6 Activities That A Virtual CFO Can Perform For A Small Business

January 02, 2017

6 Activities That A Virtual CFO Can Perform For A Small Business

Every decision that a person makes in a business has financial consequences. Many small and developing businesses that hire bookkeepers or accounting managers lack strong financial management skills. At the same time, hiring an expert finance manager or CFO on a full-time basis can become an expensive proposition for a small business. As a solution to this problem, a new domain related to virtual CFO services providers in India has been introduced. This is a cost-effective way to receive professional expertise in the business. Virtual CFO outsourcing services offer skills and assistance in the financial domain for an organisation. A virtual CFO in today’s time can be an individual or an organisation. Hiring such CFO outsourcing services helps in keeping the fixed costs low and provides flexibility for choosing services as and when required.


The description of virtual CFO consulting services has been overused to a certain extent. In the ever-demanding business environment of the 21st century, CFO’s have become an invaluable resource, especially for small businesses. Even though SME’s have finance domain employees or access to their chartered accountant, they lack resources who can combine strategy, operations, and finance to prepare the organisation to scale-up to the next level. The virtual CFO’s typically associate on a part-time service basis and work remotely out of their own offices. Their main role is to report past financial performance, forecast future performance and develop financial strategies that are linked to the organisation’s business strategies. Following are the list of activities that a virtual CFO services providers will typically perform for an organisation.


1.     Reporting past financial performance

Recording accurate information about an entity’s previous performance is often the starting point for developing strategies for the organisation’s future direction. Typically, the CFO consulting services are not involved in the routine data entry, reconciliation or bookkeeping activities. These are usually performed by a financial controller or a book-keeping manager of the company. The virtual CFO’s oversees all of these activities and provides guidance and recommendations that would benefit the organisation. Virtual CFO services providers set up the bookkeeping procedures and control, review the preparation of accounting and financial records and give their valuable inputs on improving financial systems in the company.


2.     Managing Financial operations

Virtual CFO’s provide great help and support for maintaining a balance sheet and cash flows. Ideally, this will leave the SME owner with more time which they can devote towards other equally significant tasks.  The virtual CFO’s maintain different control teams that are responsible for maintaining the complete financial operations of their clients. These can include maintaining funds, formatting vendor payments, monthly accounting, etc. This ensures and facilitates easy returns on capital and achieving business objectives. A virtual CFO can also help in training and managing the accounting staff.


3.     Providing Financial Advice

Virtual CFO’s ought to possess all the necessary information and updates regarding the business environment and financial markets. They usually provide expert advice to drive profits before venturing into any schemes or plans. Such experts can recommend and suggest improvements in business policies, such as taxations, investments, and finance sourcing. It is important as a business owner to have a clear idea of the current business position and where they wish to go financially. CFO services for small businesses guides the owner through the process in a timely and suitable manner. As aptly mentioned by Patrick Schulte, ‘More important than making money is figuring out what you want to do with that money’, and hence, CFO’s are best source of guidance for the same. Virtual CFO outsourcing services provide SME’s with features that will help businesses with tough business decisions and also clarify the business plans of SME’s clients.


4.     Preparing effective financial strategies

A strong financial model and plan that is in alignment with current market trends, customer requirements, and organisation goals is a necessary ingredient of a successful business. A virtual CFO outsourcing service can help a business owner formulate perfect strategies for a successful financial year. Additionally, budgeting and forecasting are the two important functions that are performed by virtual CFO’s team. They also suggest proper legal entity structures, due diligence and compliance matters to business owners as a part of their service offering. A professional support in compilation and monitoring of annual budget by a virtual CFO is always helpful for an organisation’s growth and achievement of financial goals.


5.     Provide financial expertise and insights

Usually, none of the startup or small business owners should write the company’s books of account or file taxes. As the business grows and scales-up, accounting and finance, as a function, become increasingly complex and time-consuming to handle. Thus, it makes complete sense to hire a professional to manage this function of the business. Virtual CFO consulting services provide relevant business intelligence to businesses, so that better decisions are taken by the business owner. A focus on innovation accounting helps businesses and SME’s to reduce the time invested into revenue and cost streams of their business models. In today’s competitive world, virtual CFO’s also support on raising funds, investors relations and provide management reports that give projections about future growths.


6.     Facilitate Audit support and coordination

Virtual CFO consulting services also provide support for auditing and reviewing monthly, quarterly and annual performances. They perform such activities along with external accounting firms and also prepare the compensation audits with external government agencies for workers. The CFO also helps identify the changes and latest trends in the accounting activities of the business and prepare regular internal interim reports to assist financial planning. Such CFO consulting services provide a better understanding of the financial aspects of the business which reduces uncertainties and enables businesses to have domination over the financial positions. 


Virtual CFO services providers in India are increasingly adding value to businesses of all types, shapes, and sizes. In fact, they also provide services in different global regions. Many businesses, especially SME’s, are now using CFO outsourcing services and associated accounting activities to deal with finance and accounting. Advice from such virtual CFO’s is now a phone call, email or Skype call away. The financial reports or data can be sent via email or any of the inexpensive cloud-based data sharing systems. Virtual CFO’s can often turn the data into insightful reports which are helpful to the business owners to make their financial decisions.


The flexibility that a virtual CFO offers is that businesses can pay for it as and only when they require the CFO’s support. Various virtual CFO services for small businesses offer fixed price agreements or pay-as-you-go services. Such services enable SME’s to keep their overheads under control and at the same time, retain services of a highly experienced and qualified profession when required. A business may have an immediate need that a virtual CFO can resolve or it may simply require a better visibility and analysis of business’s financial performance. In either of the cases taking the help of virtual CFO services providers immediately, will help.


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January 02, 2017

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