What does Virtual Chief Financial Officer (CFO) Services mean?
Virtual CFO services are offered for companies that have not named an in-house CFO (Chief Financial Officer). In the current scenario, there are many challenges faced by the companies in terms of development, financial, accounting and management dimensions. For this function, an officer shall be named who may be solely responsible for managing financial risks, financial reporting and record keeping as senior company's management. The virtual CFO will thus be there to respond effectively to the problems by providing financial and technical guidance, evaluation and assistance to management. CFO is a respected accounting body, sometimes out of reach for small businesses, start-ups or small and medium-sized companies. There is therefore a need for a virtual CFO.
What are the necessary requirements of having Virtual Chief Financial Officer (CFO) Services?
Virtual CFO solutions include access to Chief Financial Officer (CFO) products, which assist with financial analysis and threat recognition. If you are not interested in hiring a house team to conduct financial tasks, then in this case outsourcing of CFO services can be done. Outsourcing of the CFO Services can be done to a leading consulting firm that manages all types of financial functions related to your business. They're going to assist you take your business to the next level. You will be able to interpret the financial health of your company through leveraging online CFO services.
Virtual CFO services will assist you in following ways:
1. Financial Projections
Virtual CFO services can enable you with useful financial projections through the analysis of revenue and financial statements.
2. Cash Flow Projections
Cash flow forecasts will be rendered with a view of securing cash inflows in order to fulfill the duty.
3. Manage Cash Flow
Reasonable cash flow management is important to understand the use of cash.
It is very necessary to establish the budget for each year and then review it annually to monitor progress.
5. Debtor & Creditor Management
Control of Debtor & Creditor is very relevant for the reduction of credit risk.
6. Setting up an Accounting System
Assessment of the existing accounting system and suggestions for improvement.
What are the characteristics of Virtual Chief Financial Officer (CFO) Services?
Maintaining documents in alignment with accounting records and strengthening the current organizational structure is a key feature in CFO services.
Below mentioned are some of the features of Virtual CFO Services:
1. Accounting Records Maintaining
In compliance with accounting standards, the virtual CFO shall sustain the accounting records. As we know, the financial statements of any company must be in accordance with the accounting standards as laid down by the government body.
2. Financial Analysis
Virtual CFO evaluates the company's operations, which help to make choices about the future of the firm. Operations are also evaluated by defining primary operational metrics.
Budgeting helps to plan the company's cash flows. This helps to analyze the need for cash. It creates a balance between income and expenditure.
4. Financial Projections
Financial projection concerns revenue & expenditure forecasting. It involves market factor predictions. It helps to determine the need for cash as well as the need for resources.
5. Cash Flow Projections
Cash flow projections help to assess the cash position of the business. It helps to prepare the cash needed to fulfill the expectations.
6. Improve Profitability
Virtual CFO services helps to reduce the waste of resources. A clear policy is being put in place to improve productivity.
7. Risk Assessment
Virtual CFO recognizes risks and makes decisions to reduce uncertainties that may affect business in the long term. This is done in order to reduce risks and boost opportunities
8. Key Performance Indicators
Key performance measures assess the current situation and predict the outcome. There are various aspects of the business such as production distribution marketing, cash accumulation and inventory levels that represent KPIs. The virtual CFO constantly monitors and analyzes these factors.
9. Organizational Structure
Virtual CFO shall make adjustments to the organizational structure as and when needed for the success of the company.
10. Growth Plan
Virtual CFO manages the company's finances which lead to the success of the corporation. The virtual CFO is designs a clear growth plan. It is necessary to draw up a growth plan to determine what funding is needed in the business.
What are the core services of the Virtual Chief Financial Officer (VCFO)?
Following are the main virtual services:
1. Financial Advisory
Virtual CFO provides financial advice on the basis of requirements. Proper financial planning will take business to the next stage. As a consequence, senior management will concentrate on key areas without worrying about financial issues.
2. Cash Flow Forecasting
The virtual CFO's other main service is to predict cash flows. In order to make the right decision, companies need to have a better understanding of the cash position. This helps to take decisions regarding the required fund.
Budgeting requires virtual CFO facilities. Budgeting helps monitor the company's performance. It is important to update the budget on a monthly or quarterly basis so that changes can be made in compliance with the established objective.
4. Break Even Analysis
Under break even analysis, total costs (fixed + variable) are compared to revenue in order to determine a point where business does not make any profit or loss. Virtual CFO will help to derive break even analysis that will allow the company to manage its expenses.
5. Accounting Functions of the Organization
Accounting services are the organization's most important aspect. It is a method that helps to assess the financial accounting health check of the company. Accounting health check means a complete analysis of the organization's financial and accounting component. For this purpose, an esteemed management professional is expected to prepare detailed accounting practices data such as data preparation and other accounting policies. It is important to assess areas of expertise in order to achieve advancement to the next level.
To order to have a well-defined accounting health check, the preparation of different policies and implementation of tactical ideas is important. Proper instruction in this process is addressed and assessed on current turnover income, company aspirations, organizational and accounting processes and key performance indicators. In accounting health check, the business framework, tax efficiency and prospective development are also considered.
1. Compliances of the various acts applicable
The virtual CFO will provide end-to-end solution according to the provisions of the Companies Act 2013, FEMA, Income Tax Act 1961, Contract Act, IPR laws etc.
2. Corporate Governance
Corporate governance requires rules and regulations that the company follows. This balances investors, owners, management and clients ' needs.
3. Cost Management
Cost management is a process that allows virtual CFOs to plan properly to minimize the company's costs. Virtual CFO helps to determine the efficiency of operations. To monitor this, the virtual CFO analyzes a variable cost.
4. Debt Planning
To achieve the desired target, a virtual CFO makes adequate debt planning. It is important to have adequate debt planning to manage the debt.
5. Year End Accounts Closure & Filing
Virtual CFO guarantees that the financial statements are drafted & annually filed on schedule. It also ensures the filing of income tax returns & GST returns.
6. Audit Support
The virtual CFO provides end-to-end audit aid by resolving the auditors' questions.
7. MIS Reporting
In MIS reports Virtual CFO is responsible for providing appropriate and accurate information about the company's financial health.
8. Accounting Policies and Procedures
A well-designed and properly maintained system of accounting policies helps to improve the accountability and consistency for a comprehensive internal control framework in the organization. Accounting policies and procedures allow the organization to formulate and execute well-defined accounting and management
9. Internal Controls
In order to be effective, a proper and accurate accounting record, well informed financial decision, financial reporting is needed as part of the internal control system. The company's CFO aims to analyze and execute the above-mentioned procedures.