Q. Who is a Virtual CFO?
A. A CFO, who is available on a Virtual basis to different organizations.
Q. Why does an organization need a CFO?
A. CFO is a very important position for any organization. A CFO is a member of the strategic management team, who not only is in charge of managing Finance, Accounts, Statutory Compliances, but also plays a vital role in various business decision making processes such as expansion of products/ services, choice of new location, selection of various schemes of govt. (as available under various acts or policies), helping in decision making at the time of any crisis etc.
Q. What kind of organizations would be mostly suitable to hire a Virtual CFO?
A. An organization, which
(a) belongs to SME category, has growth plans but cannot implement the same for want of guidance from a financial expert
(b) needs a CFO but does not have enough work for a full time one
(c) needs a CFO, but cannot afford to bear the cost of a full time one
(d) is not willing to commit for a full time CFO until some expected large business deals/ orders are matured
(e) wants an interim CFO until they find a suitable person to take care of full time responsibility.
Q. How a Virtual CFO is different from any other external consultant?
A. Generally an external consultant is engaged for a very specific job, and his responsibility is normally to submit his report with recommendations, unless he is specifically assigned to execute the same. Whereas a Virtual CFO works with much bigger responsibilities, not only advises, but also is accountable to ensure that the job is done, either by himself or with the help of others. In brief, a Virtual CFO shares the same responsibilities of a full time CFO (who is a part of the Strategic team) only with the difference that he spends time at the office of the organization based on the requirements. He becomes a part of the organization he is engaged with and strives for the betterment of the organization just like any other employee.
Q. If a Virtual CFO spends only one day per week in an organization, does it mean that his service is not available for the remaining period?
A. Even when the Virtual CFO is not physically present at the office of the client, he is available over phone/ email for any suggestion, clarification as and when needed.
Q. How expensive is a Virtual CFO?
A. This depends on the profile of the person engaged and the time he is expected to spend with the organization. Our service fees are very much attuned to the needs and affordability of any organization.
Advantages of having a Virtual CFO:
- An Experienced CFO will have impact at strategic level; his valuable inputs will add different dimensions in strategic decisions.
- Flexiblity – time and cost involvement of the CFO may be suitably altered as per the varying needs from time to time. A Virtual CFO working in an advisory capacity, unlike a full time CFO on payroll, would be flexible in varying the extent of his involvement with the company.
- A strong CFO is essential for important activities such as raising capital, Investment decisions or Merger & Acquisition transactions.
- Cost-effectiveness – In spite of the Virtual CFO being a high-end person his cost would not be high to one particular company, as he will be spending only a part of his total workable time with each of them. Besides, he will also have his own back office support staff for some specialized jobs, which can be leveraged to a great extent.
- Opportunity to derive the benefit of hands on, state of the art knowledge and practical experience of the Virtual CFO, who has been exposed to diverse financial and commercial activity across a variety of business and industry at all times and is thus infinitely more enriched with experience of handling situations than the company bound standard CFO.
- The Virtual CFO can utilize the knowledge and expertise of other partners of his firm which will help in better delivery of results.
- He can be the one point contact for any finance/accounts/tax related issues for which one need not go to other consultants.
Improvements expected after engaging a Virtual CFO:
- The management will have more time to focus on the business growth such as developing new services, attracting new customers and dealing with other core business issues.
- A true portrayal of the financial status of the business through timely and correct MIS will help the management in taking the right decision for the business and get the best benefit.
- Availability of an expert whom one can depend on to guide through tough business decisions.
- Availability of a specialist who will train the accounting staff of the organization to free the senior management from this aspect.
- Preparation of financial budget and periodical monitoring of actual for variations from the same.
- Profitability study on the basis of various products, processes or clients.
- Guidance on tax planning for the organization
- Proper compliance of Statutory requirements
- Efficient cash management with the help of weekly cash flow
- An expert’s endorsement of everything from insurance policies to financing options, equipment purchases, Investment decision, ESOP scheme etc.
- Analysis of mergers and acquisitions possibilities
- Improved Internal Control of the business operations.