Blog Article

What Is a Virtual CFO, and Does Your Business Need One?

A Virtual CFO gives a growing business the strategic financial guidance of a full-time CFO, without the full-time price tag. For contractors, that means someone looking ahead at cash, margins, and the big decisions, not just recording what already happened.

Hey guys, welcome in. Today we are talking about virtual or fractional CFOs. What it is, is it for you? Just breaking it down, because I may have mentioned a couple times that we do offer that. That is one of our packages. But what is it actually? Let's talk about that. Before we dive into that though, let me introduce myself. My name is Jenn Shaw and I am founder of All Accounting LLC. We specialize in trade and construction companies, businesses ranging from $500,000 to $10 million, and really help them understand their finances, understand what's happening in the world of money for them, because we feel that when you know your numbers, you can own your future. So every week we break down different topics within your finances, or KPIs, or just accounting jargon, to help you feel more comfortable in knowing and understanding what this world is. It may be a foreign language, but it doesn't have to be. We help you understand it. So let's go ahead and talk about a fractional CFO.

A fractional CFO, or just a CFO in general, is a chief financial officer. We say fractional because although the information a CFO can produce is really useful for businesses, sometimes monetarily it's a little difficult to hire that in-house. So we have this fractional or virtual CFO that comes in at a lower cost, but you still get the great benefits instead of having an in-house hired CFO. A lot of CFOs are $300,000 or more on your payroll, and we come in at a much lower rate but are still able to have these financial readiness conversations, let you know where your cash is, and help you optimize what's going on within your business.

Most times people hire on a bookkeeper, accountant, or CPA, and they are really looking at your past information. This is your historical data, ensuring that all of the things are ticking and tying together within your software, making sure that you receive your profit and loss and balance sheet. Very important documents for you to review and look at, but it only tells you the history of what happened in your business. We also handle tax compliance or sales tax compliance, making sure that you are on time when you are filing, so you aren't paying interest and penalties for not filing appropriately. And bookkeepers and CPAs also maintain your payroll. So why is that different than a fractional CFO? A fractional CFO is going to look at your future and what's happening over there. One of the best things they can add is a cash flow statement. This takes your historical data and somewhat predicts what's going to happen, the ins and outs of all your cash moving forward. It takes your AR statement and your AP and, day by day or week by week or whatever granularity you need, spreads that out. Looking at margin optimization, where do you actually stand historically with your numbers? Registering those into KPIs, key performance indicators, looking at specific numbers and percentages that can help guide where you actually want to go. So a fractional CFO is in the future, looking ahead, and the bookkeeper and CPA are looking in the past. You do always need the bookkeeper and CPA, do not get me wrong. You cannot just have a CFO. You need someone to ensure that all the things in the past are correct, because a CFO is not going to be able to take any of that information forward if they're looking at garbage. Garbage in, garbage out. So we want to make sure the historical data is in fact really great information.

Now let's talk about what you're actually going to receive if you get this virtual CFO deliverable. What does that look like? You are going to receive a monthly strategic meeting where we sit down for about an hour and go over all of the information. This isn't a you'll only talk to us during this time, because you will also get cash flow projections, or 12-month rolling forecasts, and your KPIs delivered to you on a regular basis. That might be dashboards you receive on a weekly basis, but we only have a one-on-one meeting on a monthly basis, because businesses kind of move like molasses. It's a big entity, there are lots of moving parts, and you can only move things so often. We do need good information, and a good amount of it, to actually make decisions. So once a month we sit down one-on-one for an hour, but you are receiving different deliverables. It actually depends on what your business needs. I know sometimes it's difficult to say that, but each business is unique. You may not need all of the KPIs that other businesses need, and we help guide you to what is really going to be most valuable for your business during that time. And it could change over time. For a year we could be looking at advertising and dialing in on that, and then the next year we're going to dial in what your estimates and sales look like. So it just depends.

One of the important things to look at is your ROI in hiring a fractional CFO versus an in-house one. You're going to find about 60% savings overall with a fractional versus in-house. Our annual investment is going to be a lot less, $40,000 to $100,000, compared to $250,000 to $450,000, and this is for smaller companies, $10 million or under, because there are many CFOs that can make up into the millions. We're not there, but it allows you to get the same information without them being in-house doing things we can do on a fractional side. Since we're our own business, you don't need to do bonuses or health insurance or anything like that, but you still get the same information, which is great, and the flexibility, which is also there.

These are the actionable items, just visually seeing what we can get: that 13-week cash flow. We find that 13 weeks gives you a solid three months of information. Especially when you're really dialing in, if you're in a time crunch with being able to pay certain people or waiting on money, 13 weeks dials it in. After a while you can create a longer one that isn't so granular, but at the beginning, 13 weeks is crucial. Looking at your profitability analysis, break-even points, and a whole slew of information.

