Virtual CFOs (Part 1): Just tech-savvy accountants or the future of business finance?

Virtual or remote CFOs are using specialist software and cloud solutions to deliver services to small businesses and entrepreneurs. But as their automated solutions free up the business to focus on strategy and growth, could they be creating a model for the CFO of the future - regardless of organisational size? Beth Amato spoke to three virtual CFOs to learn how they are shaping the future of finance.

If robots can raise children as the fourth industrial revolution rolls in, there’s no reason why a fairly conservative role – the chief financial officer – won’t be changed by significant workplace digitisation. While South Africa has always been behind the Silicon Valley curve, Louw Barnardt (pictured), co-founder of Outsourced CFO says that South Africa is an emerging market with high cloud technology adoption and that “cloud accounting” is rapidly replacing desktop versions of the same software.
 
“Instead of technology replacing the role of the chief financial officer, their time will be freed up to focus on strategy and not colonised by mundane tasks,” says Barnardt. With this level of freedom from the mundane, senior finance professionals will have the freedom to work on more than one concept or company at a time, and a new kind of CFO will emerge – a virtual CFO.
 
According to an article published in In the Black, as much as ten per cent of all accounting revenue in the US derives from virtual CFO services. The virtual CFO is well suited to small and medium-sized businesses that need to keep their overheads low, but where information is a click away. The relationship between the virtual CFO and the client is wholly dependent on the correct software being in place.  
 
The virtual CFO – a definition
“A virtual CFO fulfils the position of a full-time CFO at a small to medium-sized company but works on this client on a part-time basis. The technology we use – cloud accounting, integrated software and artificial intelligence – enables this,” explains Louw.
 
Xero, the provider of cloud-based accounting software, notes in a blog post that a virtual CFO plays the CFO role for a fraction of the cost, acts as a sounding board, provides financial sanity and is essentially a financial advisor. The commoditisation of compliance work, increased competition, increased fee compression and the rise of technology in automating basic functions have laid the groundwork for the virtual CFO to operate.
 
At the Outsourced CFO, 80 percent of client bookkeeping is done automatically. Cloud accounting software links to a company’s bank feed, and transactions are placed directly in the accounting software. Time is saved and real-time access to financial information is possible. In addition, debtor and supplier invoices are captured in the cloud, and so financial information is always up to date.
 
Louw says that the cloud services have strong reporting tools that can generate graphs, variance reports and key metrics to form a financial dashboard for Outsourced CFO’s clients.
 
Graeme Shapiro, owner of Myccountant, offers virtual CFO and accounting services through his clients’ cloud accounting platforms. “Technology is fundamentally changing the finance profession,” he says, “and it helps entrepreneurs focus on business, instead of merely recording it, and it helps accountants focus on strategy instead of wasting time manually capturing transactions.”
 
Graham works with small to medium-sized companies, adding value through advanced reporting software. This software includes live dashboards and cash flow forecasts. “With these tools we give our clients a view on the impact of their decisions and what decisions they could be making,” he says.