Virtual CFO
Virtual CFO: a partner in the pathway to success
#COVID19 pandemic has caused businesses across all sectors to struggle to stay afloat and to make matters worse, not only India but the whole world is facing an economic slowdown. With significant uncertainty of how the pandemic situation will evolve as we approach the end of the year, many are worried that the worst is yet to come. So now organizations, have accelerated their actions to protect their financial results as well as their employees, customers, and suppliers.
Amid all this uncertainty, a #CFO (i.e. Chief Financial Officer) can play a strong, central role, alongside executive peers, in stabilizing the business and positioning it to thrive when conditions improve. The CFO is the leader, after all, who most directly contributes to a company’s financial health and organizational resilience day today. CFO can help to relieve some duties and insight provided by him/her will be valuable in ensuring the accuracy of the business’ financials and various compliance.
However, the problem is most of the start-ups or MSMEs are not having CFOs, and business owners very often face the problem when a regular CFO is not on board or at times it is not cost-effective to appoint an in-house CFO on a full-time basis.
In many of the cases, either the founders or some other person at key leadership are assuming the role of a CFO along with many other managerial roles. Though the role of a CFO is an independent professional role and it’s not easy to have a full-time professional CFO. Herein a virtual CFO i.e. an outsourced service provider offering high skill assistance in the financial requirements of an organization, just like a chief financial officer does for large organizations, comes into the picture Virtual CFO Services is the best solution in such situations.
The role of a CFO
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Virtual CFO services are provided to the businesses who have not appointed an in-house CFO. A virtual CFO, by increasing its financial control and visibility, enables business owners in an informed decision-making process. The roles and responsibilities of a virtual CFO are similar to that of any full-time CFO of a large corporation. A good virtual CFO helps business owners/leaders bridge the gap between finance, operations, and strategy that allows them to focus on long-term goals. A virtual CFO is broadly responsible for the following:
1. Accurate financial reporting
2. Developing strong internal & financial controls
3. Creating a strong financial base
4. Budgeting of cash flows
5. Maximise revenues and minimize costs
6. Taking care of regular corporate compliance
Individual vs Team
#VirtualCFO can an individual or a specialized company i.e. CFO Services Provider (CSP). There are multiple advantages of working with CSP because if a company is considering hiring a full-time CFO; it makes use of the knowledge of a single professional person which in most cases is limited. However, CSP comprises a team of experienced professionals, each one of them with his/her expertise.
You need better insights to make better decisions
Data-driven decision-making is essential – and CFOs have the expertise to make these informed choices. Virtual CFOs are often experienced professionals and can give organizations clarity around their finances: helping them make sound, rational decisions.
It is highly important for any organization to robust internal and financial controls herein also an experienced virtual CFO helps the organizations. The robust internal and financial controls are the base of any successful and sound business organization.
More than that, business owners should look to the guidance and experience of a virtual CFO in leading their finance teams while striving to implement best practices like annual budget planning within the company’s processes. Eventually, with financial models to drive sustainable budgeting on annual basis, after all, financial models serve as perfect budgeting tools.
Challenge - budget and financial forecast
This is a huge issue for start-ups and high-growth SMEs – especially those looking for that all-important next round of funding. With the leadership of a Virtual CFO, fundraising in case of start-up especially becomes faster, easier, and less daunting, enabling founders to focus their attention and efforts on other aspects of their core business operations or product development.
The support and guidance of a virtual CFO will be able to maximize a company’s value and establish a sound reporting system which is also crucial while communicating and pitching to investors.
More than that, a virtual CFO can strategically dive deep into a company’s processes, understand what drives value for the organization, and use this information to develop a strategic direction for the company. The role of a virtual CFO also includes developing a scalable finance function to ensure that the company’s economic engine continues to run smoothly and efficiently with the newly acquired funds.
The growing trend of virtual CFO
The concept of the ‘virtual CFO’ is more realistic now than ever before when working remotely is a new normal, they seldom on come to your office and mostly work remotely, and effectively act as an outsourced finance head. Virtual CFOs also benefit as they can deploy their strategic experience and services to a diverse set of clients, without ever setting foot in the actual office.
At the same time, however, the accurate tracking of key financial metrics is a must. That’s where the services of a virtual CFO fit this need which provides this service have been instrumental in creating robust and effective financial models while maintaining active involvement in all financial matters.
In turn, while many businesses are concerned with getting through this economic slowdown, it is a good time for business owners to the option of an experienced virtual CFO.