Are you having trouble managing the company’s cash flow? Do you need financial guidance? Or do you want a financial expert to be a part of your team?
If your answer is yes to any of these questions, you may want to consider hiring a virtual CFO.
The role of a virtual CFO varies, depending on the business needs. It’s no surprise, therefore, that virtual CFO costs and rates vary too.
In this guide, we’ll break down to you the average virtual CFO cost in Dallas and common fees, factors affecting the virtual CFO rates, the benefits of hiring one for your business, and more.
But first, let’s find out what a virtual CFO is.
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What is a Virtual CFO?
A virtual chief financial officer (CFO), also called a fractional CFO, is an outsourced or remote professional who provides financial leadership by providing strategic advice and financial management to a company on a project or part-time basis.
Virtual CFO typically works with small to medium-sized businesses and help business owners make sound business decisions based on their financial reports and planning.
A true CFO in the past was often a full-time highly-paid employee that only large firms and corporations could afford to hire.
However, in today’s volatile economy, where the security or market experiences unpredictable price movements, even smaller enterprises and startups are also in need of a CFO’s service and expertise. Hence, the introduction of a virtual CFO for them.
Here is where the value of a CFO comes in for small and medium businesses:
Provide deep insights into the business finances through the use of reliable data
Forecasting and budgeting
Detailed and comprehensive financial analysis and reporting
Analyze budgets and financial trends to determine business opportunities and issues
Make recommendations, develop insights, review financials, and form strategies to support business growth and make the business process more efficient.
Presentation and preparation of monthly and quarterly financial reports and review of end-of-year financials
Evaluate and identify the possible effect of new service offerings, products, or business initiatives.
Advice on the latest tools and software
Identify business opportunities for the company to grow and expand
Cash flow management
Develop reliable cash flow forecasting models and projection processes
Virtual CFO Cost in Dallas
Virtual CFO Cost in Dallas typically ranges between $3,000 to $10,000 per month.
Research done by Salary.com shows that an average full-time CFO in the US earns $430,700 per year as of July 25, 2023. The range typically falls between $326,300 and $552,500 yearly. [1]
Such a salary is more than most small and medium-sized businesses can afford. Thus, some businesses risk by giving CFO tasks to an underqualified employee or do without a CFO-level strategy at all.
The good news is there is now an option to hire an experienced and highly qualified virtual CFO.
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Factors Affecting the Virtual CFO Rates
1. Scope of Services
The virtual CFO position is flexible, meaning that the cost of hiring them varies based on the responsibility involved and their time.
For instance, if you need a virtual CFO to handle complex financial forecasting and modeling, you can expect to pay higher rates compared to only needing basic accounting and bookkeeping services.
2. Duration of Engagement
The amount of time and effort that the virtual CFO will invest in a company will also affect the cost.
If it’s short-term work, like for a specific project only or a one-time financial analysis, it may only need a small time commitment, resulting in a lower cost.
Conversely, if it’s a long-term engagement, like ongoing financial strategy or management, it requires a larger time commitment that would contribute to a higher virtual CFO cost.
Longer engagement may require the virtual CFO to dedicate more expertise and resources to their client’s company, which would result in a higher cost.
The reason for such is that the virtual CFO will have to spend more time understanding the financial situation, creating strategies, and implementing financial management systems.
3. Complexity of the Business
The cost of hiring a virtual CFO may be higher based on the complexity and needs of your business. If you have a competent financial team that provides bookkeeping, accounting and financial controller functions to support the virtual CFO, the cost of hiring them can be lower.
4. Industry-Specific Knowledge
CFOs who have specific experience and knowledge in one industry may charge more compared to those who don’t. The reason is that they have a better understanding of the challenges that the business encounters and can render more targeted advice and services.
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Virtual CFO Pricing Models
Fixed Monthly Fee
The cost of a virtual CFO in Dallas ranges between $3,000 to $12,000 per monthly fee, the price varying by industry, location, and experience.
Hourly Rate
The average fractional hourly rate for a virtual CFO in Dallas is between $175 to $350. Still, the exact amount will vary based on the factors we shared above, plus the client’s type of business and location.
Fractional employment is a pricing model where employees work part-time during the week. It’s different from part-time or contract labor since fractional employment commonly does not represent interim or project-based work.
Companies that provide part-time CFO services usually have CFOs with full-time experience but now receive hourly compensation through a contract.
Project-based Pricing
Although fees for outsourced CFO services are often based on a monthly retainer, there are virtual CFOs and other CPA firms in Dallas that charge on a per-project basis.
Their pricing usually depends on the organization’s needs and goals and the number of hours it will take to complete the work.