So when do you think you actually might need one? We're going to look at rapid growth. If you are seeing a huge influx in sales and you're still just running the hamster wheel but not knowing where to go, it's important to maybe have someone on the outside helping you guide decisions. Do you really feel like you're working really hard and you still don't have the amount of money that you think you should? That's a great key marker of saying, hey, we might need some outside analysis to help guide us where we're going. Perhaps you need to know if you can take on loans, being able to analyze that and help you. People will give you money if you have great financials, they will give you money. But is it actually in the best interest of the business to take on that loan? This is something we can deep dive into and actually help you understand. And then making capital decisions. When is the best time to buy equipment, when is the best time to hire someone new? For all of these ideas and wishes and wants for businesses, there are good, better, and best times to do this, and having a fractional CFO to help analyze your financials and guide you is good.

So what does the first 90 days look like? The first 30 days is really a lot of deep diving into your financials, where you've been, making sure that everything is accurate, looking at some of those key KPIs, and gathering information. Then the next 60 days, we'll build a 12-month rolling forecast. A forecast is more live and workable, where a budget is like, well, we didn't hit this marker, and now what? But a forecast, we're constantly feeding it new and updated information, so it changes over time, which is good because it gives us real data. And then at 90 days, we should have by then all of the information you will get on a regular basis. This will be your KPI dashboard, your rolling 12-month forecast, and also very importantly, your 13-week cash flow forecast. And then from there, every quarter we'll have strategic tax planning sessions, analyzing where you are, especially quarter 3 and quarter 4, to make sure that now that we have all of the information, where did we land? Do we need to make any adjustments? And just continuous growth and execution.

Having that virtual CFO is really going to help empower you as a business owner and not make you feel like you are on it on your own. We are really there to help keep you accountable in your numbers and help guide the business to where you really want to go. Where do you see yourself in five years? Where do you see yourself in 10 years? Are you creating a job for yourself? Are you creating the ability to step back as a business owner, or do you want to go to another state, or what does this all look like? Sometimes it can be very lonely thinking about it on your own. Perhaps you do have a partner involved, but maybe they're more of the operations side and you are more of the head steering where the business direction is going. So it's really great to have another set of eyes and someone to bounce ideas off of, with good data to help guide you in the right direction.

All right, guys, that is it today. Thank you so much for joining. I hope that you now understand a little bit more about what a virtual CFO does, and maybe can think about, is this something that will fit for you? We would love to do a financial diagnostic on your books and see if we are a right fit. You have your information here. And if you really like this information and would like to see things coming up, go ahead and subscribe to our channel and we will see you next week. Thank you.

A Virtual CFO, also called a fractional CFO, gives your business the strategic financial guidance of a chief financial officer without the full-time salary. A bookkeeper and CPA look at what already happened. A Virtual CFO looks ahead, at cash flow, forecasting, margins, and the big financial decisions, and delivers that insight at a fraction of the cost of hiring in-house.

What is a fractional CFO?

CFO stands for chief financial officer. The word fractional, or virtual, simply means you get that expertise part-time and at a lower cost, instead of hiring one onto your payroll.

The insight a CFO produces is genuinely useful, but hiring one in-house is expensive. Many in-house CFOs cost $300,000 or more on payroll. A fractional CFO comes in at a much lower rate and still gives you the financial-readiness conversations, a clear view of where your cash is, and help optimizing what is happening inside your business.

How is a Virtual CFO different from a bookkeeper or CPA?

The difference is time. A bookkeeper, accountant, or CPA looks at the past. A Virtual CFO looks at the future.

Your bookkeeper and CPA handle historical data: making sure everything ties out in your software, producing your profit and loss and balance sheet, keeping you current on tax and sales tax compliance so you are not paying interest and penalties, and maintaining payroll. Those are essential, but they tell you the history of what already happened.

A Virtual CFO looks ahead. One of the most valuable things they add is a cash flow statement that takes your historical data and projects the ins and outs of your cash going forward, spreading your accounts receivable and accounts payable across the days or weeks you need to see. They work on margin optimization, showing where you actually stand, and turn your numbers into KPIs, the key performance indicators that guide where you want to go.

One important caveat: you need both. A Virtual CFO cannot carry your numbers forward if the history feeding them is wrong. Garbage in, garbage out. Accurate, reconciled books come first, which is exactly what our bookkeeping and accounting services are built to deliver.

What do you actually get with a Virtual CFO?

You get a monthly strategic meeting plus regular deliverables between meetings.

Once a month you sit down one-on-one for about an hour to go over all of the information together. Between those meetings you receive deliverables: cash flow projections, a 12-month rolling forecast, and your KPIs, often as dashboards on a weekly basis.

Why only one meeting a month? Because businesses move slowly, like molasses. There are a lot of moving parts, you can only change things so often, and good decisions need a good amount of information gathered over time. The exact deliverables depend on your business. Every business is unique, so the KPIs that matter most vary, and they change over time. One year we might dial in advertising; the next, your estimates and sales.

Is a Virtual CFO cheaper than hiring in-house?

Yes. You will generally find around 60% savings compared to an in-house hire.

For smaller companies, those under $10 million, a fractional CFO runs roughly $40,000 to $100,000 a year, compared with $250,000 to $450,000 for an in-house CFO. You get the same quality of information without paying for bonuses, health insurance, or benefits, plus the flexibility that comes with an outside partner. Larger companies can pay in the millions for a CFO; the point is that a fractional model gives a growing contractor the same insight at a scale that actually fits the business.

What does a Virtual CFO deliver that you can act on?

The centerpiece is a 13-week cash flow forecast. Thirteen weeks gives you a solid three months of visibility, which is crucial early on and especially when you are timing payments or waiting on money to come in. Once things are dialed in, you can build a longer forecast that is less granular, but 13 weeks is where you start.

Alongside it you get profitability analysis, break-even points, and a range of other information tailored to what your business actually needs.

When do you need a Virtual CFO?

A few clear signs point to it:

Rapid growth. Sales are climbing, but you feel like you are running on a hamster wheel without knowing where to go next. An outside set of eyes helps you steer the growth.
Working hard without the profit to show for it. If you feel like you should have more money than you do, that is a strong marker for outside analysis. We dig into that gap in profitable but broke.
Financing decisions. Lenders will give you money if your financials are strong, but the real question is whether taking the loan is in the best interest of the business. A CFO helps you analyze that.
Capital decisions. When is the best time to buy equipment or hire someone new? There are good, better, and best times, and a CFO helps you time those moves against your actual numbers.

What do the first 90 days look like?

The engagement ramps up over a quarter.

First 30 days: a deep dive into your financials, confirming everything is accurate, reviewing your key KPIs, and gathering information.
Next 60 days: building your 12-month rolling forecast. Unlike a budget, which just tells you that you missed a marker, a forecast stays live and workable, constantly fed with new and updated information.
By 90 days: your regular deliverables are in place, a KPI dashboard, the rolling 12-month forecast, and the 13-week cash flow forecast.
Ongoing: quarterly strategic tax planning sessions, especially in the third and fourth quarters, plus continuous review and execution.

The real value: you are not steering alone

A Virtual CFO empowers you as the owner and keeps you accountable to your numbers. It answers the bigger questions too: where do you see yourself in five years, or ten? Are you building a job for yourself, or the ability to step back? Those decisions can feel lonely, especially if a partner runs operations while you steer direction. Having another set of eyes, and good data to bounce ideas off, helps guide the business where you actually want it to go.

Key takeaways

A Virtual CFO (or fractional CFO) gives you CFO-level financial strategy part-time, at a fraction of an in-house salary.
Bookkeepers and CPAs look at the past. A Virtual CFO looks at the future: cash flow, forecasting, margins, and KPIs.
You need both. A CFO cannot work with inaccurate books. Garbage in, garbage out.
You get a monthly strategic meeting plus a rolling forecast, a 13-week cash flow forecast, and a KPI dashboard.
Expect roughly 60% savings versus in-house: about $40,000 to $100,000 a year instead of $250,000 to $450,000.
Common triggers: rapid growth, working hard without profit, financing decisions, and major equipment or hiring calls.

Frequently asked questions

What is the difference between a Virtual CFO and a fractional CFO?

They are the same thing. Both terms describe getting chief financial officer expertise part-time and at a lower cost than a full-time, in-house hire.

Do I still need a bookkeeper if I have a Virtual CFO?

Yes. A Virtual CFO relies on accurate historical data to look forward. Without solid bookkeeping, the forecasts and analysis are built on bad information. You need both, working together.

How much does a Virtual CFO cost?

For companies under $10 million, a fractional CFO typically runs about $40,000 to $100,000 a year, compared with $250,000 to $450,000 for an in-house CFO, and without the added cost of bonuses, benefits, and health insurance.

What deliverables does a Virtual CFO provide?

A monthly one-on-one strategic meeting, plus regular deliverables between meetings: a 12-month rolling forecast, a 13-week cash flow forecast, and a KPI dashboard tailored to your business.

How do I know if my business needs a Virtual CFO?

Common signs are rapid growth without a clear direction, working hard without the profit to match, upcoming financing decisions, and major capital decisions like buying equipment or hiring. If any of those sound familiar, it is worth a conversation.

Is a Virtual CFO right for your business?

The best way to find out is to look at your numbers together. We would love to run a financial diagnostic on your books and see whether we are the right fit. Learn more about our Virtual CFO service, then email help@allaccountingllc.com or reach out to All Accounting.

Know your numbers. Own your future.