A & A Associate | Virtual CFO
What is Virtual CFO services ?
- This is also referred as Outsourced CFO services or fractional CFO services.
- This is accomplished by outsourcing the tasks that are normally performed by CFO to a highly qualified and experienced professional who is not an employee of the company.
- It is referred as Virtual, as most of the tasks are performed offsite though modern means of communications combined with specific hours to be spent at company site.
- This is in the nature of Business Process Outsourcing services which is very commonly practiced in most places and evolving in UAE.
- This arrangement achieves services of Highly qualified and experienced professional but at a fraction of the cost.
What Virtual CFO can do ?
- Virtual CFO can perform all those tasks that are done by a full time CFO in employment
- In addition since he is independent can also undertake independent activities like management audit
- Be part of Senior management as well advisory board taking key decisions
- Many times Full time CFO also does many other tasks outside of “ CFO responsibilities “ only because he/she in on full time employment. With Virtual CFO on board, other tasks can be performed by other executives costing much less and requiring lesser experience and qualification
- Support the owner/ key management in their addressing common challenges in business that related to financial and management function
- Scope of CFO can be defined based on need but commonly covers:
- Organization structure, review and re-structuring
- Cash flow tracking and management system
- Structuring bank facilities
- Risk management
- Management reports
- Guidance to Finance team
How does it work
- Fixed number of visits /hours to company site is agreed to accomplish tasks that will require personal presence.
- Through email and phone consulting and advisory services are provided within the agreed and committed time with responses and decisions within agreed SLA
- A fixed retainer fee is agreed to cover set of tasks . Though these can be worked out based on the company needs scope of mandate normally covers the following areas
- Being part of management board to take key decisions
- Designing company governance and policies
- Guiding accounts staff for structured accounts and financial reports, Audit.
- Monthly financial and operational reports, Red-flag reports with solutions
- Treasury management Dashboard
- Commercial contracts and legal front ending.
- Company specific areas to be agreed
- Success based tasks like banking facilities are also undertaken for a different free structure normally related to the value of facilities procured
When a CFO is required?
The right answer is from DAY ONE.
- But very few businesses realize this and only resort to financial discipline and structured management as a Disaster
- Recovery Plan mainly due to worry of costs.
- Unfortunately the actions are becoming less effective, more expensive and more often too late to refurbish/ recover and are leading to shut down.
- This is happening even if the market for the product or services are still good.
Hence the time NOW.
Why CFO services even for SME?
The challenges are common for all businesses and so the need SME owners want to grow the business but feel alone with no one to turn to for advice and also have a deep rooted fear of lack of internal controls, of what is right and wrong and so on.
- Structuring financial transactions and make the company “Bank ready” is mandatory task.
- Banks expect that finance is handled by knowledgeable and experienced professionals
- Accounting team needs to be guided to perform right tasks at right time
How to ensure confidentiality
Chartered Accountants are Governed Code of ethics including confidentiality and so information received will remain confidential.
- Can sign Non disclosure Agreement as well
- Responsibility of Virtual CFO / Outsourced CFO is no different than that of full time employee. The only difference is the nature of contract.
- Virtual CFO is also a” company resource’ just like a Employed CFO.