The Chief financial officer (CFO) of a company ensures its financial decisions are good and help the company reach its financial goals. Businesses looking for a CFO often have to make a tough choice between a part-time CFO who works from home and a full-time CFO who works on-site.
Before we get into what makes a Virtual CFO different from an In-house CFO, first, let’s look at the roles of a Virtual CFO and an In-house CFO.
Who is a Virtual CFO?
A virtual CFO is a proven solution to close the bridge for growing SMEs that need a financial executive but don’t yet have the revenue to invest in a full-time CFO. VCFO closes the gap for small to midsize businesses that are growing to the point that they need a financial executive but who don’t yet have the revenue to invest in a full-time CFO.
Who is a Full-time CFO?
A full-time CFO is a senior executive in charge of the company’s financial actions. They are often in charge of keeping track of cash flow, analyzing the company’s financial strengths and weaknesses, and keeping an eye on all aspects of the company’s financial success. They exist within the company and are not hired from the outside.
Following are the four major differences between an In-house CFO and a Virtual CFO.
IN-HOUSE CFO: Most of the time, a full-time CFO is in charge of a company’s financial matters. The CFO of a company is in charge of the accounting department and must answer to the company’s employees, shareholders, and board members. One of the CFO’s most important jobs is to make a financial plan for the company’s future. To do this, he or she can use the knowledge of the whole accounting staff.
VIRTUAL CFO: On the other hand, a virtual CFO offers all of the services that a traditional CFO would, but they are only delivered when the organization requests them. Virtual CFO services can do everything an in-house CFO can do, but you will only get the services you ask for, and less responsibility will be taken care of.
IN-HOUSE CFO: When you engage a professional who works on the premises, it is more probable that the individual has experience with the local standards, legislation, protocols, and so on that apply to business and finance. This is what happens in most cases.
VIRTUAL CFO: A virtual CFO is often exposed to global accounting standards. If you hire a virtual CFO from India, you can be sure that they will provide services in accepted worldwide formats. This is very helpful when doing business globally. A VCFO can help you adopt international norms and define a new growth model to meet your goals.
IN-HOUSE CFO: When you recruit someone to work in-house as your chief financial officer, you should give them at least two to three months to become familiar with your company’s operations and organizational finances. Meanwhile, you cannot anticipate that your CFO will provide the highest possible level of productivity. In addition, the loss of production in just a few months might set your company back several years.
VIRTUAL CFO: On the other hand, a “virtual team” of CFOs is trained to work in different business situations and with different accounting software. They also know how to deal with financial documents, team members, coordination, etc. So, a virtual CFO can immediately speed up your business’s productivity because they don’t have to spend as much time learning the ins and outs of your business’s finances and accounting software as a dedicated, on-site CFO might.
INHOUSE CFO: The salary could be the biggest problem with hiring a full-time CFO. The average pay for a CFO is more than ₹40 lakhs per year. This doesn’t include the cost of health care or other benefits. Also, you usually give out bonuses, commissions, or some kind of share of the profits.
VIRTUAL CFO: If you hire a Virtual CFO by the hour, you have to pay for all the services he can provide for the same. In the first contract, both sides will agree on a fixed rate. So, you won’t pay the VCFO nearly as much as you would for a full-time job. This way, you can save an average of 60-80% per year by hiring a CFO for a short time, by the hour, or for a specific project.
Do you think an expert CFO can help your business meet profitability? It’s time for you to contact CFO Bridge today.