Day in the Life of a Virtual Finance Director

Alongside the day-to-day responsibility of keeping the Offshore Group running smoothly across the Guernsey, Jersey and Mauritius offices, Managing Director Craig Shorto and Jersey Director Daan van Heerden spend their time acting as outsourced virtual finance directors for businesses across offshore financial centres around the globe.

But what does that really mean?

We sat down to chat with them about what that looks like on a day-to-day level.

For anyone unfamiliar, what exactly does a Virtual Finance Director do?

Craig Shorto: A Virtual Finance Director (FD) is somebody who will essentially act as a delta between the finance team and the board, whether that's an internal finance team or an outsourced finance team.

That virtual FD will be responsible for delivering things like budgeting, strategy-level advice, and more of the other high-level stuff—not the processing, which happens underneath by the accounts team.

How does this role differ from that of an accountant or a bookkeeper?

Daan van Heerden: I think something that jumped out to me that Craig was saying there is "strategy."

Being a VFD is really about working with the owners or board of directors of a company to implement that strategy and that high-level thinking. Often it's either to solve a complex problem in the business or to look at growing and developing the business.

What type of businesses does Offshore Group typically work with when providing a virtual FD service?

Craig Shorto: We work with a variety of different businesses, really, but where it fits most neatly is businesses that are looking to grow, expand or make some form of strategic move, and therefore they need that higher level advice.

A lot of businesses will have a finance director because they're big enough to warrant it, but there'll be lots of businesses that need director-level finance experience and guidance, but more on a fractional or virtual basis—either from a transactional perspective to get something over the line, like a merger or acquisition, or in an ongoing arrangement; just making sure that they're keeping on top of the strategic bits that their accounts team can't take care of.

If you were spending a whole day on a client in your capacity as a virtual FD, could you walk us through a typical day of what that would involve? What does your morning look like? Your afternoon? Are you looking at emails, reviewing cash flow, leadership meetings, forecasting and the like?

Daan van Heerden: I think a big part of the role for us has to do with, to give an example, engaging in advance of a monthly or quarterly board meeting. So a lot of that would be prep with the team, such as their or our finance team looking at the bookkeeping and the financial controller and working with them to make sure that everyone is happy and fine with all the figures.

But then the really important stuff has more to do with the reporting. Reporting the board meeting, engaging with the leadership team at the company, looking at historical information and looking forwards at forecasts...

Often, it also goes deep into the KPIs of the business, understanding those, reporting on them, and planning for how to keep driving them going forward.

Could you give us some examples of the kind of client problems that would tend to land in your inbox or on your desk in your role as a virtual FD?

Craig Shorto: It can vary. Sometimes, it's more annualised services; things such as preparing an annual budget and going through that with the board members and the management team, and obviously coming up with a final budget, which we would then incorporate into management reporting and KPI reporting.

And then the other end of the spectrum would be, to give an example, a more one-off project. For instance, there's a business that we worked with recently, which had an online business, originally run from Guernsey. But actually, most of its customers were in the UK. And so what we did is help them restructure their business by moving to a Guernsey holding company, which then owns the UK online business.

So that project entailed restructuring that business from Guernsey into the UK, where its customer base is, where it can take real commercial advantage of things like Klarna and Stripe, and all the kinds of things you can't get in the Channel Islands.

So, we've run that project for them from start to finish, and then I continue to act as their virtual FD at the same time as the Offshore Group team acting as their outsourced finance team and looking after the day-to-day finance operations.

What are some of the biggest mistakes that you see businesses make before they get to the point of seeking help?

Craig Shorto: Focusing on revenue over profit is huge. Everybody wants to go down to the pub in the afternoon and tell their friends how much revenue they've made, but only the successful people talk about profit.

"Revenue is vanity, profit is sanity," is what they say in all the textbooks. That's a big one.

Another one is just not regularly reporting, so people just have no grasp of where they actually are.

We've had clients who are actively making money, but they have no idea from a sales control perspective what was happening and where the money was coming from.

They knew their customers, of course, but what I mean is they didn't know if they were missing revenue or overcharging people. It's just a lack of organisation, really. So that's where we step in to help.

Daan van Heerden: I also think that sometimes they wait too long. I think they leave it completely, or they try to do it themselves, and while they're great at running the business, they struggle with the finances.

So if they go into distress and leave it too long before they bring someone in, and they've been in trouble for a year at that point, if they had just asked for help a year earlier, they would have seen the light a year earlier. Instead, some businesses have the tendency to kind of string it out and almost wait until it's gone really poorly before they actually bring someone in.

Craig Shorto: Absolutely. A lot of businesses very much "live in the now," which is a big problem. A question that I get asked all the time, across all industries, and get in so many conversations when I meet people the first time, is "How much money am I going to make next month?"

