Virtual CFO and how it can help Start-ups

What is CFO ?

 The CFO (Chief Financial Officer), person responsible for managing company’s finances, starting from book-keeping and compliance to financial planning for the organisation and corporate investments.

CFO, traditionally had the responsibility to perform all reporting tasks with regard to financial aspects of the Company, where in the modern world, CFO is the person who is in par with the organisation’s vision and drives the team to the achievement of the vision.

What is Virtual CFO ?

Virtual CFO (or vCFO) is a service provider that handles all the duties of a CFO while working part-time and on a remote basis. It is outsourcing of head of finance department of the company.

What does the Virtual CFO do ?

• Managing finances:  Start-ups may generally face issues in keeping track of their day to day affairs, the Virtual CFO can here help with regular book-keeping, maintaining accounts and also help in the investment segment that ultimately will help in tax planning.
• Better decision making:  Virtual CFOs help Start-ups with rational decision making ensuring that they help in overall growth of the business.
• Stabilizing the budget:Virtual CFOs focus on ensuring that the expenses are as per the budgets set
• Performance: Virtual CFO’s help in achievement of the performance as per the plan, ensuring and guiding on utilisation of resources.
• Mitigation of Risk:Virtual CFO is also help to analyze potential financial risks, and measures to minimise the same.

The role of a virtual CFO, which could be an individual or a service provider, is like any other full-time CFO employed by a large business – financial and tax planning, risk management, compliance management, cash-flow forecasting, cost-control measures, bookkeeping, payroll automation, obtaining necessary licenses like GST Registration, TDS Registration, etc. amongst others. Virtual CFOs manage the accounting of finances, use their accounting knowledge, data and information about the financial markets to take strategic calls that drive the business forward without straining its resources.

Why Virtual CFO ?

• The trend of virtual CFO is gaining huge momentum in India. It is more of a benefit to start-ups where they do not have huge resources to appoint a full time CFO on Board, they would utilise the services of vCFO and ensure the financial planning is also on track.
• The Start-up is run by a group of innovators, a bunch of college students who have unique ideas and know what’s the requirement in today’s competitive world, but they may not be equally competent when it comes to managing finances
• A full time CFO would be the right choice but again it would hinder the finances of the Start-up, there vCFO play a important role.

So, it is a call out to all the Start-ups to ensure the financial stability, measurement of finances and spending them effectively. And, to sum it all, vCFO can help to analyse financial data and break it down for the top management to help them make future business decisions and also help them take calculative decisions.

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