Virtual CFO: A Success Mantra

Introducing Chief Financial Officer (CFO)

It’s no secret that we are breathing under a viciously competitive world. But unfortunately, we have evolved into these bloodthirsty competitors, so much so that mere survival has become an uphill battle, let alone carving out a niche for yourself out there in the corporate world.

Thousands of business start-ups are launched every day, yet only a few hundreds of them can see the light of the day. So, what exactly goes wrong in those start-up formations, and why is it tough for most start-ups or even an established company to let itself from drowning under these arduous circumstances?

Well, there could be numerous reasons as to why these businesses tend to fail. Still, one of the most compelling reasons could be an inability or, in some cases, a lack of knowledge of how to handle the financial aspect of the business, which then leads to holding oneself back from thriving their business.

So, one of the many reasonable or rational solutions can be a thorough evaluation of the financial areas where the company must be lacking behind thus hiring a virtual Chief Financial Officer (VCFO) who will take care of all the financial analytics of your company and help it bring back on its journey to success.

But before we get onto the technical details as to how a VCFO is going to turn the fate of your company for the better, let’s first understand who and what is a CFO and what is the difference between an in-house Chief Financial Officer is is and a virtual Chief Financial Officer.

What Is A Chief Financial Officer And Its Role In An Organization?

Fundamentally, a Chief Financial Officer (CFO) is an expert or a professional responsible for its finances and enhancing its current position.

They handle all the financial matters of the company, such as the following: –

  • Planning and implementing the most profitable revenue model in the long run
  • Budgeting and expense control to manage the smooth running of the operations
  • Bookkeeping
  • Improving the customer segmentation and insight
  • Managing the cash flow of the company
  •  Formulating authentic reports and rectifying the errors according to the company’s needs etc.

Hiring a Chief Financial Officer can be a game-changer for your organization; their analytical function can significantly impact the firm and quickly steer it toward success.

So now that we are aware of what a Chief Financial Officer is and their role in an organization let’s get a basic understanding of what a virtual Chief Financial Officer is and how it is different from the conventional Chief Financial Officers.

It is common for most early-stage businesses not to have strong finances; so, hiring a Chief Financial Officer might seem a little unbelievable, if not too much, primarily because, in the initial stage, a business has to incur many expenses to establish itself.

Also, an experienced Chief Financial Officer is a pretty expensive investment as they typically charge somewhat between $ 300,676 and $502,063 according to the data provided by salary.com (21st July 2021); so, investing in an experienced Chief Financial Officer might drive the company to drown itself in financial distress.

Introducing Virtual Chief Financial Officer (CFO) & How Is It Different From In-House Chief Financial Officer (CFO)

 This is where the virtual Chief Financial Officer jumps in, acting like the miracle solution in the entrepreneurial world and saving the day. So, this brings the question of what a virtual Chief financial officer is?

Essentially, a virtual Chief Financial Officer can be defined as a typical CFO only with a lot more distinctive qualities, which makes it undoubtedly superior to the latter in more than one way.

A virtual Chief Financial Officer is a new and improvised concept that enables start-up companies to seek the benefits of CFOs without worrying about their enormous salaries and thus to save thousands of dollars.

A Virtual Chief Financial Officer or a (VCFO) is a financial expert who is in charge of the financial facet of the business, such as operational optimizations within an organization; raising capital; systems analysis and design; fixing cash flow issues; implementing more efficient processes and systems; developing pricing strategies; and preparing for growth just like a traditional Chief Financial Officer but who is available as a part-time worker and who works remotely.

They help strengthen the company’s finances by the company’s needs with much-reduced costs. A Virtual Chief Financial Officer brings the concept of “only pay for what you need” to the companies, making it the most rational choice under limited circumstances.

Key Benefits Of Investing In A Virtual Chief Financial Officer

The virtual Chief financial officer (CFO) role brings substantial welfare to small start-ups. Apart from the obvious cost-efficient advantages and enjoying all the financial insights and expertise which is usually limited to the giant multinational corporations, a virtual Chief financial officer (CFO) provides the following benefits to your organizations as well:-

An Efficient Utilization Of Time As Well As Money

The attribute or the characteristic that has captivated the corporate world, specifically the entrepreneurial part of the corporate world, towards the concept of virtual Chief Financial Officer is its flexibility and cost-efficient pricing, thus leading to saving thousands of dollars while enjoying the services provided by a full time chief financial officer (CFO) as you hire them only for the services you need.

