Why do you need a physical office for finance? If you can’t provide a good answer to that question, your organization might very well benefit from a virtual finance office.

Telecommuting is the key to establishing a virtual finance department. Through telecommuting, secure online collaboration and document-sharing space, and using financial applications delivered through the software-as-a-service (SaaS) model—all issues previously discussed here—you don’t need a physical finance office at all. In fact, your organization might not need a physical office for any department—marketing, sales, IT, customer service, R&D, HR—but certainly finance could easily lead by example.

Driven by the poor economy and the need to cut expenses, companies are turning to telecommuting and virtual offices as a way to lower costs and boost productivity. As SonicWall, a virtual private network (VPN) provider, notes in a recent report, “increasingly, financial considerations such as gas prices, the credit crisis, and hard cost savings drive telecommuting programs.” Almost any business can capture these benefits.

In its most recent benefits and talent survey results, Aon Consulting, an HR and benefits consulting company, identifies the top benefits respondents see from a virtual office:

1. Increased productivity and performance

2. Increased employee engagement

3. Decreased turnover and job withdrawal

Virtual offices are increasingly common. There are big-name consulting firms that only appear to have a worldwide presence. Most of their addresses, it turns out, are small shared office spaces. A consultant can drop by, dock her workstation, recharge her cell phone, connect to the firm’s network, and be as engaged and productive virtually, maybe more so, than if she dropped into a permanent physical office. Instead of leasing costly office real estate, the firm rents a permanent address and pays only for the actual physical use.

Running finance as a virtual operation saves money, starting with a reduction in the amount of physical office space and office furnishings needed. That’s space you don’t have to heat and cool, so count on green savings, too. More green savings come by eliminating the commute to work. In addition, time spent not commuting can translate into increased productivity. The ROI from a virtual finance department can be significant.

Offsetting those gains, however, are the costs of making sure that every worker has a good telecommunications link, probably a broadband Internet connection. The virtual finance office also requires IT support, specifically a VPN or other secure communication link. IT also will have to do some rethinking about bandwidth needs and enabling applications and data for secure remote access, including authentication, authorization, and encryption, according to Todd Ringwelski, network solutions architect, Forsythe Technology.

But these aren’t virtual finance department showstoppers. The Aon study identified the three biggest concerns and — guess what — they aren’t technical:

1. Job structure (e.g., the discipline to work individually)

2. Management resistance (e.g., supervisor discomfort with managing remotely)

3. Organizational culture (e.g., fear of change)

The real barriers are managerial and cultural, not the IT challenges you would expect. Realizing the benefits of a virtual finance department is within your control. ###