vCFO Services - the new-age cost effective way to doing business.

In these historically unprecedented times, organizations are quickly realigning their strategies for business. Chief Financial Officer a.k.a. CFO is unquestionably one of these leaders who directly benefits the operational and financial strategy of a company. The CFO's role has been. developing over time. The vision must be defined by finance leaders in terms of people. They are ready to make the changes needed to move toward the future state thanks to processes, structure, and organization.

“The CA community looks after the economic health of society”.

-- Hon. Prime Minister of India- Shri Narendra Modi”.

Startups are budding like never before. And there is a common pattern in almost all of the start-ups’ growth which is lack of finance to afford major or unnecessary expenses. But they also want specialised and quality services whenever and wherever needed. Due to these reasons, a concept germinated in the business consulting segment which is called virtual CFO services. What better could be than to get services of CFO level at a low cost?

Among all the C-Suite management roles, a CFO holds one of the most crucial roles in any new business. Gone are the days when their role is limited to book-keeping and accounts handling. The newer times has brought a lot of responsibilities on the shoulders of CFO which includes handling accounts, creating MIS reports, managing finance inflow and outflow, budget preparation, designing strategy and models related to revenue, pricing, fund sourcing, and so on.

Now, if we talk about that one specific professional in the country which possess knowledge and capabilities in book-keeping, taxation, finance all at once, there comes only one name – Chartered Accountants. We are providing services in these areas from more than 70 years and are considered as the most suitable profession for these services. Let’s understand each type of vCFO services and how a Chartered Accountant can fit in easily in providing the same:

Building Strategies, Plans, and Models

While the entrepreneur starts working on his idea or product, he, usually, does not have a well-structured model of his business plan and overall strategy to move forward. However, a great product with a poor or no strategy can hardly be able to survive in the competitive business landscape. And hence, there is a dire need of a robust business strategy. vCFO service providers need to understand first the pond (i.e., the industry in which the particular startup falls) and then the fish (i.e., the startup itself). Then, building an organisational structure, a decent 3–5-year business plan, creating an informal board for taking strategic decisions, and setting up core business segments all these play a vital role in deciding the next step of a startup journey. CAs are well versed with analysing the Strength, Opportunity, Weakness and Threat (SWOT) of a business, doing financial planning, segment analysis. The ability to understand the business and the financial foresight that a CA possess make a CA a suitable fit.

Designing Policies and Procedures and their Implementation

When a startup starts growing its operation, it needs team and resources. And with team comes delegation of responsibilities, decentralization of power and it starts building departments or functions internally. These functions could be Sales, Marketing, Product, Finance, Operations, Administration, Research, etc depending upon the nature, complexity, and size of the startup. For each function, the startup needs a specific policy that will govern how it will be carried out. For instance, Sales team need to know about the policies around cash, customers, return, defects, etc. These policies are followed by the procedures involved in carrying out each function. Procedures could be Order to Cash, Purchase to Pay, Hiring an employee, etc. CAs has so many associations with businesses that it is imperative to say that they know the knitty-gritty of each function. While performing their core services like audit and compliance, they need to understand the corporate internal policies and procedures and that’s why they are well-equipped with these understandings.

Book-keeping, MIS Reporting, and Finance

All the startups need to prepare the books of accounts not only from compliance perspective but also to analyse and monitor their growth and basis the same, the entrepreneurs take decisions. MIS Reports provides the key information of day-to-day activities in a very summarised form helping the C-Suite to adjust their steering, if needed. Similarly, finance is the hot discussion of any board of meetings of a rising startup. All these functions can be clubbed and outsourced to a vCFO firm run by Chartered Accountant(s). CAs are the champions of book-keeping and MIS Reporting. From decades, we are the last professional to resort upon when it comes to handling the accounting data. Related to finance function, some key functions that a CA performs are – reviewing financial statement, monitoring cash flows, budgeting, working capital management, fund raising, etc.

Due diligence at transactional level

One buzz word which is as common as fund raising is deals. A lot of dealing activities are happening across the industry including mergers, acquisitions, restructuring, joint ventures, and similar agreements. And before entering into these transactions, the deal makers want a due diligence to be conducted on the operations of the startup to form a true and fair decision. vCFO service providers assist those startups undergoing the due diligence process by thoroughly inspecting the key documents, reviewing each transaction at individual level, identifying red flags for potential buyers, analysing risk involved and post examination of all the information gathered, evaluate, and share their findings. Chartered Accountants, having vast knowledge base of the financial aspect of each transaction in any business event, can cater these needs with their competence and professional experience. However, CAs must consider the continuous update of knowledge and economy as a whole is important for providing the quality services.

Other Support Services

A typical vCFO service provider firm provides many services other than above which are very crucial for the startup. This includes management of capitalization table, compensation designing, managing compliances, reviewing the internal controls, helping incorporate new accounting update, and so on. Due to the disciplined and professional nature of CAs, they can easily be trusted for services like compliance and control testing.

vCFO services are increasing at a rapid pace and so is the opportunities of Chartered Accountants in this space. Bion Advisors Private Limited, one of the leader firms in this space, understands the pain-points of a budding startup in terms of non-affordability of a full-time CFO. After all, cash flow is the lifeblood of an organisation. Bion Advisors provides all the virtual CFO services that any startup may need in the early stages of the business.

Note: Information in this blog is intended to provide only a general outline of the subjects covered It should not be regarded as comprehensive or sufficient for making decisions, nor should it be used in place of professional advice. Bion Advisors accept no responsibility for loss arising from any action taken or not taken by anyone using this blog.