What is the role of a virtual CFO?

A virtual CFO, or vCFO, is an experienced finance professional who provides accounting services to a company on a part-time or project basis. The main benefit of hiring a vCFO is that you can get their CFO playbook and expertise without committing to a full-time resource. You can dial the hours up or down as needed, so it's great for companies or start-ups on a budget. So, what are the steps when evaluating how to hire the right vCFO?
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1. Assess your company's finance needs

Start by evaluating your current team and advisors. Identify any skill gaps and determine if each team member is focusing on their core competency. This will help you understand the expertise and services a vCFO should bring to your company.
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2. Identify current challenges

Recognize the specific financial challenges your business is facing. By understanding these challenges, you can identify the skills and expertise a vCFO should have. Questions you should ask yourself include:

Financial control

• Is the founder doing bank reconciliations?
• Are expense claims or tracking expenses in general a nightmare?
• Do you need more executive finance skills but don't have the need or desire for a full-time employee (FTE)?

Raising capital

• Are you VC-backed or planning to raise capital soon?
• Do you need help evaluating fundraising paths, managing your cap table, or preparing a data room?

Managing cashflow

• Is your company profitable, but you can't determine why your bank balance was negative $50K last month?

Scaling operations globally

• Are you scaling overseas?
• Are you dealing with multiple currencies and tax headaches?

Building financial models

• Do you operate in eCommerce or industries with long cash cycles?
• Do you have lumpy revenue cycles?

Hire a bookkeeper rather than a vCFO

Consider whether a bookkeeper can handle tracking expenses and your bank reconciliations. This will cost a fraction of the price, and if you need a strategic perspective, you can engage a vCFO with a smaller engagement.

Engage a vCFO with the right expertise

Ensure that the vCFO you are considering has the right background. For example, hiring an ex-blue chip CFO may not be the best choice for executing month-end tasks, as they may not find it challenging enough and may not add much value.

Engage multiple parties with different roles

Remember that a "rainmaking" vCFO can be engaged on a project basis when you're ready to raise capital. You may not need someone with that expertise on an ongoing basis.

Managing cashflow

Managing the cashflow is the top priority for companies that haven't raised venture funding. The best vCFOs will help you manage your cash and ensure there are no financial surprises.
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Final thoughts on how a vCFO can reduce costs and add value

One of the first jobs when a vCFO joins a company is tracking expenses and understanding what is being spent on SaaS. For a vCFO, SaaS management is typically overlooked because it’s so difficult to understand where the saving opportunities exist. Luckily, Hudled can do this for you without the overhead. Get started for free with Hudled and request a SaaS audit.

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