In recent years, there’s been a strong trend for small and medium-sized business who could not otherwise afford an internal CFO to outsource this role to accountants and other financial specialists.
An external CFO is a person or an accounting firm that takes on the role of CFO for a client on a contract basis. Virtual CFOs are well placed to help business owners focus on essential, long-term strategic and financial planning. They base their planning and forecasting activities around the business drivers and report performance against these drivers.
Thanks to cloud accounting systems, accountants can work largely remotely to monitor finances and advise on key business decisions. Their investment in the development of cloud accounting, digital solutions and data analytics is affordable because it can be spread across many clients.
Over the past 12 months, there’s been a significant increase in demand from SMEs for outsourced financial management and consulting services focusing on business sustainability during difficult times. Business clients have also needed to ensure their accounting was up to scratch to both understand and qualify for government subsidies
The jump in demand for outsourced number crunching and strategy work, especially of the kind a chief financial officer would usually provide, is likely to expand further in 2021. Progressive accounting and advisory firms are already positioning themselves to take advantage of these opportunities.
Key areas of focus are likely to include:
- Bookkeeping and payroll management
- Accounts payable and receivable
- Cashflow management
- Budgeting and 3-way forecasting
- Management reporting and review
- Advisory board management
For accounting firms, a key focus must be on good reporting as a critical element of an effective financial management ecosystem. Both compliance and management reporting can help business owners make effective strategic and operational decisions for sustainability and growth.
Many accounting firms have tried to implement vCFO services with limited success. Key challenges have included:
- Lack of effective financial reporting systems
- Insufficient leverage affecting capacity to grow
- Inability to identify value in the client’s mind
- Challenges in implementing services cost-effectively
- Inability to effectively manage scope of work.
The Virtual CFO Association has produced an ebook ‘So you want to be a Virtual CFO’, a guide for those looking to, or hav started their journey towards running a Virtual CFO Business.
In collaboration with the Virtual CFO Association, CPD for Accountants has launched a new vCFO Advanced eLearning Course for accountants and advisors in public practice.
This eLearning course is designed to provide a comprehensive guide to financial reporting and strategic decision making for vCFOs. The course will also provide vCFOs, partners and managers with clear guidelines in relation to client engagement and project implementation strategies.