Whether you are contemplating hiring a CFO and need to know what’s right for you or you are re-evaluating what’s working (and what’s not) in your current finance department, we’re giving professional insight on whether you need a virtual CFO or in-house CFO and the pros and cons of both.
What is a CFO? A chief financial officer, also known as a CFO, helps with the financial decisions in your company, the scope of which depends on your company policy and what your company currently needs.
Rather than reporting on how your company is performing financially, like a bookkeeper or accountant, your CFO uses your reporting insights to strategize the most efficient way to maximize your future growth.
There are two main differences between a virtual CFO and an in-house CFO, where they work and the investment to hire.
The average cost of an in-house CFO for 2024 is $437,000 salaried with benefits and bonuses. A virtual CFO can range on average from $1,200 – $2,500 per day, and here at ModVentures, we create a custom quote based on your needs.
As their titles convey, a virtual CFO works virtually in an outsourced position. Depending on the firm, you may be able to invest in a complete virtual finance department. Alternatively, an in-house CFO is on your payroll and works according to your company standards, whether that’s coming to your office or utilizing a hybrid schedule.
Before you make your decision based on these two facts alone, let’s look at some of the other aspects of hiring an in-house or virtual CFO:
Both an in-house CFO and a virtual CFO have comparable experience. The benefit of working with an in-house CFO is the extensive hiring process you can utilize to find the CFO that’s right for your industry and company.
The downside is that you have to implement said process and potentially invest in a talent recruiter – which you can expect to pay 15% to 30% of the hired employee’s first-year pay.
A virtual CFO may work alone or maybe a part of a larger virtual firm. With a virtual firm, they’re able to best match a CFO to your company based on that CFO’s knowledge and experience. In some cases, your virtual CFO may have the support of a behind-the-scenes team, allowing them to work more efficiently with your company.
Rather than being inaccessible, virtual CFOs often are more accessible than in-house CFOs. With clear lines of communication in place, virtual CFOs are readily available for quick changes and incoming information or data. This flexibility is just one of the ways an outsourced CFO can help your growing business.
With an in-house CFO, communication can be hard when you need to align schedules. But, overall, if you’re working in the same company in the same building, a quick trip to their office can solve the issue – albeit a little more confrontational.
In regards to decision-making, it depends on your company policy. While some companies are comfortable trusting a CFO to make the financial decisions, others prefer to keep a CFO in an advisory role.
When hiring a CFO, it’s important to have a strong sense of trust and reliance in their decisions. While hiring an in-house CFO can feel more secure initially due to the high-touch in-person onboarding process, a good virtual CFO and their firm will provide an experience that builds trust and a sense of camaraderie despite the physical distance.
In the search for a virtual CFO, you may find it easier to find a firm or CFO that aligns with and cares for your company’s values. As you’re not limited to your local talent pool, you’re able to connect with talents that truly connect with your business. This is especially true for non-profits and other value-based organizations.
Ultimately, it depends on where your company is at, what your company needs, and what your company can handle financially. After comparing some of the aspects mentioned above you’re still unsure which type of CFO is best suited for your company, reach out for a free consultation.
During our consultation, we’ll take a quick deep dive into what you’re looking for and what your end result should look like. We’ll guide you through deciding whether you would benefit most from an in-house CFO, virtual CFO, or if you need a project-based CFO.