What Does a Virtual CFO Do? | Push Digits Chartered Accountants

What Does a Virtual CFO Do?

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What Does a Virtual CFO Do?

A virtual Chief Financial Officer (CFO) can be beneficial to any business of any size operating anywhere in the world. Virtual CFO is one of the types of CFO services. A virtual CFO brings a wealth of strategic and financial wisdom. Virtual CFOs can help business entities in clarifying as well as realizing their business objectives. 

There comes a stage where business owners realize that they may lack the strategic and financial skills to take their business to the next level. In such a situation many business owners opt for hiring someone that can help them in achieving their goal of business growth and expansion. Businesses can step forward towards achieving this goal by hiring a virtual CFO with adequate knowledge and appropriate work experience.

The cost of employing a virtual CFO is far less than that of a junior accountant and on top of that, a virtual CFO has far more potential to add value to a business when compared to a junior accountant.

Strategic Functions Managed by Virtual CFOs to Add Value to your Business

A virtual CFO assesses the current structure and operations of the business to identify potential issues. After identifying potential issues, a virtual CFO develops methodologies and procedures to overcome them so that the company can be set on the path of growth and success.

  • Audits: Ensuring that the business’s external audits are completed on time is an integral duty of a CFO or a Virtual CFO. Whether it is a virtual financial audit or done inside the business premises, the successful completion of that audit is solely the responsibility of the CFO.
  • Planning: Makes sure that the budgets and forecasts are prepared in accordance with the milestones and goals set by the company’s top management. Once the budgets are prepared, regular monitoring on the achievement of the targets is ensured.
  • Cashflow: Prepares monthly/quarterly/yearly cash forecasts to ensure the business never experiences liquidity issues. Remember, a business can survive without profits, but not without cash. Company liquidation becomes obvious in case of consistent cash flow issues.  
  • Internal Controls: Prepares rigid processes, procedures, and controls to ensure errors and/or fraudulent activities are timely identified and captures.
  • Profitability: Identifies business areas where the company is losing or making money. Provides recommendations to either improve or discontinue loss-making products.
  • Reporting: Accurate and meaningful reporting that too on a timely basis allows a business owner to focus on its key business areas that are fundamental for the success and growth of its business.
  • Team Structure: Makes sure that the business has appointed the right people in the right roles.
  • Tax and Compliance: Ensures that the business is preparing and filing all its tax returns on time. Besides, he makes sure that the business is complying with all the relevant tax laws and regulations.
  • Risk Management: He develops and implements risk mitigation processes and controls to ensure stability and going concern of the business.
  • External Stakeholders: The virtual CFO can also represent the business in meetings with potential investors or with bank representatives.

Important Factors when you Appoint a Virtual CFO

  • The expectations from the virtual CFO should be very clear right from day 1.
  • Though the relevant industry experience is important, he should have diversified experience so that your business can be managed with a different, wide, and unique mindset.
  • A virtual CFO is not your permanent staff and most probably he is providing services to multiple clients. So you need to keep in consideration that he/she can stop providing your services at any point in time.
  • Data security is an important factor to consider. Hence, it is recommended to appoint a virtual CFO who is also physically present in your country of business so that he is accountable to the relevant regulatory authorities.
  • A non-disclosure agreement must be signed by a virtual CFO. In case he/she refuses/hesitates to sign, that is enough for you to understand that it is not safe to engage.

 

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