Payroll is often a pain-point for SMEs. It is a time-consuming task, and one where errors are easily made. Many small business owners are unaware what can and cannot be entered on the payroll, with the result that they may pay more tax than they should, miss out on legitimate expenses, or fail to report their pay and benefits accurately. This is rarely an issue for larger businesses and established SMEs, because these companies usually have an in-house payroll expert who knows their way around the process. However, such a resource is frequently beyond the budget of smaller companies.
Increasingly, therefore, companies are turning to Virtual Finance Director (VFD) services as an on-demand source of payroll expertise they can draw on when needed. However, what are they? And are they worth it? Read on to find out.
What is a Virtual Finance Director?
A Virtual Finance Director (VFD) is a dedicated financial advisor who is available to provide executive-level financial advice either face to face or remotely, on various aspects of a company’s finances. A VFD does exactly what a full-time in-house Finance Director would do, at a fraction of the cost of maintaining a high level professional in-house.
Many VFD’s combine experience working as Finance Directors in private or public limited companies with accountancy and other financial experience. As such, they have a highly extensive skillset. VFDs are qualified to handle all aspects of payroll, including compliance, but this is just one element of a holistic approach to financial organisation. With a VFD, the entire process of cashflow management is integrated, enabling advanced strategic planning.
Many in-house payroll experts are excellent at what they do. However, their skills tend to be honed to one particular organisational requirement. With a Virtual Finance Director, you get the benefit of a broader, multi-faceted skillset, taking in different aspects of financial best practice in management.
Is A Virtual Finance Director Cost-Effective?
Using the services of a Virtual finance director is far more cost-effective than hiring a full-time FD, but the cost of a VFD will depend on the size of your business and your requirements. The service is designed so that you pay for what you need, and nothing more. As such, the cost of a virtual finance director can be tailored to your budget. This makes VFDs ideal both for small to medium-sized businesses and for organisations where scalability is central to their business model. VFDs are fundamentally agile and flexible, and they infuse this dexterity into your management accounting techniques.
How Flexible are Virtual Finance Directors?
The purpose of Virtual Finance Directors is to be flexible. For most SMEs, scalability is central, which is one of the reasons why VFDs can be a significant benefit. Companies often find that they need a service that can add to or reduce its workload, tailoring its capacity to the current goal.
Is a Virtual Finance Director The Same As An Expert?
A Virtual Finance Director is a financial strategy expert. They may not have as much specific experience in areas such as payroll or so on, but their work gives them a higher level, strategic viewpoint that individual specialists may not have. Bringing together expertise, skills, and experience from multiple industries and areas of finance, your VFD has a 360° view of financial health, strategy, and forecasting. This can be a significant benefit for SMEs, particularly during the early days when change is a constant companion.
Contrastively, a payroll expert usually develops an encyclopaedic knowledge of your specific organisation – and one that is restricted to payroll and HR. This can be highly valuable. However, the lack of exposure to broader financial strategies can make this knowledge slightly limiting if what you’re looking for is high-level strategic expertise.
Does a Virtual Finance Director Take Control of My Business?
All business processes require a degree of collaboration and trust. When you decide to work with a VFD, you will retain complete strategic control – they are not an Executive Director of your business or a decision-making partner in any way. However, they will use their advanced expertise to offer both practical services and advice, and this can be a springboard for more effective decision-making by your in-house senior team.
What Next?
If you would like to learn more about Virtual Finance Directors and whether the flexibility of a VFD may be of benefit to your organisation, please book a 15 minute chat with one of our friendly experts today.
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