Virtual CFO: Need of the hour for companies

In these unpredictable times, a CFO is the best person to deliver the most up-to-date and relevant performance indicators. Key financial measures and decision like capitalizing on the knowledge and experience of a CFO can help firms see the big picture in the midst of upheaval.

Many firms all over the world are functioning in a volatile climate, mostly because of the massive financial upheaval caused by the pandemic. Many organizations around the world are shifting to the new normal and adopting more flexible models to deal with such uncertainties. However, the need of a CFO is not just because of the disruption caused by the pandemic. CFOs are seasoned financial specialists who may be incredibly valuable to start-ups, small businesses, and medium-sized businesses.

What is a virtual CFO?

A Virtual Chief Financial Officer (VCFO) is an outsourced service provider who delivers professional expertise to meet a company’s financial needs. A VCFO might be a single individual or an institution that performs the same tasks as a large corporation’s Chief Financial Officer.

They help businesses keep their fixed costs low. They also have the option of hiring high-skilled help for their financial department as and when they require it. Even larger corporations that have full-time CFOs on staff may hire virtual CFOs. They can hire virtual CFOs for their subsidiaries and joint ventures, as well as virtual CFO support for their current CFO offices.

Why you should hire a virtual CFO?

Generally, small or mid-sized enterprises do not have the flexibility of hiring a full time CFO, and that’s where a VCFO comes into picture. This person or entity assists businesses with their financial tasks and strategy. A CFO is in charge of an organization’s financial health and strategic strategy. Furthermore, such a person is in charge of budgeting, tracking spending, generating financial reports, and advising on strategic decisions that affect growth and profitability.

Here are the top 6 reasons why you should engage with a virtual CFO:

1. TO THE POINT ANALYSIS

Businesses that seek to operate without a CFO face risks such as missing commercial opportunities, a lack of effective control, and legal or tax liabilities. They may also face difficulties such as squandering time on ineffective work and a sloppy transfer to new processes.

It’s worth noting that CFOs assist firms in making better financial decisions. Businesses may benefit from increased earnings, improved cash flow, and less risk as a result of such actions. A CFO can also provide the strategic counsel that a company needs to manage any problems during crises or uncertain times. Outsourced CFOs have often worked with a wide range of companies in a variety of industries and situations. This knowledge aids them in resolving your particular problems.

2. FLEXIBILITY

Virtual CFOs are highly adaptable in their approach, in addition to their work resulting in monetary benefits to a corporation. A VCFO can be hired by a start-up or a small business at any time. Businesses, for example, can hire them for a set amount of time, such as a few hours per week, to keep up with what’s going on in their field.

Alternatively, during brief periods of a shifting business climate, a company can benefit from the expertise of a CFO. A virtual CFO can help with specific projects, mergers and acquisitions, policy development, and obtaining finance or investments, to name a few examples.

3. COST OPTIMIZATION

The most obvious advantage of hiring a virtual CFO is the cost savings. Because a VCFO is not a full-time employee of a corporation, this is the case. As a result, the employer can feel relaxed in terms of his full salary and other job perks.

Hiring a full-time CFO, especially for start-ups and small and medium businesses, is prohibitively expensive. CFOs are certified public accountants with a master’s degree in business administration and extensive experience in business management (minimum 10 years). This indicates that they have a background in accounting, finance, and business management. As a result, full-time CFOs may not be affordable.

4. STABLE PERFORMANCE

A virtual CFO might be a person or an accounting firm. A virtual CFO can teach a company’s accounting personnel how to do fundamental operational accounting responsibilities. Monitoring accounts payable and receivable, billing, payroll, and preparing financial reports like as profit and loss statements, balance sheets, and cash flow statements are examples of these functions.

A virtual CFO can also assist a company in transitioning to a full-time CFO once it reaches the size or transactional complexity that necessitates one. He might be able to help such a company choose candidates for a full-time CFO position. In addition, a virtual CFO may be able to assist the organization with the entire process of onboarding a new CFO.

5. WORKING CAPITAL MANAGEMENT

Many firms continue to keep large sums of money in their day-to-day operations. They can, however, better manage their working capital and boost profitability. Working capital optimization is one of the most efficient ways for a company to increase cash flow in a short amount of time. A company’s accounts receivable, payable, and inventory cycles must all be reviewed in order to maximize working capital. This type of study will aid the company in identifying potential cash flow improvements and projecting cash flow.

A corporation can additionally examine specific key performance indicators in addition to this. These indicators might assist a company in calculating its working capital requirements.

6. IMPROVING BUSINESS GROWTH

In order to grow, every company requires a strategy. A virtual CFO may assist a company in developing a strategy and selecting the best growth path. A virtual CFO can assist a company that is going to buy another company by addressing critical questions prior to the transaction. “Is the company worth purchasing?” or “What is the business truly gaining with the purchase?” are examples of such inquiries.

As a result, a virtual CFO conducts due diligence on the target company. This allows the company to avoid making the wrong acquisition selection and to know exactly what it is purchasing. In addition, a virtual CFO can assist a company in evaluating its current workforce mix.

At Vittakosh, we’ve been providing a range of services that help businesses with error-free accounting and making their financials more accurate. Let’s talk if you’re looking for such services.