As a result, you only pay for what you require. Also, it has saved the company from going through both the cost and energy-draining process of recruiting a full-time chief financial officer (CFO).

Hiring a virtual Chief Financial Officer brings productive time utilization for a business owner as a VCFO. It saves him from consuming unnecessary time on the recruiting process, budgeting, preparing financial reports, and a lot more. As a result, he can focus on working on the business instead of working in the business.

Managing The Cash Flow Of The Company

Cash flow is the spine of all kinds of business organizations, so essentially, it becomes essential to ensure a solid cash flow position of the company.

A virtual CFO can formulate cash flow statements that include stockholder equity, long-term assets, net income, and liabilities, among others.

A regular and thorough evaluation of these cash flow statements results in strategies to maximize and strengthen the cash flow further, ensuring a healthy run of your company.

Forecasting

Financial forecasts can play a significant role in your ability to win investment and take the next step up the funding ladder, so this isn’t something to put off through lack of knowledge.

The virtual CFO supervises the financial functions through a series of timely formulated financial reports.

You gain complete visibility and clarity over your business financials through these extensive reports, therefore, giving you the power to make necessary decisions about your business’ future and growth.

The virtual CFO explores opportunities to streamline your business with system improvements and modifications for the prosperity of the business in the long run.

Complex Financial Challenges

A virtual Chief Financial Officer isn’t an average Chief Financial Officer. Since VCFOs work part-time, they usually work for more than one organization at a given time.

They’ve worked with organizations of all sizes, industries, stages of growth, etc. So consequently, they have experience of not just one kind of industry but all the different kinds out there.

Hence, they have more extensive knowledge and experience than the regular CFOs, and as a consequence of that they are the best out there in the market to deal with complex financial situations such as high business overhead; inability to raise capital; poor cash flow, and profitability; high client churn; and debt management and loan repayment; among other challenges.

Strategic Insights For Increased Productivity

Business owners can concentrate on other salient matters and aspects of the business to ensure the success of an organization instead of exhausting their energy and time on areas that are not aligned with their skills and expertise, thus leading to increased performance of the organization.

Other functions of virtual CFOs like financial planning, preparing tools and reports on financial matters, financial oversight to reduce the possibility of financial error, evaluation of accounting data of the company provides assistance to make all the profitable and favorable decisions for the prosperity and productivity of the business.

Apsurge Of A Global Pandemic (Covid-19)

The global viral pandemic has had a significant impact on the workplace.

In addition to endangering public health, the economic and social turmoil endangers millions of people’s long-term livelihoods and well-being.

We never thought that going outside and meeting people would become a privilege up until now.

The last two years have substantially increased the emphasis and the requirement of the virtual world, so much so that even the giant multinational companies have shut down their workplaces and implemented the concept of work from home.

So, the new work from the home era has naturally or consequently promoted the virtual aspect of all the jobs and automatically created a need to hire a virtual Chief Financial Officer and remove the possibility of further encouraging this daunting disease.

Hence it is safe to say that bringing in a Virtual Chief Financial Officer by the small/large business start-ups can expedite their way towards success than most companies out there.

Virtual CFO Services For Small Business

To earn a profit or provide any charitable service, every business needs to earn a profit. Any business enterprise, be it of any size and set up to earn a profit or provide charitable services. It needs to measure the results of its operations in terms of money.

The finance professionals are the set of people doing this activity of converting all business operations into money. This being a specialized job, needs to be handled efficiently and effectively. Therefore, virtual CFO services are the best to choose from.

The business process outsourcing services provided by the virtual CFO are pretty impressive and perfect.

The role of the finance department in any organization has evolved from the Parta system. From this system to the modern-day digitalization of accounting functions. With demonetization, the need for a cashier to dispense and collect cash is done away with. In the same way, the digitalization of accounts function has done away with some concepts—the concept of having full-fledged accounts and a finance department.

The outbreak of Covid or similar pandemic types has further underlined the limitations of having a physical presence in doing all types of activities, be it sales, marketing, human resources consulting services, Finance and accounts, IT, etc. We have learned to do away with these physical services. Also, I have moved to the virtual mode in all the above business activities.

This opens up new opportunities to do away with having an entire team do something. For example, setting up different departments and opting for virtual CFO and Virtual CIO Services or CSO, etc.

What Will You Gain by Having Virtual CFO Services?

