Post-Covid, the business scenario in India is exhilarating. Scores of MSME units with new business ideas are mining new opportunities. Mumbai is leading the rest of the country with its excellent ecosystem for business development that includes virtual CFO services in Mumbai to provide advanced financial services and consultancy.
What is important in business? Growth. And how does one achieve growth? Is it the result of a good product, good marketing, and your hard work combined? No. You have to add another very important aspect to this list to ensure growth, which is financial management. Virtual CFO Mumbai steers businesses to achieve their goals using superior financial services.
How exactly do virtual CFO services help a small business?
Good handling of finance is an enabler of growth in a business, but handling of finance requires specialists. Large companies employ a full-time CFO or Chief Financial Officer to ensure sustainable growth through developing a financial policy, taking informed decisions, and judgments correctly when dealing with a crisis.
MSMEs in India have historically avoided employing full-time CFOs because of their high pay package. But with the rapid advancement of cloud technology, the CFO services are now available to them at a very affordable cost, in the form of a virtual CFO or remote CFO, or you may even call it an outsourced CFO.
A virtual CFO is a cloud technology-based remote service provider that provides high-skilled financial management assistance to a business, just as a chief financial officer does for large enterprises. A virtual CFO may be a single person or an entity.
If you compare an in-house CFO and a virtual CFO (scroll to the bottom end for a detailed comparison), you’ll discover that a lot favors the latter. The Virtual CFO services can actually replace the entire accounts department. You do not even need to have a bookkeeper.
As the owner or CEO of a business, if you are wondering just how realistically virtual CFO services can help your business, here is a list of some highly necessary accounting tasks that otherwise require an accounts department, but now can be managed effectively by just one virtual CFO service.
- Regular bookkeeping and accounting tasks(virtual bookkeeping & virtual accounting)
- Managing cash flow within a lean budget,
- Make sure the ROC forms are filled out and submitted by the due date,
- Managing GST compliance and TDS compliance,
- Taking care of IT return formalities,
- Identifying and preventing fraud, errors, internal and external threats
- Obtaining a bank loan etc
But more than the virtual bookkeeping & virtual accounting tasks, the virtual CFO services provide deeper insights and advice than you normally expect from a finance director or a CFO. Some of those critical and specialist financial services offered by the virtual CFO services include:
- Identifying market trends
- Obtaining funds
- Preparing financial forecasts
- Assuring good investors on board,
- Finding safe and profitable investment opportunities for profits,
- Helping to expand business to new territories.
Other than the above areas, a virtual CFO can be a great help in other important areas of your business, such as
#1. Negotiation with suppliers and customers
A virtual CFO with the necessary data and insights can effectively negotiate on your behalf with vendors/suppliers or customers to win advantageous contracts for your company. This helps to ensure that there is enough cash flow to keep the business running smoothly.
#2. Budget analysis and resource allocation
Virtual CFOs are skilled at comparing a company’s performance to its budget to identify profit potential. They can also determine the most effective ways to allocate scarce resources in accordance with the company’s strategy.
#3. Financial analysis and modeling
A virtual CFO will compare your company’s financial performance to industry benchmarks and the performance of competitors. This data will be used to inform business decisions and improve the bottom line.
The CFO will also use dynamic financial modeling to estimate cash flow and project revenue, as well as to improve decision-making, in order to accelerate growth.
#4. Mergers and acquisitions
A virtual CFO can help you get through a successful M&A transaction and obtain cash when organic development options are limited.
A virtual CFO can assess the risks of a proposed merger and acquisition and validate its profitability. It can also assess cash flow, taxes, service or product compatibility, and financial impact, as well as negotiate terms and conditions and comply with regulatory requirements.
Why is Virtual CFO growing so rapidly?
In a highly competitive business environment, MSMEs and startups often have to spend large amounts on product development and marketing. Where necessary, there is pressure to cut personnel and outsource. Finance remained a neglected area and more often than not handled by the owners, taking wrong, uninformed decisions.
Virtual CFO services have done a paradigm change in the way most small businesses and MSMEs operate. Besides proving to be flexible, customizable, and low-cost solutions, the virtual CFO services are enabling MEMEs and startups to take judicious, professional and futuristic decisions that are taking good care of the top line and bottom line of their business. This has resulted in a trend of hiring virtual CFO providers over the more traditional full-time CFO in-house.