CFO Reports: That a VCFO Can Provide About Your Business

Raghvendra Sonker

01 Aug, 2023

Every business enterprise needs a financial officer to monitor financial activities and prepare interim and annual financial statements. A CFO reports the financial activities of a business after analysing and compiling the gathered information provided by other departments in the organisation. Generally, a Virtual Chief Financial Officer (VCFO) is outsourced by small and medium-scale businesses in place of a Chief Financial Officer (CFO). The term and conditions of hiring a VCFO can be flexible and at an affordable cost.

Who is the Virtual Chief Finacial Officer (VCFO)?

A VCFO or Virtual Chief Financial Officer is an outsourced service provider offering high-skill financial assistance as per the needs of the businesses, similar to a chief financial officer who works in large organisations with a team of professionals. Unlike a regular CFO, a VCFO doesn’t need a proper infrastructural setup in the office premises. A VCFO can be a single person or entity which provides VCFO services. A VCFO has experience working with various companies and has a bigger pool of experts for providing industry insights, networking and guiding decisions.A VCFO can be retained on a quarterly, monthly and annual basis at a lesser cost than the traditional CFO.

Role of VCFO Similar to CFO

A business entity chooses a CFO or VCFO for financial services and accounting services. The VCFO will help build a financial strategy with the help of expert professionals having the best insights about the industries and market demands. The VCFO offers similar services to what CFO reports for businesses. Some of the roles and functions discussed in the blog are:

Due Diligence Process

A VCFO provides a similar service of due diligence to the businesses, starting from the registration procedure to analysing the fundraising process. A CFO reports a potential or ongoing litigation and evaluates and reviews contracts and agreements with employees, clients, vendors and consultants. A complete financial inspection, analysing old reports and forecasting financial reports of a business.

Cash Flow Management and Planning

Cash flow management is a process of tracking money which goes out of the business and what comes in. the process requires continuous monitoring to optimise the minute details of every single transaction of the company. Effective cash management planning can help predict how much money will be available for debt, salary,vendor invoices and investment-related activities. The CFO reports on cash flows are analysed and discussed at length by the potential investor to check the financial position of the businesses.

Bookkeeping Services

Like CFO reports, a virtual CFO also manages day-to-day accounting with timely and accurate reporting of the company’s expenses. A virtual chief financial officer prepares invoices of the clients to whom the good and services are offered and prepare month-wise closure reports. A VCFO adopts and implements the best financial practices and reporting standards for system optimisation.

Ensure Compliance

A Virtual CFO takes care of the multiple filings to tax authorities for income tax, GST and professional tax. A list of compliance has been adhered to while carrying out day-to-day functioning related to labour law compliance, company law compliance and regulatory changes. This ensures businesses don’t attract any violation for non-adherence and can efficiently work and function as per the needs of the company.

Financial Reporting

A Virtual CFO prepares monthly, quarterly and annual financial statements, balance sheets and statements of cash flows. The Virtual CFO reports and maintains the accounting standards and ensures all transactions are recorded completely, accurately, and timely in the accounting books. The VCFO can create a cloud-based customised dashboard with key financial indicators. The dashboard can be updated based on the company’s financial transactions and can be reviewed quickly as all information is available online.

Internal Control and Productivity

The CFO reports on the internal control^[1] and process by framing financial strategies and policies to safeguard and protect assets from loss and deterioration. A standard internal control mechanism shall be in place all the time to increase the employees’ productivity, curb the event related to misappropriation, theft, fraud and money laundering and minimise the losses incurred by the company.

Financial Restructuring

To avert a crisis, CFOs are the central figures guiding the company to make necessary changes ranging from job cuts to restructuring of client’s debt and company’s management. This reshuffling is done in view to avoid future losses.

Conclusion

Nowadays, both small and large businesses are hiring a virtual chief financial officer to prepare reports and handle finances that the CFO reports earlier while working for the companies. VCFO oversees all business activities and has an objective and neutral approach towards providing services as they are unaware of the internal discussion and debate among employees. VCFOs specialise in assisting companies in taking their financial strategy to the next stage.

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