The overall business environment has become more competitive due to the emergence of digital challenges. Given this, it is crucial to have virtual CFO services. The advantages given below will accrue by using virtual CFO services.

Specialized Knowledge Skillset:

  • Due to the broad scope of various finance and accounts activities. It becomes impossible for a CFO to master all finance and accounts function areas. By availing of the virtual CFO services, the organizations will get the advantages of technology integration. As well as specialized knowledge skill sets. With the use of advanced technologies such as artificial intelligence, data analytics, and big data to enhance the process in which compliances are maintained, virtual CFO services will be much more effective. Even the task of Accounting compliance can be maintained through this process. Getting timely updates on compliances is a critical activity provided by the virtual CFO. At Concat, we use high-end technologies such as artificial intelligence and data analytics to provide seamless services. Further, we have experts in various fields helping you perform all the accounting business process outsourcing.

Independence in Handling Activities:

  • Using the services of a virtual CFO will ensure independence in handling various accounting activities with no influence from anybody in the organization. This will help in having proper inputs for effective decision-making.

Keeping Pace With New Requirements:

  • Due to diversity and ever-changing statutory requirements, it is difficult for the CFO to keep track of various due dates. Using this service would provide the organization with an added advantage of compliance with accounting systems. In India, there are many compliances under different regulatory authorities like the Institute of Chartered Accountants of India, Ministry of Corporate Affairs, Securities and Exchange Board of India, the Income Tax Authorities, etc. Your organization will be able to achieve accounting compliance and compliance with the relevant regulatory authorities by using virtual CFO services. Concat, we provide you with updates on different compliances that have to be followed by your organization.

Adoption of Best Practices:

  • Since Concat is dealing with different accounting systems and ERP packages, they are well equipped to identify the best options best suited to your requirements. This will help you take advantage of the best practices, which will help you expand your business operations.

Virtual CFO Services Offered by Concat

VCFO service is for businesses looking at optimizing the business overheads by outsourcing whole/ part accounts and finance function, overhauling and streamlining the business financial reporting and internal control process, and further businesses looking to expand the operations in a time-bound and cost-effective manner.

The service includes financial leadership for board members, financial forecasting, acting like an eagle eye for senior management, creating promoter’s vision & long/ short term business plan, and establishing governance standards.

Finance functions outsourcing is a new trend that many companies are accepting. At CONCAT, we also help companies with financial reporting, planning & analysis, bookkeeping, compliance, accounting and taxation services, treasury management, IFRS, and other requirements.

At Concat, We Offer the Following Specialized Services.

Bookkeeping and Accounting:

  • We undertake to record all your organization’s financial transactions in Tally or any other accounting package suitable to your organization.

Accounts Receivable Management:

  • Compelling accounts receivable management plays an essential role in working capital management. Market conditions post Covid like pandemics have highlighted the importance of promptly collecting the dues. We provide specialized services that include all activities, from issuing dunning letters to collecting the dues with a continuous follow-up mechanism.

Budgeting:

  • Budgeting is an important activity that provides proper direction to business activities. We undertake to provide tailor-made budget templates as per your requirements, collect data, and prepare budget reports to marry the outputs with the vision of the business.

MIS Reporting:

  • Having multiple data is of no use unless it is adequately analyzed. We undertake to provide quality MIS reports using the existing data of your accounting system. This helps you in making informed decisions to grow the business.

Business Process Re-engineering:

  • We undertake to study existing business processes and provide inputs for improving these systems to have process efficiencies that result in cost control and profit improvement.

Product Costing and Product Profitability:

  • Many organizations do not have a proper costing system and hence cannot know product-wise costing and product-wise profitability. A profit improvement plan needs to take into account the proper product mix. Setting up a proper costing system or improving the existing costing system will help the organization achieve profit improvement.

Compliances:

  • We comply with all the statutory requirements by keeping track of different due dates and ensuring that returns or payments are made on the due dates.

Direct and Indirect Taxation:

  • We provide consultancy services in the area of direct and indirect taxation.

Treasury Management:

  • We provide services in treasury management, starting from cash forecasting to arranging funds as per business requirements.

VCFO service is for businesses looking at optimizing the business overheads by outsourcing whole/ part accounts and finance function, overhauling and streamlining the business financial reporting and internal control process, and further businesses looking to expand the operations in a time-bound and cost-effective manner.

