Virtual Finance Director – what is one and do you need one?

Virtual Finance Director, VFD, outsourced advisor, management accountant, finance business partner - there are so many names and descriptions to contend with in the finance world, so what is a Virtual Finance Director?

Smaller businesses often face the same challenges as larger businesses, but they cannot always afford a full-time Finance Director. A Virtual Finance Director is a business advisor, a sounding board and provides financial insight at a smaller cost than a Full-time FD. 

Having someone with financial expertise, together with commercial and business experience, can be vital to the success of your business. Finance Directors are vital for all types of businesses and unlike an accountant, who focuses on the past, they look to the future. They assess the past and financial performance of a business but with the major bonus of looking forward and using the information to plan for the future.  

In this short blog we will outline the benefits of having a Virtual Finance Director: 

Saves money 

A Finance director is sometimes considered a luxury that smaller business simply cannot afford or justify, however would really benefit from. A Virtual FD solves these issues as they work part-time and do not have the additional employee costs such as benefits, pension and recruitment fees!  

A new way of looking at things 

A Virtual FD can provide an outsider's perspective that can breathe new life into your business, they can provide a unique perspective and be a sounding board for ideas. Sometimes employees may be too close to the business and not see the wider picture. 

Commerical insight 

Having worked in and with businesses we are able to provide commercial knowledge that other accountants may not be able to provide, if they haven’t worked within a commercial business. 

Allow you to work on the business not in the business 

Do you find yourself worrying about the small things, the day-to-day running of the business, looking at reconciliations or chasing invoices? You should be concentrating on the wider business strategy; you should have the freedom to have a day off if you want. A VFD will give you the time and freedom to do this. You can concentrate on your area of expertise and your reasons for starting the business. 

Process and systems  

It is important to have right systems in place to support business growth; you cannot successfully continue to grow if you do not have a handle of your numbers. By having the right systems in place, you will be able to have a real time view of your financials and we will be able to provide forecasts, cashflow and management accounts. This will enable you to see the bigger picture and make smarter decisions for the future of your business. 

Just having Xero in place will not provide all the answers, are you using it correctly and maximising its benefits. Do you have the right apps connected to really benefit your business? 

Cashflow  

Identify any shortages and excesses so you can invest and expand at the right time. 

Financing advice 

Sometimes business require extra capital investment and it is important to identify best type of finance dependent on your business's requirements. That is why it is important to work with a broker to get the most suitable deal; most businesses will simply speak to their bank which may not provide the best rates or most suitable finance options. 

Signs that your business is ready for a Virtual Finance Director 

Growth 

Your business is growing, customers numbers and increasing steadily but do you have the right foundations for growth? At the beginning it makes financial sense to do everything yourself but as the business grows, things start to slip through the net, now is the time to seek outside help. 

Cashflow 

Do you know your business’ cash position, or do you simply check the bank each morning (ok each week) with a squint and hope it's positive? Most businesses fail due to poor cash management, so now is the time to concentrate on your cash position. You will need to look at the future ups and downs so you can make smart decisions with regards to your business. 

Not getting the right financial information 

Can you trust your data? You may have an accounting system in place but is it providing accurate, up-to-date information that you can make sound business decisions on? Are you able to use the data for scenario planning (what-if analysis), to help you decide if to take on that extra member of staff? 

Future plans  

Do you have a business plan or is in hidden away in a drawer never to be seen again? A VFD will help you to make the most of a business, looking at real numbers which you can track you process against. A business plan will give you focus and direction for the business. 

Too much time spent working in the business not on the business 

Strong processes and controls, getting the right systems in place, reducing admin, giving peace of mind, freeing you up to work on the business strategy 

Key aspects of the role: 

• Handling of all the usual FD duties but work remotely and on a part-time basis 
• Cashflow management including a rolling cash flow forecast 
• Preparation of an annual budget 
• Attendance at board meetings 
• Preparation of monthly management accounts and analysis 
• Discussion of business performance and offer financial insight 

A Virtual Finance Director is particularly suited to forward-thinking start-ups and established businesses where financial expertise is the best way to assist its continued growth. 

Is the time right you for to get a VFD and get focussed on your business? Message me on LinkedIn today and find out how Southbourne Accountancy & Business Services can help you. Our service ranges from monthly or quarterly board views to management reports, our aim is to match the level of support with your business needs. This support can be flexed as an when needed.