Virtual CFO

A virtual CFO or a virtual chief financial officer is an outsourced service offered by business advisory firms to small businesses or startups to help them make sound financial decisions. They help them with financial planning, financial reports and designing financial strategies. The difference between a traditional CFO and a virtual CFO is that a traditional CFO is a full-time executive position while a virtual CFO offers these services remotely or on a part-time consultation basis.

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Advantages

A virtual CFO is able to guide the startups better by educating them about the incentive schemes and tax benefits available that may be beneficial to their business. The virtual CFO will be able to assess financial reports and provide accurate feedback to the CEO. They can manage the fund flow and raise early red flags in case of potential concerns. Some of the advantages of hiring a Virtual CFO include –

Reduction in cost

A virtual CFO works out cheaper for startups in their initial stage as they do not have the budget or requirement to hire a full-time CFO. A virtual CFO can offer the specific services they need at a fraction of the cost.

Flexibility

You have the flexibility to hire the virtual CFO for a few hours each week or get a few specific services outsourced. You pay only for what you use and you can scale up or down based on your business needs.

Financial Forecasts and Regulatory compliances

The virtual CFO will provide you with financial forecasts and budgets on one hand and manage regulatory compliances on the other. This will ensure that your business functions smoothly.

Budgetary Control

The virtual CFO can provide you with detailed budget analysis and help you to manage your expenses.

Liaison With External Stakeholders

A virtual CFO can be your liaison point with external stakeholders. Their Due Diligence Reports on the accuracy of financial statements can be reassuring for investors.

Diverse Experience

Since virtual CFOs work with multiple companies at the same time, they have a wealth of experience and they can add value to your discussions and provide meaningful insight.

Process

Monthly Meetup
Monthly visits or virtual meetings over zoom/google meet with a senior resource for CFO services to discuss business financial strategy, monthly performance review and discussions with the management for certain committed hours each month.

Pay as you avail– Virtual experience for a few committed hours

Compliance Management
While you come on board for our VCFO services, we keep you notified and updated on routine compliances to ensure smooth conduct of your business

Business Financial Performance Review
Bird’s eye view of the financial performance of your company.

Process Improvement
Proactive management of your company’s finance with the help of advanced tools and technology.

What you should look out for while hiring a Virtual CFO

When you are hiring a virtual CFO, you are looking for a long-term relationship that could have a serious impact on your business. You will need to keep some factors in mind before you hire a person/team for this purpose to get the best out of the arrangement.

Cooperative Approach with Clear Communication

Experience

Trust

Certification

Scalability

Cooperative Approach with Clear Communication

If your virtual CFO doesn’t have a friendly and cooperative approach, you may hesitate to call up and have a comfortable discussion. In the absence of open interaction, you may not get the complete benefit of the service and may miss out on the valuable advice that you are looking for. Remember that you are hiring a virtual CFO because you need sound financial advice in clear understandable terms. If the virtual CFO/team does not provide clear communication or advice within reasonable response times, the purpose of hiring a virtual CFO is completely defeated. You need someone who can provide you with clear financial advice that can be converted into actionable outcomes. The communication channels must be open and accommodating.

Experience

While hiring a virtual CFO service, make sure the people on the team have the necessary academic qualifications and business experience to guide your business.

Ask them for their experience in virtual CFO roles. You can try and talk to a few of their

clients to get an unbiased review of their services. It is best to hire someone who has reasonable experience in providing these services.

Trust

A vital element when it comes to a virtual CFO, trust. Remember, you are entrusting your business finances to them. You cannot afford to have any compliance issues like taxes not being filed or errors in your financial reports. This can affect your decision making and also get you into trouble with the tax authorities. Instead of appointing a freelance virtual CFO, you may be better off hiring a company with a team. This would eliminate the single point of failure in case the CFO is unavailable when you need them and will keep your business finances up to date.

Certification

Make sure the people you hire have their certifications up to date. You need to check their qualifications and ensure they are continuing their professional education so that they are accurate in their recommendations especially when it comes to regulations and compliances.

Scalability

You expect your business to grow over time and you need your virtual CFO to keep pace with your growing requirements. Make sure your virtual CFO has the capacity to handle a larger business as it would be messy to change your virtual CFO when you scale up. It is best to take a futuristic view and hire someone who can handle bigger challenges than you have at present.

Need for virtual CFO in the world of startups

Having a financial roadmap is essential for any business. While established businesses have a full-time CFO, startups do not have the luxury in the early stages when they are more focused on developing their product/service and designing the business strategy.

Several startups consider financial planning as an activity only when the fundraising stage arises. They may not need a full-time CFO but they would need assistance from finance professionals. This has created a demand for virtual CFOs who can help startups on a flexible basis.

A CFO would be responsible for managing the major financial decisions of a business and guiding the CEO on finance and investment-related decisions. The role of a CFO would include the following –

Financial and Tax planning
Risk management
Forecasting the cash flow
Compliance Management
Cost control measures

These are critical for a startup to survive in tough business conditions and hence the need for a virtual CFO arises.

Virtual CFO Services offered by Startup Movers

If you are looking for virtual CFO services for your emerging business, you can look at Startup Movers. We are a professional setup offering a range of services under the Virtual CFO umbrella.

The range of services offered include –

Financial advisory services to startups
Handling the accounting function
Managing the regulatory compliances
Corporate governance
Overseeing the financial plans
Advising on the capital structure

Having a virtual CFO can help the startup to focus on its business goals while the finance and regulatory compliances are taken care of in a professional fashion without having to bear the full cost. This can be of tremendous benefit to startups who are trying to find their feet and need financial advice on a need basis.