A Discourse on Virtual CFOs Scope of Work

Prabhat Nigam

16 Sep, 2024

The businesses nowadays want to float lean because of their limited resources. Efforts are being made by the management to cut down the permanent staff and outsource the work wherever possible. This has resulted in the rising trend of hiring virtual Chief Finance Officer (CFO) services over the more traditional in-house full-time CFOs. The advent of Virtual CFO services has allowed the small businesses and Small and Medium Enterprises to avail the services of a CFO at substantially lower remuneration. This article discusses the Virtual CFOs scope of work.      

What Is A Virtual CFO? 

The person who discharges the functions of a Chief Financial Officer of a company virtually is called a Virtual CFO. The main function of a Virtual CFO is to handle the company’s finances in a virtual mode and part time basis without the need to appoint such person on a full time basis. Virtual CFOs scope of work involves a variety of tasks which have been provided below.    

Virtual CFOs Scope of Work 

The following services are included in the Virtual CFOs scope of work:

1. Goods and Service Tax (GST) Compliance: every business has to get registered with GST authority and file GST returns. As far as GST compliance is concerned, Virtual CFOs scope of work extends to the following activities:
2. Document registration under GST
3. GST reconciliation in case of a mismatch
4. Generating E-way bills
5. ITC calculation and compliance
6. GST refunds
7. Filing appeals under GST
8. Filing Letter of undertaking (LUT) in case of export of goods and many more

• Tax Deducted at Source (TDS) Compliance: When an organisation makes payments and such payment goes beyond a specific amount, then the payee has to pay TDS^[1]. With respect to TDS compliances, Virtual CFOs scope of work extends to the following:
• Calculation of TDS and interpretation of TDS rules
• Supporting the system of payments made in the TDS portal
• Quarterly filing of returns
• Form 16/ 16A compliances
• Reconciliation services of TDS under Form 26A

• Human Resource Services: Apart from providing financial services, Modern CFOs also need to provide human resource services to an organisation such as:
• Drafting of employment policies
• Payroll support at all the levels of the organisations
• Drafting of contracts such as NDAs, CXOs agreements, ESOP schemes etc
• Labour Law compliances

• Income tax Returns (ITR) Filing: One of the most important task within the Virtual CFOs scope of work is filing of ITRs at the organisational level. ITR services provided by a Virtual CFO include:
• Income tax Act compliances
• Filing of ITRs in a timely manner
• Computation and Reconciliation of Tax
• Advance tax calculation etc.

• Compliance with the Registrar of Companies (ROC): Right from the time of incorporation till the time of winding up, a company has to make a number of ROC compliances. A virtual CFOs scope of work includes:
• Filing of Annual Financial statements with the ROC
• KYC compliance of the Directors
• Assistance in preparation of Board Resolutions etc.

• Legal Support Services: A virtual CFOs scope of work also includes providing Legal support services to the companies such as:
• Formation and registration of different forms of business entities
• Vetting and Reviewing of Legal Contracts
• Support in appeal and overall litigation services
• Legal templates for entering into contracts
• Drafting of Service Level Agreements, Master Service Agreements, and Franchise Agreements etc.

• MIS Reporting Services: Management System Information (MIS) Reporting helps the management in taking decisions that can affect the organisations in the long run. It is an online system of reporting which will affect key decisions taken by the organisation. Following MIS reports are prepared by a Virtual CFO:
• Financial Forecasting
• Budgetary reports
• Spread sheets analysis of the reports etc.

• Book Keeping: The task of maintaining and recording the financial transactions of an organisation on a daily basis is included in the Virtual CFOs scopeof work. Such a task is carried in an organisation to keep a record of sales, purchases, inventory and supply within an organisation. To be specific, a Virtual CFO does the following work related to book keeping:
• Management of ledgers
• Management of accounts
• Rectifying
• Tallying

• Payable Management Services: If a business organisation has any outstanding payments to be made and if the same are not made on time, they turn into outstanding debts for the organisation. It is the payables management services that come to the rescue for such organisation. This includes the tasks of:
• Allocation of different forms of expenses
• Negotiations with the creditors
• Settling the order of priority of different forms of debt

1. Interim CFO: Modern CFOs scope of work also involves extending services as an Interim CFO which means providing CFO services to multiple organisations. It is called interim CFO because such a CFO is acting for a particular period of time only.

1. Financial Management: Management of the finances of a company, cash flow management is probably the most important task undertaken by a Virtual CFO. To be precise, Virtual CFOs work related to Financial Management includes the services of:

• Management of finances of the company
• Preparation of a report

1. Corporate Governance: Modern Virtual CFOs are also engaged in the maintaining transparency amongst different stakeholders of the organisation such as directors, customers, shareholders. Virtual CFOs scope of work related to Corporate Governance include:
2. Implementation of the Framework of Governance
3. Assistance in clarifying different roles played by executive and non-executive directors

Conclusion

The biggest benefit of having a Virtual CFO is the kind of work that it does for small organisations and SMEs such as accounting, budgeting, maintaining cash flows, internal control, debt planning, corporate governance etc. It is the extensive Virtual CFOs scope of work that allows the small business owners to focus more on other important tasks of the business and leave the hassles of secretarial work to Virtual CFO.

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