When a startup begins to scale, the day-to-day responsibilities of a founder, like identifying market opportunities, product development, sales, will also evolve. And it could be easy to overlook other important aspects of running a business, like managing its cash flow or financial diligence.
As the startup scales, its financial requirements will also become more complicated. Bringing on a CFO would be beneficial to the business in this instance.
Having a CFO as part of the team means having expert help to prevent financial challenges, implement financial systems, optimise strategy and ultimately, assist you in achieving sustainable growth.
VCFO for Startups
A practical strategy for these sorts of companies is to outsource to a virtual CFO (VCFO). A VCFO performs the same function as a CFO, providing financial guidance to businesses, but they work part-time or per project. This type of service is particularly beneficial for companies with limited capital and tight operating budgets who might not yet afford to hire a full-time CFO.
What are VCFO services?
A startup can tailor its VCFO services depending on the needs of the startup. Areas that a VCFO can help companies with are:
- Board & Management Reporting
- Business Planning and Forecasting
- Cash Flow Forecasting
- Financial Modelling
- Profit and Loss Analysis
- Support during Fundraising and M&A Process
How can startups benefit from a VCFO?
1. Huge Savings
Hiring a VCFO allows startup founders to outsource the exact services they require at a fraction of the cost when compared to having a full-time C-suite employee on their payroll. Startups can then deploy these savings into other higher impact areas of the business.
Also, outsourcing provides companies with the flexibility to scale up or scale down on services as their requirements change.
Most VCFOs have experience working across many companies from different industries. In addition, these experts are seasoned professionals who have guided businesses through various challenges.
Startup founders can leverage their VCFO’s vast knowledge and experiences that go beyond accounting and tax compliances.
3. Higher Credibility
A VCFO on the team can help founders get their business off the ground and help them secure funding from venture capitalists, angel investors and lenders. Typically, investors will look for projections and management reports, which a founder with no finance background may find hard to produce. It is safe to say that having a VCFO on the team will make investors more confident about investing in the startup.
4. Better Cash Flow Management
Expenses could quickly blow out of control when founders have no control of how much money they can spend on their business at a specific time.
A VCFO is an expert in creating cash flow projections, helping founders obtain a clear picture of their incoming funds and outgoing costs. They also provide strategies to help startups reduce overall costs and improve their cash flow.
5.Ability to Handle Complex Processes
As startups grow, their finances will become more complicated – processing payroll to a growing number of employees, making payments to numerous vendors and handling finances involving clients and investors. A VCFO can analyse what needs to be actioned and what processes should be improved to adapt to the changing needs of the startup.
Running the business begins to be more complex when a startup scales. The expertise of a Virtual CFO can bring tremendous benefits even to a young, budding company.
Cloud CFO offers VCFO and accounting services that are ideal for small businesses and startups. If you want to know how we can help, don’t hesitate to contact us at 03 9008 5422 or firstname.lastname@example.org.