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Comparing In-house vs. Virtual CFO Services

Ashish M. Shaji

| Updated: Oct 19, 2021 | Category: CFO Service

Comparing In-House vs. Virtual CFO Services

When making crucial decisions like hiring a CFO for a company, there may be confusion between whether to hire an in-house CFO or go for Virtual CFO services. Before you arrive at final decision, a lot of things are looked at, such as the operational area, size and the organizational requirements. Once you align your business requirements, then you would be able to make better choice for your business. But do you know what differentiates the two? We will find out in this article by comparing In house vs Virtual CFO.

Who is a CFO?

CFO stands for Chief Financial Officer, who oversees the financial aspects of a company. A CFO analyses financial data, reports financial performance, does cost management etc. CFO is a crucial part of any company, and the responsibilities of a CFO is not limited to the management of financial resources of the company. They decide the capital structure[1] of the company and also decide when and where to invest.

In-house vs. Virtual CFO Services: Meaning

  • In-house CFO-

In-house CFO refers to a CFO who performs his/her duties while being at their designated seat in the company.

  • Virtual CFO

VCFO is an outsourcing service which provides all functions of a CFO but by not being at the designated seat in the company but remotely. A Virtual CFO may not be there on-site but would be available whenever you need him.

Now that we have understood its meaning let’s compare the two.

Comparing In house vs Virtual CFO Services

An In-house CFO and VCFO can be compared on the following factors:

Comparing In-house vs. Virtual CFO Services
  • Handling Responsibilities

An In-house CFO oversees and handles financial aspects of the organization where they are hired. It makes them answerable to stakeholders, board members, and employees. CFO is assisted by the accounting team to prepare a roadmap for a better future of the company.

VCFO extends all services of CFO but provides them when the company requires from them. They provide the services of financial planning, reporting and strategic services without the need for hiring a CFO and accounting staff. Moreover, a VCFO can take care of multiple financial services of different businesses at a time as the VCFO has a team of its own. Hence, you only need to pay for the services that you have rendered from VCFO.

  • Responsiveness

When you hire an in-house CFO for your company, you may need to rely on the expertise and knowledge of a person to take care of your finances. Here your in-house CFO may speculate the future, but there is no 100% surety that the CFO would be able to take swift decisions based on market trends.

Taking the option of best VCFO can provide the best services on your business requirement as they have a vast experience of working under different market conditions. Additionally, VCFOs comprise of a competent team and professionals who support them in handling complicated financial situations.

  • Productivity

An In-house CFO may take some time to understand your business and financial structure. Further, the CFO may be unable to offer the optimum level of productivity straightaway.

However, VCFO has the potential to speed up the productivity of your business instantly. Virtual CFOs have vast experience in different domains, and possess with the knowledge of the latest technologies. Thus, when you are seeking to raise the productivity of your business swiftly, you should go for VCFO services.

  • Cost

One of the most significant differentiating factors between an in-house CFO and VCFO is the costs involved. Large business organizations may be able to hire an in-house CFO, but smaller businesses may not be able to afford in-house CFO. Here using the services of outsourced CFO can be ideal. With VCFO services, business owners need to pay only for those what they need. Moreover, they can also save on overheads that arise with hiring full-time additional employees.

  • Reliability

One of the concerns with VCFOs is that they may not be as reliable as traditional in-house CFOs. Another factor that business owners need to think about is trustworthiness. Some business owners believe that an outsourced CFO poses a security risk, as they may not feel a sense of company loyalty and may end up sharing sensitive information to sources they shouldn’t.

  • Convenience

If you are thinking in terms of convenience, then having an in-house CFO around can be more convenient considering your financial needs. If your financial needs are not extensive, then VCFO can be better option.

  • Empowering decision making

A business or a company should make profitable decisions related to future business investments. A VCFO can help in making data-driven decisions. They can assist you in arriving at accurate and low-risk investment calls.

Takeaway

When you decide between in house vs Virtual CFO, then keep in mind the size of your enterprise. If your business has reached at a point where it needs the services of a CFO, VCFO can be an ideal option as they provide substantial cost-savings. However, if your enterprise is generating sizeable annual revenue, then you should consider hiring an in-house CFO who can be entirely devoted to your business finances.

Read our article:10 Benefits of Hiring Virtual CFO Services

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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