Post Covid, as the economic revival is on the fast track of the government’s priorities and the MSMEs are getting the extra focus as the fulcrum of growth, technology is seen to be a major factor that can help achieve this goal in a time-bound manner.
Because the use of technology helps SMBs to cut down the operating cost, enhance efficiency, and attract investment, which are the three pillars of growth. But can technology alone ensure the success of a business?
No. Financial management is supreme when it comes to judging the condition and taking the rightful measures to nourish your business. Technology only provides the data and tools, but to use them to the best of your advantage, you need to get your financial management done earnestly.
This is where a virtual CFO comes into the picture. A virtual CFO service is an outsourced finance department working from remote, with a CFO on the top. Besides performing all accounting and financial management needs to ensure a sustainable growth for the business, a virtual CFO often provides valuable information, expert financial advice, and the right direction during a critical situation.
Virtual CFO service is creating waves all over the world because of its unique value addition that makes the complete financial services available from remote. This is doing away with heavy burdens from small businesses and startups and helping them avert liquidation. And what is driving the success of their remote operation? It’s the technological advancements such as cloud technology, SAAS, and AI.
Here is an insight into how the two are best suited for each other.
A startup is aggressive, opportunistic, and unconventional, that wants to disrupt a market with innovative new product or business strategy. While they are mainly occupied with product development and marketing plans, the back office activities like bookkeeping, cash flow, compliances, etc. must be managed to keep the house in order and make provisions for eventualities.
A virtual CFO service provides complete financial management that includes the above back office services and much more. In short, on one hand it protects a startup from the regulatory and financial issues, and on the other hand it provides the information and advice to realise a startup’s growth ambitions.
And most importantly, a virtual CFO service is flexible, modular, scalable, and costs only a fraction of the traditional office based financial department and the CFO. This provides significant benefits to the startups as they can scale up and add more values to their offering without having a high overhead.
Do you want to know how realistically a virtual CFO service can help a business in specific terms? Here is a list of the stumbling blocks in the path of an MSME/ Startup that can be removed by a virtual CFO:
- Cash flow management within a lean budget,
- Filling in and submitting the ROC forms within the due date,
- Managing GST and TDS compliances,
- Handling the IT return formalities,
- Preventing risks from fraud, errors, internal & external threats
- Eligibility for bank loans,
- Getting good investors on board,
- Finding the best avenues for investment of profits,
- Expansion of the business to other regions.
Other than the above areas, a virtual CFO can be a great help for the following needs:
- Negotiation with suppliers and customers – A virtual CFO with required data and insights can negotiate with vendors/suppliers, or customers on your behalf to win advantageous contracts for your company. This helps to guarantee that there is enough cash flow to keep the firm functioning properly.
- Budget analyses and resource allocation – Virtual CFOs are adept at comparing a company’s performance to its budget in order to identify profit potential. They can also find the most efficient ways to deploy scarce resources in accordance with the company’s plan.
- Financial analysis and modelling – A virtual CFO will compare your company’s financial performance to industry benchmarks and competitors’ performance. This information will be utilised to help guide business decisions and improve the bottom line.In order to accelerate growth, the CFO will also use dynamic financial modelling to estimate cash flow and project revenue, as well as to improve decision-making.
- Mergers and acquisitions – Mergers, acquisitions, or an IPO could all be part of your company’s growth strategy. A virtual CFO can assist you to get through to a successful M&A transaction, as well as help you to obtain cash when organic development options are restricted. A virtual CFO can assess the risks of a proposed M&A and validate the profitability. It can also evaluate cash flow, taxes, service or product compatibility, and financial effect, negotiate terms and conditions, and meet compliance requirements.