Virtual financial directors (FDs) have emerged as an invaluable resource for small and mid-sized companies seeking strategic financial leadership without the overhead costs of a full-time senior executive.
Harnessing the skills and expertise of a virtual FD on a short-term or temporary basis can help you with a crucial financial task, such as analysing complex aspects of profitability and cash flow, coming up with budgets or planning a business deal like a merger or acquisition (M&A).
Read on for an in-depth explanation of what virtual FDs do and how partnering with one can benefit growing organisations of all kinds.
Understanding virtual FD services
A virtual FD serves as an outsourced financial strategist and controller, offering the experience of a seasoned CFO or other senior financial expert on a flexible, as-needed basis.
They provide expert-level financial expertise tailored specifically to a company’s growth plans and key objectives.
The kinds of services delivered by virtual FDs include:
- Management accounts: Management accounts provide essential insights into the financial health of your business, offering regular, detailed reports on aspects like profit and loss, cash flow, and balance sheets. Management accounts are used for informed decision-making and strategic planning.
- Monthly or quarterly meetings: Regular monthly or quarterly meetings ensure continuous engagement and oversight. These sessions offer opportunities to review financial performance, discuss strategic initiatives, and make adjustments to align with changing business objectives or market conditions.
- Budgets and forecasts: Developing and maintaining accurate budgets and forecasts is vital for present and future financial planning. They serve as a roadmap for your business, outlining expected income, expenditures, and financial goals, thus guiding strategic decisions and resource allocation.
- Pre-year-end tax planning review: A pre-year-end tax planning review is a proactive approach to managing your tax obligations. It involves assessing tax liabilities and exploring opportunities to optimise taxation. This extends into government tax incentives and schemes like R&D tax credits or the Enterprise Management Incentive (EMI).
Benefits of outsourcing financial management
Outsourcing financial management to a virtual financial director offers immense strategic value for growing organisations.
Here’s a deeper look at the key advantages:
Cost-effectiveness
Rather than a fixed, long-term expense for an in-house finance executive, virtual FDs are flexible and scalable.
Companies only pay for the specific level of financial support needed month-to-month.
Specialised expertise for smarter planning
Virtual FDs have often served as CFOs and financial controllers for industry leaders.
This experience provides virtual FDs with advanced knowledge of strategic financial leadership and how it fuels growth.
They bring an objective, metrics-driven approach to identifying opportunities to improve a company’s financial and operational fitness.
A virtual FD’s insights help leadership construct more effective growth plans across all facets of the business, from inventory to payables to capital investment and more.
Productivity and time savings
Without the need to manage extensive financial operations and compliance in-house, leadership teams free up precious bandwidth.
Virtual FDs handle these complex responsibilities, allowing executives, department heads and managers to dedicate their time towards business-critical tasks and strategies.
Considerations when choosing a virtual FD service provider
Selecting a virtual FD can be challenging due to the overwhelming volume of options on offer. Consider the following:
- Industry-specific experience: Opt for a virtual FD with a proven track record in your business sector. Ensure they bring relevant insights to the table and are adept at navigating the specific financial challenges you’re struggling with.
- Necessary specialisations: In addition to the industry, assess the services to determine experience in what you require, whether that be financial planning, reporting, audit coordination, tax preparation, cash flow analysis, or something else.
- Quality of communication: Establish clear communication channels right from the start. Ensure the virtual FD is responsive to inquiries and collaborates with necessary personnel. Effective collaboration is rooted in regular, transparent dialogue and the ability to resolve issues swiftly.
Final thoughts
Virtual FD services can transform a company’s financial management, offering expertise, flexibility, and cost-effectiveness.
They’re an excellent solution for businesses seeking to navigate financial challenges, capitalise on growth opportunities, and streamline operations.
With the right virtual FD by your side, you can focus on what you do best – growing and managing your business, assured that your financial strategy is in expert hands.
James Scott offers virtual FDs tailored to your business. Contact us for more information.