Or, "If I make this cost change, how much does that mean in a couple of months?" When, actually, they need to be looking at 18, 24, 36 months in advance, tying that into what their overall goals are, and then actually having a structured plan of how to get there, rather than doing things on a whim and hoping things go well because they're doing good things and have good habits.

Can you share an example of a business problem that you helped solve?

Daan van Heerden: Recently, one of the laws in Jersey changed, so our client was trying to change how they operate their business and increase their volumes because of it.

We worked with them, did budgeting, looking at what their new volumes could be in the business for sales. Then we looked at ramping up to that sales volume—what was needed in terms of cash flow so that they could go out and get financing and actually ramp up production so that they could then meet future demands.

That's a typical point where, because of the law change, they've had the opportunity to reset the business. They needed to get their finances in place to actually achieve that, so we helped them through that cycle so they knew how much financing to get to realise their goal.

Craig Shorto: We also took on a client probably 12 months ago now that's a holiday rentals business. They had big problems with monitoring margin and cost control—and when you boiled it all down, the reality was they didn't have a pricing model.

So we had these various properties that they were renting out, and the prices were a little bit sporadic and not necessarily formulaic. And so we're getting to situations where, actually, some weeks or stays were actually on a loss-making basis. And so, as soon as we could after we started, we implemented a pricing model by property, which listed out every cost based on every board basis, and then applied the margin to that.

And so they're now using that for their pricing, and every stay they've done since has hit at there or thereabouts on their targeted budget.

What do people commonly misunderstand about a virtual FD?

Craig Shorto: I think the biggest misunderstanding is that, because it's a virtual FD and not a full-time FD, and it's not somebody working full-time in the business, that you only get part-time of somebody's experience and knowledge, and actually, that isn't true.

A virtual FD exists because you don't necessarily have a full-time requirement for an FD, but you still need the experience and know-how of an experienced FD. And so by taking this route, you actually get the same level of expertise, the same level of experience, but not at the same cost as a full-time FD.

How do you see the role of a virtual FD changing over the next few years?

Craig Shorto: I think it's going to become more important as businesses that are looking to the future are going to be in a position where they'll be able to automate some of the processing that happens below. That might lead to less headcount in those positions, and then that might lead to less internal conversation around who's doing what or what's happening in the business.

And so I think the virtual FD role is going to become even more of the value-add piece that, as it currently stands, AI can't really do. AI won't sit in your board meeting and have a conversation with the directors and the shareholders. 

How do you think AI is going to shape the role of the virtual FD?

Craig Shorto: I think it's going to make the virtual FD role more powerful, because I think an experienced FD will have more information at their fingertips, meaning that they can be even more effective than they are currently.

If a business owner were reading this and they could take one action today to improve their financial visibility, and they could do it themselves, what would you tell them to do?

Craig Shorto: Go and have a conversation with somebody who does what we do to figure out what it is that your business needs. Most businesses like ours will offer a no-obligation conversation with somebody, and that might just give them some of the answers that they need.

I always tell business owners this: if you aspire to move your business forward, you can, for a reasonable cost, get someone with lots of experience to help you do that. Even if it's just on a short-term basis, and you say, "Look, just come in and help me for six months. Teach me what I need to do. Give me your thoughts and your impressions." It can be quite powerful for a business owner. Especially for somebody who is financially literate and doesn't want to completely rely on somebody else.

Acting as a virtual FD or outsourced financial support can also be very much about modelling what is important and what's useful for the business, so that they can actually go away and do it themselves.

It's not always about being in position for 5, 10 years.

How does your offering line up with that of a more traditional, full-time financial director?

Craig Shorto: If you think of the number of businesses that I've worked across in the last five years as virtual FD, if you combine all of that experience, albeit fractional in nature, but from different industries, different businesses, working with different people, working with different finance teams, it's such a big scope of experience versus someone who's just been an FD at one business or group, one group of businesses for the last five years, because they'll only been exposed to what's around them.

Whereas for us, we could be working on an accommodation holiday rentals business one day, and then the next day we're working on a medicinal isotopes business, which is listed in the US.

And there's such a big gap between the experience that gives you, versus the experience that someone may get from working at two businesses across twenty years.

In your role as a virtual FD for your clients, which part of your day do you enjoy the most?

Craig Shorto: I love dealing with the boards and the owners. A lot of businesses that we work with are owner-managed, and so you can really add value by sitting down and speaking to them and helping them run successful businesses.

I find that really rewarding, because these guys might be, for example, estate agents and way better at selling a house than I would ever be, but at the same time, my experience and my qualifications mean that I can add a skill that they don't necessarily have. And being able to do that is very rewarding.