For instance, if the business needs accounting-related work and the partnership is focused on a short-term engagement, then a virtual CFO may charge less than when an organization needs a strategic virtual CFO on an ongoing basis.
Other Fees Associated With Outsourced CFO Services
Service Bundle
Some companies need both CFO and accounting services and other services related to optimizing value for an eventual sale or exit. As such, the CFO may create a service bundle at a slightly discounted rate.
Retainer
A monthly retainer is usually created when an ongoing CFO service is needed. Such a service may include accounting or strategic CFO work.
Out-of-Scope Rates
Not every need will be voiced or thought of at the beginning of the business agreement. If this happens, the virtual CFO will simply charge the small business with the additional CFO service they worked on and consider it as “out-of-scope rates.”
They’ll often base it on the team or person that performed the task.
Benefits of Hiring a Virtual CFO
Cost-Effective Solution for Small and Medium-Sized Businesses
The main reason for hiring a virtual CFO is it’s cost-effective. They can produce good results, like what a full-time CFO can do but at a lower cost.
Moreover, you don’t have to pay taxes, paid holidays, retirement contributions, and medical insurance. There’s no need for office equipment or space because the job can be done remotely.
Access to Expert Financial Advice Without Need for a Fulltime CFO
A virtual CFO is generally someone with a CPA license or other certification. They have an advanced degree and broad experience working in different industries.
With these qualifications, it can assure you that the individual will be an asset to your business. This is especially true if the virtual CFO has previously worked in your specific industry.
Scalability and Flexibility to Meet Changing Business Needs
To remain competitive in today’s fast-changing business landscape, organizations must be agile and adaptable. This requires having the ability to scale operations up and down. Hiring a virtual CFO can provide your business with the scalability and flexibility it needs.
Time-Saving for Business Owners
Hiring a virtual CFO can greatly benefit busy business owners. By hiring a virtual CFO, business owners can bypass the time-consuming process from recruitment to training the newly hired CFO.
Business owners can immediately access qualified professionals ready to handle financial matters efficiently.
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What to Look For in a Virtual CFO
Excellent Track Record
Reputation, case studies, and recommendations are important factors to consider when planning to hire a virtual CFO for your business. If they have helped a company like yours, they are more likely familiar with the challenges and the strategies to apply.
Wide Network
Another factor to consider when hiring a virtual CFO is if they have a wide network of accountants and consultants. If they do, there’s a high chance that your business will get the same assistance it needs to grow.
Communication Skills
Effective communication is important for a virtual CFO, especially since they will be providing guidance and financial advice remotely. They should be responsive to your concerns and questions and explain complex financial concepts in a clear manner.
Proactive Approach
Look for a CFO who takes a proactive approach in their role, taking action before a small problem turns into a big one. They should also be able to identify potential opportunities for improvement and growth and offer strategic insights.
Furthermore, they should be capable of spotting patterns and trends in your financial data to help you with decision-making.
Technology Proficiency
It is crucial that the virtual CFO is capable of using the necessary financial software and tools you’re using in your company. They should be able to work with your existing financial processes and systems or implement new ones if necessary.
Ethical Conduct
Ensure that the virtual CFO have high ethical standards in their work. They should be honest and transparent in their financial reporting and work in the best interest of your company.
After considering all these factors when searching for a reliable virtual CFO, take time to interview the candidates. Hiring one will be a big decision, considering the impact it can have on the business decision-making process.
So, ask each candidate about their work experience, approach to financial management, and their qualifications. From there, decide who you believe will be the best fit for your business.
Negotiating Rates with a Virtual CFO
When negotiating rates with a virtual CFO, keep in mind the factors beyond just the hourly rate. Discuss the expected timelines to finish the work, the scope of their services, and other expectations about the work.
Having an honest and open discussion allows you to get the best value for your money.
Further reading: How Much Does an Accountant Cost in Dallas?
In Summary
CFO costs can be daunting for any business, especially for small businesses. The cost of a C-level executive can dramatically increase your overhead. Yet, not getting sound financial advice can also be detrimental.
That’s why small businesses outsource the work to a virtual CFO. Your business’s financial performance, sustainability, growth, and overall health are their concern.
However, the skills of a CFO are now more accessible through the work of a virtual CFO. As a small business, you don’t need to hire an expensive executive to get the financial leadership that will drive your business decisions forward.
If you’re looking for a trusted virtual CFO, check out Hall Accounting Company. We’ve worked with some of the most dynamic and fast-growing small businesses in Dallas. Contact us today.
Reference:
[1] https://www.salary.com/research/salary/alternate/cfo-salary