More than ever, nonprofit organizations are looking for ways to operate more efficiently. There is pressure to reduce employees and outsource whenever possible, and as a result, hiring virtual CFO services rather than the more conventional in-house full-time CFO has become more popular.
Would you like a third party to take care of your financial reporting and other financial processes, yet you are unsure whether these virtual CFO services will be valuable for your nonprofit organization? In this material, we will depict the benefits of virtual CFO services, offering you advice on how to choose a service provider.
Achieving your nonprofit objectives requires you to focus on developing your mission, range of activities and attracting donors. However, even the most tenacious nonprofit organizations can encounter problems if they lack a solid financial base. Virtual CFOs, or external financial consultants that offer their talents and knowledge, can be useful in this situation.
Virtual Chief Financial Officers (CFOs) and virtual CFO services offer crucial financial help for organizations of all sizes, from certified nonprofit accounting to seasoned financial consultants.
Some daily tasks of a virtual CFO role include:
- Being an active part in the financial decision-making process of the organization
- Determining financial key indicators and monitoring financial statements and reports
- Nonprofit accounting and bookkeeping
- Using nonprofit accounting software for account management
- Donor preparation: internal audits, pitch decks, and financial models
- Regularly interpreting financial data
- Overseeing the annual budgeting process and creating the annual plan
- Cash planning and management
- Strategic planning
Compared to hiring an in-house CFO, there are numerous benefits that come along with employing virtual nonprofit CFO services.
Here are some of the reasons why a virtual CFO service can benefit those operating in the nonprofit sector:
Any time you hire someone new in your nonprofit organization, you can’t anticipate them to be productive right away.
It may take weeks or even months to train someone, depending on their position within the organization. In fact, it could take this person a good amount of months to reach their peak performance. That isn’t very productive. However, that is also the case if you decide to hire a traditional CFO for your nonprofit.
Even though a virtual CFO might not be working to capacity on day one, the learning curve will be noticeably slashed. They have plenty of experience with onboarding at new nonprofit organizations, so they are aware of how to quickly settle in and maximize their productivity.
Given their vast experience in the nonprofit sector, a virtual CFO can quickly evaluate the status of your nonprofit organization and take the appropriate action.
Before you hire someone to manage your financial data, it is important to make some well-thought decisions on your own. A virtual CFO will be less expensive than hiring an internal, full-time traditional in-house CFO for your nonprofit organization.
Given their vast expertise in the field, a professional CFO has every right to ask for high pay. Additionally, if you factor in a full-time salary, perks, and vacation time, the job could easily cost you more than your balance sheet would allow. Nonprofit organizations typically don’t have that kind of cash on hand.
However, a virtual CFO or an outsourced CFO service will only charge you for the time and outputs required by your organization. This might simply be a couple of hours a week, depending on your needs.
Not every nonprofit organization requires 40 hours of nonprofit accounting, does it?
If you choose to employ a virtual CFO, you won’t need to worry about adding them to your payroll, providing employeebenefits, or dealing with any other hiring-related expenses.
You might not have a standardized layout and reporting for all of your financial records, even if you have previously worked with an accountant or a bookkeeper. When it’s time to generate forecasts or produce financial statements, this could become an issue.
Standards such as IRS or GAAP will be used by any knowledgeable virtual CFO service. They’ll also advise your bookkeeping team on how to uniformize procedures no matter where you are based. The end result of using this strategy is that your records will remain structured, and your financial reporting will be more accurate.
This way, your nonprofit organization can be more appealing to potential donors who are attracted by well-structured financial reports.
All CFOs have a background in finance and accounting. That goes without saying. Yet, a traditional in-house CFO will probably have worked with just one or two businesses for most of their career. Their whole experience is therefore somewhat constrained.
A virtual CFO, however, will be considerably more knowledgeable. They will have prior experience dealing with numerous companies in various industries. Due to their extensive experience, an outsourced CFO is therefore more likely to be familiar with how to suit your organization’s needs. Your firm will gain a ton of value from this.
From the perspective of an executive position, you’ll receive additional insight and analysis that you typically wouldn’t receive from a standard full-time CFO
Much like hiring a new employee, finding the right virtual CFO services for your nonprofit organization can take some time and effort. Therefore, it is important to make a clear analysis of your options.
Before choosing a virtual CFO, take into account the following aspects:
- Cost breakdown: Virtual CFOs ought to be open and honest. Any add-ons should be agreed upon beforehand, and all fees and prices should be made explicit from the start. You require a company that you can believe in. You are entrusting them with your money, after all.
- Expectations: What does your fictitious CFO anticipate of you? They might need links to resources, access to digital documents, or perhaps a full onboarding from your present financial team. Find out what you can do to facilitate the changeover and promote a collaborative environment.
- Industry knowledge: Besides the nonprofit sector as a whole, it can be wise to look into hiring a virtual CFO who has experience in your particular industry, whether it is environment, social issues, or religion. Every industry has its peculiarities and specialties, therefore enlisting a virtual CFO who is conversant with some of these practices.
While financial management might not be your main field of activity, Zivo will offer you tremendous help through its virtual CFO services. You save time and money, while we take care of the entire process.
Book a free consultation with Zivo if you need a Canadian professional to look over your finances before you decide whether to proceed with a CFO or on your own!