Virtual Finance Department or Fractional FD?
Virtual Finance department, Virtual Finance Director or Fractional Finance Director: which does your business need?
Your business has grown, but the financial support around it may look much the same as it did a few years ago.
You might have someone in your team taking care of the day-to-day bookkeeping and an accountant preparing your accounts at the end of the year. But that doesn’t necessarily give you the information you need when deciding what you can afford to spend. If you’re considering taking on another employee, you need to understand whether the business can cover the extra cost over the coming months.
You might need someone to prepare more useful financial reports, or you may already have those reports but want experienced help deciding what to do next.
At Pisces, we provide a virtual finance department, with the option of adding Virtual Finance Director support. We also offer a standalone fractional Finance Director service for businesses that already have their accounts team in place.
1. What is a virtual finance department?
A virtual finance department is an external team that takes responsibility for agreed parts of your business’s finances. It gives you access to the people needed to manage the work without employing a whole finance team yourself.
The service can cover everyday accounting responsibilities, including bookkeeping and payroll, alongside monthly management accounts and financial forecasts.
For the owner, this means having someone responsible for getting the accounts ready and providing the information needed to manage the business.
For example, your accounting software might show a profit, but you’re unsure whether all the costs have been included. Before you can rely on that figure, someone needs to check the records and deal with anything missing.
The finance department handles that underlying work and prepares the reports. You should know when you’ll receive them and who to contact if a figure needs explaining.
At Pisces, we agree the responsibilities around your existing arrangements. If you already have someone doing part of the work well, we can discuss how we would work alongside them.
2. What is a Virtual Finance Director?
A Virtual Finance Director provides experienced input into the financial management of your business.
At Pisces, we offer this as an addition to our virtual finance department package. Our team prepares the accounts and reporting, while your Virtual Finance Director works with you on the decisions that follow.
Suppose you’re considering recruiting another employee. The monthly accounts show that the business is profitable, but the new salary will increase your costs before the employee starts generating income.
Your Virtual Finance Director can help assess that commitment using the forecast. They’ll discuss the assumptions with you, including how much additional work is likely to arrive and what happens if it takes longer than expected.
Because the service sits alongside the finance department, the director can work with the team preparing the figures and ask for further information where needed.
The conversations should reflect what’s happening in your business. Some months may involve reviewing performance against the budget. At other times, you may need more involvement because you’re planning a substantial investment or dealing with pressure on cash.
3. What is a fractional Finance Director?
A fractional Finance Director works with your business for an agreed amount of time, without joining as a full-time employee.
At Pisces, this is a standalone service. You can appoint us as your fractional Finance Director while keeping your existing bookkeeper, accountant or internal finance team.
That makes it suitable for a business where the accounts are being managed properly but the owner needs more senior financial support.
You may already receive reliable monthly reports, for example, but want someone to challenge the forecast and help you assess your plans. Your team can prepare the information, with the fractional Finance Director reviewing it and discussing the implications with you.
The director also needs to understand how your business operates. In a creative agency, that might involve looking at how project overruns affect profitability and whether your pricing allows for the amount of work being delivered.
The distinction in our services is straightforward: our Virtual Finance Director support accompanies our finance department package; our fractional Finance Director service stands alone.
You may see these terms used differently elsewhere, so it’s worth checking what each provider includes.
4. When might your company need these services?
The right starting point depends on what’s missing from your current arrangements.
When the accounts work needs more support
A virtual finance department may suit you if too much financial administration still falls back on you, or if you struggle to get reliable reports when you need them.
Perhaps you spend time each month collecting missing information and checking whether the bookkeeping is complete. By the time the accounts are ready, you’ve already made the decisions they were meant to inform.
In that situation, the immediate need is to put a dependable process around the work and give someone responsibility for delivering it.
When you also need help with financial decisions
Adding Virtual Finance Director support may be useful when you want us to manage the finance department and work more closely with you on the business.
You might be planning to grow the team and need to understand how quickly the extra costs can be supported. Or turnover may be increasing without the improvement in cash you expected.
The finance department prepares the information needed to investigate. Your Virtual Finance Director helps you assess what it means and agree what to do.
When your existing team needs senior input
A fractional Finance Director may be a better fit if your accounts team is working well and you want to keep those arrangements.
You could need experienced support for an ongoing period or while working through a particular stage of growth. The role can include reviewing the financial plan and helping your team develop reporting that answers the questions you’re facing.
5. What are the benefits compared with hiring staff directly?
Employing someone can be the right decision, particularly when there’s enough work to justify a full-time role.
For a growing business, however, the requirement isn’t always that simple. You may have plenty of bookkeeping work but only need a few days of senior financial input each month.
You can match the support to the work
Using an external service allows you to agree the level of involvement you need. You don’t have to create a full-time position to gain access to an experienced Finance Director.
That can make senior support affordable at an earlier stage, when the decisions are becoming more demanding but the business doesn’t yet need a full-time appointment.
Different tasks can go to people with the right experience
Processing transactions and advising on a growth plan require different experience. A finance department service can allocate the work accordingly, with senior input added where it’s useful.
Trying to recruit one person to cover the whole range can be difficult, especially if the role contains a substantial amount of routine accounts work.
The arrangement can develop with the business
You may initially need dependable monthly accounts, then want more detailed forecasts as you prepare to recruit.
An external arrangement can be reviewed as those requirements change. The scope and fee still need to be agreed, but you have an opportunity to adjust the support without immediately making another permanent appointment.
You can draw on experience from other businesses
An experienced Finance Director brings knowledge of how other businesses have handled similar decisions.
For an agency owner, that can be useful when assessing project margins or managing the gap between paying staff and receiving money from clients. The advice still needs to reflect your circumstances, but you have someone who knows which questions to investigate.
You spend less time managing the finance work yourself
Where an external department takes responsibility for the accounts process, the owner has less work to coordinate personally.
You’ll still need to provide information and approve decisions. But you should have a clear point of contact and agreed deadlines, reducing the amount of chasing needed to get your reports.
Can Pisces provide these services?
Yes. Pisces provides a virtual finance department, with Virtual Finance Director support available as an addition to that package.
We also provide a standalone fractional Finance Director service for businesses that want senior financial input while retaining their existing accounts arrangements.
We work with owner-managed businesses and can discuss taking responsibility for the finance work or supporting the people you already have.
Get in touch with Pisces to talk through your current arrangements and where you need more support.