How CFO services are benefitting both corporates and small to medium-sized businesses (SMEs)

If you can’t afford it, outsource it – this has been the mantra of all size organizations, especially startups and SMEs due to their monetary restrictions. But when the finance function can be outsourced at 1/5th of the price of hiring an in-house finance function, not only SMEs but corporates also opt for this option candidly.

When disruptions like an increase in the cost of capital, faulty growth strategies and scarcity of resources increase, a whole new approach to processes and business models relating to financial strategy is required, that is where outsourcing CFO comes and takes the center stage. An outsourced CFO can provide a full-service finance function, including virtual CFO services, for all size corporations that can benefit from both tactical and strategic financial planning in order to achieve their financial goals. Plus with their cost efficiency and available-whenever-needed policy, outsourcing CFO is similar to many businesses moving to a software-as-a-service offering over an on-premises solution.

Benefiting big, small and medium-sized businesses

The responsibilities of the Chief Financial Officer can be divided into three main categories – financial reporting and risk management, operational efficiency and strategy development, which can be further divided into providing accurate solutions, forecasting, analyzing the key challenges, financial planning, advisory analysis, debt planning, break-even analysis, and so on for companies or enterprises.

Financial Planning and Forecasting – Along with financial modeling, CFOs also offer the “bigger picture” of the company’s finances in terms of cash flows, cash balances, projections, and expected income and expenses. Outsourced CFOs also come in handy when it comes to boosting revenues by providing transparency in bookkeeping, manual workflow evaluation and overall efficiency improvement.

Managing Capital and Debts – As per a survey, SMEs lose Rs 67 lakh annually due to outdated ways of managing finances. CFOs not only help in managing the money of a company, its assets and liabilities but also make sure that it all adds up. Losing this kind of money for startups and SMEs is really not an option so with the help of seasoned CFOs they can stay at the top of their finances in a fast-paced business environment, and work with potential investors.

Cash Management –  When it comes to cash management, a team of resources needs to come along and manage which makes 44% of SMEs complain of spending significant time, an average of 1446 hours, on financial operations and repetitive tasks. Outsourced or virtual CFOs are the finance chiefs of companies and can manage the company’s finances, debt, and inventory effectively.

Tax Compliance and Preparation – For every corporation, an increasingly complex set of tax rules and regulations come into play which can be a frustrating, complicated and expensive period for especially SMEs. A CFO helps them not only by navigating these complexities but also provides advice management on tax strategies. The CFO encourages sales and marketing and helps analyze where your company stands, how much revenue your company generates, and how best to approach the next stage of growth.

Save from cyberattacks – According to IBM’s recent report, the cost of a breach is at an all-time high of $4.35 million. Cybersecurity threats are significantly impacting a company’s bottom line, rather than a siloed IT team issue. The CFO comes to the rescue here because they are responsible for the financial security of an organization as well. Also, by managing cybersecurity risk, the CFO can more effectively measure the ROI of a security program, establish metrics and communicate with the rest of the C-suite.

CFO – The Steady Hand On The Wheel

The CFOs don’t only provide timely solutions, they design their strategies, systems, and processes for your business sustainably and they are yours to keep. The organizations will be able to reap the benefits of greater transparency, efficiency, reliability and profitability for a long time. Till now, only used for compliance and regulations and looked under the lens of just “financial functions”, CFOs are shedding more light on their data-driven decisions making powers, financial discipline and good corporate governance as well. And today, they are virtually at the doorsteps of big corporations and SMEs with a matter of just one click and affordable pricing.

(The author is Mr. CA Jitendra Jain, Director, TapanshiFinanziell Pvt Ltd and the views expressed in this article are his own)