The service includes financial leadership for board members, financial forecasting, acting like an eagle eye for senior management, creating promoter’s vision & long/ short term business plan, and establishing governance standards.

Finance functions outsourcing is a new trend that many companies are accepting. At CONC@T, we help companies with financial reporting, planning & analysis, bookkeeping, accounting, compliance, direct & indirect taxation, Call Center Setup, treasury management, HR shared services, IFRS, and other requirements.

You can hire us for outsourced financial management and accounting services with the help of our experienced experts.

Frequently Asked Questions

What Does a Virtual CFO Do?

A virtual chief financial officer is responsible for managing the financial facet of the organization. They have the expertise and skills in financial subject matters and financial strategic planning. They provide insights on budgeting and forecasting, prepare financial reports, give thorough analysis over the reports and current business finances, analyze the ongoing financial trends. 

And thus, identify the potential opportunities earlier than the rest of the market for the company to grab it, formulate strategies and policies to increase and improve the existing business finances and growth, manage the company’s cash flow, etc. They are responsible for all the financial decisions and rectifications. Therefore, reduce the burden for the firm owner to focus on the growth of the business for the future. 

Why do I Need a Virtual CFO?

In today’s competitive world, the survival of any organization has become challenging. We see thousands of start-ups getting winded up before they even see the light of the day, primarily because they couldn’t keep the businesses financially afloat. Money is the backbone of any business; however, any businessman does not understand using it efficiently to increase it further. 

Also, the business owner should be focusing on the areas where is their forte. The chief financial officer does take care of the business’s financial aspect; however, hiring one might financially drain you hence comes in virtual chief financial officer, one who plays the same role in significantly less money. Therefore, to save your business from financial distress, you should be investing in a virtual chief financial officer.

How Much Does a Virtual CFO Make?

As of 27th May 2021, a chief financial officer has an average salary is around $74,000/ year.

How is a Virtual CFO Different than an Accountant?

Accountants handle the reporting aspect of the finances, for example maintaining accounting books, filing taxes, etc. In comparison, a chief financial officer is responsible for analyzing the reports, strategizing accordingly, and executing a plan to optimize your current financial position. In addition, they identify the possible threats and opportunities. 

So put, while proper accounting is just witnessing the present and reporting pasts and has nothing to do with making the company’s finances better or worse, a CFO will strategize, analyze, guide, and support your course accordingly to help you grow. In the financial realm, accountants are more about the past, balancing books, reporting results, and filing taxes. CFOs are responsible for brightening the company’s future by developing strategies, forecasts, and a roadmap to achieve future goals.

When do I Want a Virtual CFO?

A virtual chief financial officer can be hired right from day one since it does not charge a fortune for hiring them, unlike a chief financial officer. However, a business owner may or may not know how to handle the company’s finances and the correct way of putting the money in the business so that the business reaps double money in return. 

Also, one person cannot handle all aspects of the business, so the business owner should be handling the future ideas and growth of the business and hire an expert to handle the finances. Also, suppose the business is getting drained from its finances. In that situation, it is high time for the business to consider investing in a virtual chief financial officer to save the business from going bankrupt.

What are the Benefits of a Virtual CFO?

Bringing a virtual chief financial officer to your team has many benefits. Some of them can be seen below: –

Improved productivity

Efficient cost and time usage

Management of company finances and cash flow

Future planning and forecasting for opportunities and threats

Facilitate flexibility in working schedule

Skills to handle sudden complexities

How does a Virtual CFO Work in Practice?

A virtual chief financial officer handles all of the financial realms, right from analyzing the past of the company and its present working to bringing it to the idea of what it could be. Their role is quite vast in terms of a financial officer. They perform the following functions to achieve success for the company: –

Preparing Budget plans and providing vigorous forecasting

Developing Comprehensive and detailed financial reporting and further providing analysis on it

Providing insights on business finances and prepared reports to optimize the position

Inspect vast and diverse financial and operational data for trends

Examine the financial trends and budgets to recognize threats and opportunities for the business

We provide a thorough examination of the financial position, provide insights, make recommendations, and develop strategies to fasten business growth and make business operations more efficient.

Managing the cash flow and finances of the business

Developing Strategic plans and ensuring their execution

Suggestions regarding the latest software and tools

Development and presentation of monthly and quarterly financial reports along with the review of end-of-year financials

Recognize and assess the possible impact of new products, services, or business initiatives taken up by the business.