YanJie-Horizon

The Reality of the Virtual CFO

Author: Juergen E.L. Meyer, YanJie-Horizon

The responsibility of a CFO is first of all to take care of profitability and liquidity. But his role goes beyond that.

The CFO has a strategic role in the company which is different to the overall responsibility of a CEO and much more focusing on financial aspects and results and the financial relations with banks, stakeholders and tax authorities. Targeting these present and future developments he optimizes conditions for future success. Processes, organization and quite often operational IT within the current company structure and even more important strategy design and risk control are his core business. That's why he takes lead in acquisitions, mergers and divestments to develop strategy. He is in charge of general company control so that profitability, liquidity and future sustainability is a certain consequence and not a result by chance. All of that is more or less the same in large business groups and in small or middle-sized enterprises.

This has an important meaning when you compare his role with a Financial Director and an Interim Manager Finance. The financial director is in a subordinated unit within a group of companies and at best he is reporting to the CFO. Just like the interim manager his tasks are defined and dedicated and not of a global, independent meaning in a business. An interim manager has to realize certain tasks and targets (often in a limited time) like a financial director positioned in a certain unit of a large company or a business group. Not to doubt their level of independence, not to question their responsibility beyond accounting and money. Quite often they are in charge of IT, logistics, maybe even HR. But they don't have a leadership role in the business design and development. They lack a participation in these strategic changes.

What is the Virtual CFO?

In small and middle-sized companies a strategic mind is essential even when dealing with daily affairs. Where future targets cannot be separated from today's and tomorrow's decisions, where structures are not detailed yet, where rules are more global than fine-tuned and compliance is more personalized than institutionalized, the role of a finance responsible in SMEs is more like a CFO than that of a manager fulfilling a task and following rules.

But the professionalism of the Financial Leader designing future of an SME is costly and may in small companies not even require a full-time person. That is where the virtual CFO steps in.

The virtual CFO is professional to cover all responsibility of a CFO in a small or medium sized company. He has the long-term strategic view, he knows what growth means for the company, for financial resources, employee skills, process details and asset capacities. Improvement capabilities, balancing financial requirements and supporting business development in the same moment are key for him.

The virtual CFO is virtual as he is not the company's employee and mostly he is not full-time involved like an interim manager. His virtual preoccupation is thoroughly, while his physical attendance is limited. Virtual is more than remote! The virtual CFO is real and fully responsible like a CFO in every minute he is present or not.