Running a growing business isn’t just about hitting sales targets. It’s also about checking cashflow, planning for tax obligations, and ensuring your budgeting is on track. However, many businesses find themselves stuck between being unable to afford a full-time finance director (FD) and needing a more strategic view than a bookkeeper can provide. That’s where a virtual finance director (VFD) can help.But what is the role of virtual finance directors?
A VFD works flexibly with your business and looks at the big picture. They don’t just check the numbers; they use data to guide decisions. It’s an approach that can offer the kind of insight you’d expect from an in-house FD but with more flexibility and lower overheads. A VFD can be an asset if you aim to grow fast or scale steadily.
And it’s not just about the day-to-day numbers, either. From helping you manage your cashflow to supporting you through key funding rounds, a VFD can make the difference between growth that’s guesswork and growth that’s built on real evidence.
What is a virtual finance director?
A virtual finance director is an experienced finance professional who works with you remotely. They handle strategic tasks like budgeting, forecasting, and ensuring your finances are robust. Unlike a full-time FD, you only pay for the time and expertise you need.
Statistics from the Federation of Small Businesses show that 99.8% of the UK’s business population comprises SMEs. But most of these can’t justify the salary of a permanent FD. A VFD fills that gap. We meet regularly with clients (via online meetings and calls) to look at everything from cashflow concerns to investment opportunities.
Budgeting and forecasting
Good budgeting and forecasting help you plan ahead, especially during the 2024/25 tax year when corporation tax rates are set at 25% for annual profits over £250,000 and 19% for profits up to £50,000. So, if your business falls somewhere in between, you’ll pay a tapered rate.
A VFD can model the potential impacts of this on your profits and cash reserves. We can also review how you’re drawing dividends, given the personal allowance of £12,570 (frozen until 2028), and examine ways to handle salary vs dividend strategies. By keeping up with HMRC deadlines and rules, you’ll avoid penalties and keep your tax bill as lean as possible.
But you’re not just preparing a spreadsheet once a year and hoping for the best. VFDs can stress-test different scenarios so you can see what happens if, for example, your sales grow by 20% or if you take on additional debt. This approach helps you set realistic targets. It also lets you know whether you’ll need extra capital in the year ahead.
Cashflow management
If you want to expand your business, cashflow can be a hurdle. Many small and medium-sized businesses face problems because they don’t properly track payment dates, stock levels, or pricing. A VFD can keep you on track by forecasting your cash needs weeks or months in advance.
We’ll set up regular check-ins to see who owes you money and when you need to pay suppliers. Late payments can derail your plans, so staying on top of them is essential. We’ll also examine how costs like National Insurance contributions or staff training fit into your overall plan. According to the Office for National Statistics, around 55% of UK businesses reported higher costs in early 2023. That puts extra pressure on cashflow, so forward-thinking management is more important than ever.
Funding and investment
Sometimes, to grow quickly, you’ll need outside funding. This could mean bank loans or equity finance. A VFD can help you prepare the right documents, from business plans to detailed financial forecasts. Investors and lenders want to see that you’ve got a solid plan with clear financial projections. They also want to know how you’ll repay or give them a return on their money.
We can help you present a balanced view that shows both the potential and the risks (and how you plan to manage them). Having an experienced professional in your corner can speed up the process and help you negotiate better terms. And because we’re not on your permanent payroll, you only pay for the support you need during the funding stage.
Flexibility and cost savings
One of the biggest benefits of hiring a VFD is flexibility. You’re not locked into a permanent salary, pensions, or other employment costs. You can bring your VFD on board for a set number of monthly hours or days. You can increase the hours if you need more support during busy periods – such as year-end or after a product launch. You can scale back again when things are steadier.
This can help you manage your budget more effectively. The skill set you access is identical to that of a typical FD but without the full-time price tag. You’ll still get help with strategic decisions around staffing, pricing, or big changes like expansions and acquisitions. But you won’t be paying for it 24/7.
Scalability and adaptability
The business world moves quickly, and small businesses need to adapt fast. A VFD can help you pivot if your product or service range changes. We can quickly set up new financial processes and run different scenarios to see how a shift might affect your bottom line.
You can launch a new line or open an additional site. With a VFD, you can test the numbers before committing. You’ll have the facts you need to persuade investors or your board of directors. And if things don’t go as planned, a VFD will help you adjust your approach while keeping your finances steady.
A real-world example of the role of virtual finance directors
Let’s say you run a fast-growing eCommerce business. You’ve got strong sales, but your biggest headache is understanding whether you can afford to stock more inventory and hire new staff for a busy period. You also wonder if it’s worth borrowing to fund quicker expansion.
A VFD can look at your sales forecasts, factor in your supplier terms, and build a financial plan showing how much extra income you could earn if you expand. We’ll also factor in changes like the 2024/25 corporation tax rates, any relevant VAT thresholds (currently £90,000 turnover), and how this affects your cashflow. Armed with these figures, you can decide whether the potential gains are worth the extra cost. You can also show lenders that you’ve done your homework.
We’ve got this
When you’re running a growing business, having someone you can call on for strategic financial insights is key. A VFD gives you that extra skillset at a sensible price. We can help you plan for the 2024/25 tax year and beyond, forecast growth, and find new funding. You don’t need a permanent FD – just someone on your team who can turn numbers into guidance.
If you’re looking for support that fits your budget and growth plans, we’d be happy to chat about how a virtual finance director could help. We believe in giving you the information you need to grow without letting surprise costs or missed deadlines get in the way. You set the pace; we’ll make sure your finances keep up.
Interested in hearing more about the role of virtual finance directors and how they can help your business? Get in touch with us today.
