5 Vital CFO Services for Small Businesses [& Why You Should Have Them]

May 03, 2022 By Jon Allen

Business man and woman sitting at table in front of computer

Starting a small business is no small matter. And at a certain point, you’ll need to craft a state-of-the-art financial strategy to keep your business profitable. While you could rely on a small team of accountants, a Chief Financial Officer (CFO) is a more effective source of financial literacy.

There are plenty of signs to suggest when a small business should hire a CFO. But why do you need a CFO? This article will outline five CFO services for small businesses to help answer that question.

What Services Can CFOs Offer Small Businesses?

What does a CFO do in a small business exactly? While they may not have to deal with as many investors or appease your stockholders, they can improve the financial health of your organization. Here are just five services CFOs can offer small businesses.

1. Cash Flow Management

CFOs help you better manage how much money flows in and out of your business. This often involves identifying inefficiencies to help you use the cash you currently have on hand more effectively.

Cash flow management also involves identifying new sources of additional funding. This is particularly useful for small businesses looking to expand. New investors and revenue streams can give you the financial flexibility to make required business changes to meet your goals.

2. Risk Management

Every business operates with some level of risk. The trick to being a successful business is properly managing and eliminating that risk to help you avoid making costly mistakes. 

A CFO can help reduce risk by placing internal controls that mitigate the risk of reporting errors and fraud. They may suggest ways to prioritize business operations to see the most profitable returns on your investments.

3. Financial Forecasting

Financial forecasting measures your company’s success and predicts your financial wellbeing at a future date. This is possible by looking at your company’s previous financial data to estimate future trends. Above all else, it helps your financial plan be more proactive than reactive.

Making predictive analyses when you’re only armed with previous financial data isn’t easy to do, so you need a CFO to do it for you. By conducting a financial forecast, your CFO can help you:

  • Accelerate progress towards your financial goals
  • Learn from past financial mistakes
  • Decrease overall costs by highlighting inefficiencies
  • Gain valuable insight into your company’s financial performance

Forecasting is often confused with budgeting, but it’s much more than that. Budgeting helps you plan your finances with specific results in mind—forecasting helps you predict those results and determine how you can maximize those profits. Forecasting can help you determine what to plan for in your budget.

4. Strategic Planning

A CFO isn’t just a CEO’s accountant—they are the strategic partner you can rely on to best plan your financials. In conjunction with any other executives on the team, the CFO will work with you to realize the vision you have for your company’s future. The CFO will essentially fill in the financial gaps of that strategy, offering financial realism to your business goals, so you have firm ground to stand on as you move forward.

Every other point we’ve discussed feeds into a CFO’s contribution to strategic planning. By properly managing your cash flow, reducing your risk, and forecasting a financial strategy, a CFO can demystify the financial side of your strategy. 

5. KPI Tracking and Reporting

There are a lot of key performance indicators (KPIs) you could track to measure the effectiveness of your financial performance. A CFO will know which KPIs you should track to get an accurate picture of your business’ health.

Your CFO will create reports with these KPIs to show how your financial strategy affects your business. They may find new opportunities to tweak your financial strategy to become even more efficient and equitable as they analyze these reports.

Can Small Businesses Afford a CFO?

Virtual CFOs (also referred to as fractional or part-time CFOs) are CFOs that only work when they are needed. While these CFO services for small businesses offer financial freedom, can a small business warrant the cost of a CFO? They can, especially when small businesses use virtual CFOs. 

There’s no need to hire a salaried CFO when you can find an hourly-waged virtual CFO that already has experience in your industry. With use cases in nearly every industry, virtual CFO services like Amplēo have the right person for the job. 

Make Your Financials Future-Oriented with Amplēo

If you want to move on to the next phase of your small business, it’s time to consider what a CFO can do for you. With a virtual CFO on your side, you can access all of the above services and more, making your business’ financials future-proofed and optimized for success.

Get in touch with Amplēo today to learn more about our virtual CFO service offering.

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