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Engage VCFO to grow your business

Ashish M. Shaji

| Updated: Mar 01, 2022 | Category: CFO Service

VCFO

Virtual CFOs have aided businesses to function to best of their abilities. Through their support, businesses have been able to deal with lingering financial and operational challenges. Especially since the pandemic financial planning has become more critical than before to dodge unprecedented economic impacts. Hence businesses rely on the services of a CFO, although all businesses cannot afford to hire a full time CFO, but that doesn’t indicate that they don’t need financial guidance and advice. In such cases hiring a VCFO can be a solution. In this article, we will find out how VCFOs can help your business to grow.

What is a CFO and VCFO?

The Chief Financial Officer is a person who is responsible for managing the finances of the company. Its responsibilities range from bookkeeping and compliance to financial planning and corporate investments. Traditionally the role of CFO revolved around basic financial reporting tasks, but now a CFO drives the success of an organization and utilises the financial data to make operational decisions. A CFO’s role can be significant in the strategic development of a company.

Virtual CFO (VCFO) refers to a service provider who functions in a manner similar to a traditional CFO but works on a remote basis. A virtual CFO may be a single person or can be an entity. The role of a virtual CFO can be advantageous, especially for small organizations who may not have adequate financial resources to engage the services of a full time CFO. Many startups and corporates are seen outsourcing their operations to reduce their staff when possible, which has resulted in a sharp increase of VCFOs across small businesses. 

What does a VCFO cost?

Usually, the pricing of the service provided by CFOs is based on the type and the extent of the services you require. An outsourced CFO services are tailored as per the demands and budget of the client hence you will have to shell out less than the cost of hiring a full time CFO. Some VCFO service providers may conduct an initial assessment of the business, transactions and requirements before charging fees.

What does a VCFO offer?

Usually, VCFOs offer the following:

  • Cash flow modelling, reporting and management

Cash flow plays a crucial role in the success of a business. VCFOs implement, update and monitor the cash flow forecasting and work in tandem with the business owner and create strategies to manage cash flow.

  • Preparation of Budget and forecasting, analysis and tracking

A Virtual Chief Financial Officer reviews and analyses the financial results of the businesses and its strategic plan. They ensure that their budget drive towards the businesses’ future direction and goals. 

  • Implementing accounting and financial reporting systems

Virtual CFOs implement strong accounting and financial reporting systems. This helps business owners to have full visibility to make wise financial decisions. They roll out forecast tables and financial systems that ensures resources are allocated to meet goals.

  • Establish KPIs

VCFOs put systems and tools in place and report on specific KPIs and targets.

VCFOs role in growing your business to next level

So now we come to the central subject of this article- how can VCFO help to grow your business?

A Virtual Chief Financial Officer can maximize your business profitability in the following manner:

  • By working as a genuine guide

A virtual CFO can be a reliable guide for your business who can assess the business, its readiness, and its strengths and weaknesses and then recommend appropriate ways to ensure sustainability and successful growth. Their advice and insights can help your business to deal with long term challenges and issues hence the guidance of VCFOs is a matter of great support.

  • By raising business capital

In order to scale your business, broaden your operations or launch a new product or service, access to funding is critical. Here a Virtual CFO can advise you on raising funds. They can also help you to fine tune your budget which will help you to know cost reduction techniques thus, your money will be invested in the right manner.

  • By managing cash flow and expenses

A Virtual CFO can work along with the management to track cash flow and expenses and can ensure that the performance aligns with the goals of the company.

  • By managing risks

Any business requires protection from potential risks that it may face and block its road to success. Hence taking steps for the protection of your business is critical. A virtual CFO can undertake risk assessment and check whether you have appropriate safeguards in place and that your sensitive data and inventory are secure. A seasoned VCFO can identify and alleviate risk exposure by putting in place appropriate financial[1] and operational controls.

  • By negotiating with suppliers and customers

A VCFO can ensure that your business obtains favourable credit terms and renegotiate vendor and client contracts and align them with industry trends. It will ensure that you have enough cash flow to run your business in a seamless manner.

  • By providing budget analyses

Financial officers can compare the performance of a business with its budget. This will help them to identify profit opportunity. They can allocate resources in a manner that it aligns with the strategy of the business.

  • By utilising diverse experience

Virtual CFOs work with various kinds of businesses and companies which allows them to gain diverse experience. This experience comes in handy during challenges. They can provide a perspective that is very unique and offer knowledge that is grounded in practice.

Conclusion

Your business can function to its true potential when it is backed by knowledgeable and experienced individuals. One of those is the Chief Financial Officer who is responsible for proper management of your businesses’ finances. Not everyone businesses can afford the services of a full time CFO, but hiring a VCFO can be a wise choice for such businesses. A Virtual CFO can manage some of the crucial aspects of your business for a seamless growth. As a business owner, if you are desiring to grow your business, you should find an outsourced CFO who is having operational experience corresponding with your business goals.

Read our Article:Comparing In-house vs. Virtual CFO Services

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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