Virtual CFO Servies
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
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
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.