Introducing the Virtual CFO - what & why?
Employing a full time Chief Financial Officer is a luxury many businesses can ill afford, yet the value a skilled CFO can add is something they can ill afford to ignore. This is especially so for start-ups with ambitious growth aspirations, or more established operations struggling to respond to changing market conditions.
A growing trend is for companies to fill this gap using an outsourced, or “virtual”, CFO (vCFO). By paying them on a fee-for-service basis they can avoid the overheads of a full-time senior employee, and potentially access individuals with a level of expertise and experience that would otherwise have been beyond their reach.
While the services provided by a vCFO will vary according to their specific skill set, and the needs of their clients, they are likely to include some or all of:
- Overseeing the activities of in-house finance staff
- Assisting with budgeting and forecasting
- Analysing and interpreting financial data
- Providing business insights and risk analysis to inform strategic decision making
What’s fuelling the rise of the Virtual CFO?
Outsourcing is hardly a new idea, but traditionally it’s been used mainly for non-core support services, or for clearly defined operational functions. Outsourcing of senior strategic roles, such as a CFO, is a relatively new phenomenon. This trend has largely been fuelled by these developments:
The emergence of the Gig Economy
Whether it’s a change for better or worse is a matter of fierce debate, but there is a consensus that the days of the “job for life” are gone. Globalisation has led to increased competition and reduced margins. Deregulation and labour market “reforms” have seen a decreased role for trade unions, and a commensurate reduction in bargaining power for many workers. Job security suddenly seems an almost quaint concept, as our political leaders increasingly talk up the need for agility, innovation, self-reliance and resilience.
Welcome to the gig economy, where full-time employment is giving way to independent contractors, part time or casual work, and short-term engagements. When it comes to the rise of the vCFO, this has created a perfect storm:
- Entrepreneurship is alive and well. An increasing number of young people are choosing to take direct control of their own careers rather than subjecting themselves to the vagaries of the employment market. Operators of these lean start-ups seldom have the resources to take on a full-time CFO.
- Simultaneously, many people with CFO skills are moving away from full-time employment, either through choice or circumstance, and are instead willing to offer their services on a part-time or ‘gig’ basis.
Emerging IT Enablers
The rise of the vCFO has mirrored the rise of the virtual, or decentralized, office. This has been made possible by rapid advances in technology:
- The increased reliability and affordability of business-grade collaboration and mobility tools, such as video conferencing, is making remote working more acceptable by making remote workers more accessible.
- Cloud-based business applications, including ERP systems, are enabling the secure sharing of sensitive financial information with remote workers.
- These trends have themselves been enabled by the near-ubiquity of fast, reliable broadband connections, both fixed and wireless, in virtually all advanced economies.
You can read more on this topic in this article, Rise of the Virtual CFO, featured in Acuity (the journal of Chartered Accountants in Australia & New Zealand).
How can Orchid's products support the Virtual CFO?
Orchid products have earned a reputation for supporting collaboration and productivity. Many of the features that benefit in-house staff can just as effectively support outsourced roles, such as the Virtual CFO. Here are just some examples:
- Info-Explorer – Design custom cubes containing all the data your vCFO needs to perform their regular analysis of company performance. Sensitive data can be protected from prying eyes with multiple layers of password protection.
- Report Runner – Configure and launch recurring Crystal Reports and Sage 300 GL Financial Reporter reports required by your vCFO
- Process Scheduler – Automate the regular refresh of Info-Explorer cubes, or execution of Crystal and Financial Reporter reports. Have the results emailed directly to your vCFO for analysis.
- Optional Tables – Design highly granular budgets and forecasts by adding Optional Fields to any Sage 300 View, or View combination. The included Spreadsheet Add-In makes it easy for your vCFO to remotely collaborate with other staff when setting and refining the budget.
- Extender – aid your vCFO’s oversight role by using Extender (Configurator Edition) to monitor key Sage 300 fields, log changes, and alert your vCFO by email when certain events occur.
About the Author:
David Lacey is Communications Manager at Orchid Systems. You can find out more about David and other Orchid staff members at the bottom of our About Us page.
