● Quality laptop. While this is a personal preference I usually like to see a laptop with at least an Intel i5, 8GB RAM, 250GB hard drive, WiFi capability

● High-speed Internet access in your home office (fiber optic is recommended)

It takes time and patience, as word of mouth is the best way to grow a consulting practice. There are some immediate opportunities to provide CFO services with companies like 1-800Accountant.com @1-800Accountant. 

I am now an enlightened person. Clearly, my colleague has a very strong resume but anyone with good accounting knowledge and computer skills can be an outsourced CFO. Given time and effort, this is a business you can grow substantially. Good luck and happy accounting.

Val Steed, CPA, MA, CITP

Director Accoutants – Zoho Corporation

www.zoho.com/cpa