Binder and Files

Virtual CFO Servies

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What and Why – Virtual CFO

•Also known as “Outsourced CFO”/“Shared CFO Services”.

•Virtual CFO services are provided to the businesses who have not appointed an inhouse CFO (Chief Financial Officer).

•It offers an immediate solution to the acute problems of Entrepreneurs/business entities at the initial stage of business towards business financial planning, setting up of accounts/finance department and Management Information System (MIS).

•During upgrade/change over/exit stage of running businesses, with the advice & execution support of Virtual CFO Services providers, the business challenges are handled most effectively by availing their financial and professional advice, analysis, and support to the management in any concern area not limited to the finance department but business as a whole.

•CFO is a recognized management authority which is sometimes out of budget for small enterprises, start-ups, and SMEs. Therefore, there is a requirement to have a virtual CFO.

•It is a way for small businesses to get CFO support that they would have not been able to afford previously.

Absence of Virtual CFO- Impact

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The organisations which have no CFO on board or need to support CFO office, are

vulnerable to the following risk, if they opt not to hire Virtual CFO at right stage and

right time.

  • Missed opportunities for business

  • Lack of adequate control system, Unproductive and weak processes

  • The faulty transition from the existing system to the new system.

  • Waste resources, time, and effort.

  • Loss of stakeholders, investor, and client confidence.

  • Lack of critical resources at times of need.

  • Exposure to unnecessary legal or tax risks.

Broad list of issues which affects majority of the Organization in the Indian environment (with some exceptions)

Promoter driven; without defined strategy or road map

Highly dependent on 1-2 key person

Inadequate risk management system and control

Decision making done more on gut/ad-hoc (without analysis/evaluation/cost benefit)

Unstructured; Organization are continuously in crisis management mode

Lack of Optimum utilization of available resources

Diversification at early stage leading to shortage of resources

Over leveraged; too much dependent on Debt

Sometimes, Prioritization against Organisation objectives

Lack/low understanding on Accounts – Tax – Finances – Legal and commercial capability within the Organisation

Supported by multiple consultants; but lacks advisor to the board

Value Addition by Virtual CFO

• Attracting the right talent of a CFO is very difficult for MSME (with 15-20 years of diversified experience and multi-dimensional capability). Further retaining such talent is even more difficult till organization matures.

• Brings in credibility – trust and network much needed for organisation at this stage.

• Management not only need a professional but a coach and guide to navigate to next level – playing a mentorship role.

• Assurance of capability since continuous performance is the key to service.

A right source to support in attracting/identifying talent in various domain and functions required for an organization.

• If introduced at right time; amateurs will not become powerful creating roadblock for future/professionals.

• Has the capability and network to identify and resolve any kind of Organizational issues.

• Dynamic enough to influence Operational decision-making process.

• Execution ownership with extensive hand holding - approach to deliver value.

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Fundamentals for effective Virtual CFO services

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Virtual CFO Eco System

Execution by Virtual CFO Firm

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CSP is serving as a member of the executive team and performing accounting and financial operations tactically and consistently to move forward with a clear financial strategy in the future. He also put his effort to: