Best CFO Support Services in India
We have often heard the term CFO and wondered to ourselves, "what exactly does a CFO stand for?" Continue reading to get the answer to this question and to all further questions that may arise.
Who is CFO?
A CFO or a Chief Financial Advisor acts as a financial controller for an organisation, primarily responsible for the supervision of the finance, treasury or accounting department.
They serve as the head looking into a firm's economic activities regarding its cash flow, financial reports, and the like.
They also undertake activities related to and involving analysis of their respective company's financial performance, financial assets, and liabilities.
A CFO is additionally responsible for putting forward steps that the firm may undertake to maximise output and profit and limit wastage.
Thus, to an extent, we can say that the role of a Chief Financial Officer or CFO can be interpreted as being similar to that of a Head Accountant or Treasurer since CFO Support Services are in charge of micromanaging the company's finances and making certain that financial reports of the organisation are duly completed, accurate, and ready to be presented before the Board of Directors.
Chief Financial Officers usually come from a background in Cost and Management Accountancy (CMA).
As a CFO of an organisation, one has the highest paying and the highest rank in the financial hierarchy of the firm. Additionally, they secure the third-highest position and role in the company.
They directly engage in planning out the company's economic strategies.
What are the various types of CFO?
There are 5 different and distinct types of CFO you get in CFO Support Services. These are as follows:
1. Startup CFO
These CFOs work on the primary motive to earn capital or raise funds for a new enterprise: firms backed with venture capital or those owned by investors.
These firms mainly operate in industries that focus on building intellectual property, like life sciences, software, etc. The role of startup CFO services in a new firm is to raise funds and to manage accounts.
The further aims for such CFOs are to be capable of managing these finances or funds with utmost efficiency and of working towards the preservation of the same until the final product or brainchild can be rolled out by the firm.
The quickness with which such goals are achieved is directly proportional to the value provided to the investors of the enterprise.
Thus, getting substantial returns on investments made into the firm is the main motive and driving factor of Startup CFOs.
2. Growth CFO
A Growth CFO deals with skills related to the operative functions of a company. And works towards the holistic growth of the company. They remain less engaged with raising capital for the organisation, unlike Startup CFOs.
Growth CFO Support Services are responsible for coordinating and cooperating with the employees of the organisation so that the latter can fulfil their responsibilities with utmost efficiency.
A prerequisite for a Growth CFO's qualification is that they shall have adequate communication and leadership skills so that working with the team becomes an easier job for them.
They are required to contribute to smoothening the organisational working team's functions and activities and engage in economic strategising.
Lastly, a Growth CFO must be focused on the sustainable growth of the organisation as a whole and thus, are responsible for laying the foundation for such growth, along with close working and coordination with lenders who can contribute to the firm's capital.
3. Public Company CFO
A Public Company CFO is a very specialised kind of Chief Financial Officer.
These CFOs are trained in not breaking under pressure from departments of Securities and Exchange or the SEC, lenders like banks or other investors, analysts, and the like.
They are also held to face certain regulations and are well-versed in the functioning and operations of public companies and the economic market as a whole.
These CFOs are always kept under incredible pressure from the firm's investors and the SEC while the company is expanding its operations.
4. M&A or Exit CFO
M&A transactions refer to transactions related to or involving Mergers & Acquisitions. Such transactions and economic activities are one of the most important for any firm, both economically and growth-wise.
There are many other tasks involved with successfully closing an M&A deal.
These encompass the process of performing due diligence, reviewing and analysing profitable propositions, safeguarding funds for the respective investment, and looking for a way to successfully integrate the firm you have invested in with your own.
Acquisition transaction requires due diligence, which is a time-consuming, complex task. Thus, recruiting CFO Support Services with experience in formulating or performing M&A transactions and investment bankers would help firms maximise their profit and output.
They would also be able to make sure that the M&A transaction or deal is carried out successfully.
M&A deals are not only about how much knowledge the respective deal-maker has but also how prepared and confident they are.
If this does not work out positively, it may cause potential investors to back out of the deal and, in turn, cause lesser prices for the firm.
Thus, the experience of the CFO is of utmost importance. Their experience is also needed to make out investing in which companies would be profitable and which would not
Lastly, experienced CFOs would help limit the risk, if not eliminate it, which is intrinsic to such investment.
They would help secure profits, so bringing in an M&A CFO for such tasks would be a better option for the firm than directly engaging in it without external help.
5. Turnaround CFO
Such a CFO is needed when the firm has been sustaining in the market for quite some time now and needs to expand the markets and technologies and produce changes.
For such activities, firms employ a turnaround CFO. Turnaround CFO Support Services are trained and specialised in supporting companies and working for their financial betterment in times of need.
These CFOs must be capable of understanding the firm's sources of revenue and causes of expenditure. They are further expected to bring about a change in these and earn fast turnaround profit from the same.
Apart from this, they could be required to work with issues of special attention, like dealing with investors and the bank or dealing with assets.
They might also be needed during a situation of bankruptcy. Extreme care and specialisation are required in such situations, the absence of which can cause disasters for the firm.
Conclusively, the best and most effective measures that can be taken during such times are devising strategies for such turnaround and managing cash flow efficiency.
What is CFO Advisory?
In simple language, a CFO advisory refers to a service that could assist firms in making sound and wise economic decisions and acting upon them with regard to a wide selection of their economic activities.
These economic decisions can range from the creation of better strategies of taxation to devising methods to curtail expenses and generate more revenue, and, lastly, maximize profit.
All in all, a CFO advisory in CFO Support Services facilitates a firm in the achievement of its financial success.
A CFO advisory service can bring about huge changes and differences in a firm's financial operations. It can distinguish between what would be financially better for the firm and what would not.
It does this by closely examining every economic and financial element that surrounds the firm.
A CFO adviser possesses the ability to optimize a firm's budget to the anticipation of finances, thus making possible the accomplishment of measurable KPIs that contain the ability to maximize revenue and minimize expenses.
What roles do CFO Support Services Execute?
As mentioned above, a CFO or Chief Financial Advisor is responsible for all an organization's economic activities and strategies.
The role of the CFO is a prerequisite for maintaining a balance between a company's past, present, and future financial position.
The activities performed by a CFO prove to be extremely vital for the operational and financial sustenance of the organisation.
The following are some of the duties that are expected to be executed by the CFO:
1. Evaluation and analysis of the firm’s finances
2. Preparation of financial report of the firm for the current fiscal year
3. Streamlining of allocation and reporting of finances
4. Adoption of reformative economic policies to maximise profit and output
5. Strategising new policies that can be undertaken to ensure the sustainability of revenue
6. Maintain and add economic value to the organisation
What kind of businesses can use CFO Support Services?
Although all kinds of businesses can benefit from the services provided by a CFO Support Service, however, the following 2 types of businesses can extract the most benefit:
1. Start-ups or companies that have just begun to grow
2. Small and Medium Enterprises that have matured substantially and are facing adverse situations at the moment
What are the types of CFO Support Services?
The types of CFO services that can be availed are:
1. Consulting services
A CFO specialising in experienced consultants extends short-term work with a firm to perform such short-term tasks as reporting or establishing certain procedures. They could work as interim CFOs for a certain time period or time of transition.
2. Virtual CFOs
Such CFOs encompass certain agencies that extend long-term solutions to a firm's financial management needs and mechanisms.
As per its role, the agency stays accountable for and oversees the firm's financial staff but does so virtually. It is not engaged in daily micromanagement of the enterprise.
3. Single Source CFOs
Abiding by the name or title, such CFOs are operated by a 'single source' or one person only.
They are responsible for extending CFO services to a number of different clients.
Such sources must be well-versed with the firm's industry and the project it needs CFO services for before recruitment.
4. Staffing Firms
As the name suggests, these refer to firms that would extend efficient staff towards your firm, as per your needs.
5. CFO Consortiums
Lastly, this type of CFO service extends CFO consultation services both regionally and on a nationwide basis.
What risks can you encounter if you do not opt for CFO Support Services?
The following risks may be encountered when a CFO service is not opted for:
1. Weak and inefficient financial mechanisms
2. Wastage of efforts
3. Loss of the client’s confidence in the firm
4. Losing out on resources in times of need
5. Wrong or miscalculated decisions
6. Loss of revenue and profit
7. High expenditure
8. Increased exposure to risks of legalities and taxation
What are the benefits offered by CFO Support Services?
Some of the advantages that a CFO Support Service offers are:
1. A CFO Support Service offers a part-time CFO for hire, to an extent, as compared to a legitimate CFO hired for the long-term.
2. A CFO Support Service allows an organisation to evaluate their need for streamlined economic planning and strategies. It gives the firm space to gain trusted opinions from the Support Service if they need a full-time CFO for financial strategies, economic inputs and/or rationalised financial reporting.
3. When an organisation works with a CFO Support Services, it opens its avenues to multiple people all at once with varying experiences and skills they possess.
4. As a CFO Support Service encompasses various resources under its domain, it aids in sustaining the continuity of the enterprise by extending its resources in a timely manner.
5. Geographic limitations do not exist when it comes to a CFO Support Service. An organisation can employ or recruit a service from any part of the world.
6. Engaging a CFO Support Services cuts back on expenditure by the firm in the long run. As has been proven time and again, it serves as a more cost-effective policy as compared to recruiting a full-time CFO.
7. The analysis related to the finances of the firm was done by a CFO Support Service aid in maintaining the firm’s transparency.
8. Through such analysis and reporting, they provide a clear picture of the current market situation, trends, and anticipated changes.
9. Lastly, financial reporting as done by a CFO Support Service helps in cutting down on expenses related to the goods and services produced by the firm.
What is it like to be working with a CFO Support Services?
We have read this in the former sections of this article. However, to put it concisely, the following advantages are extended by a CFO Service:
1. It extends the best options and opportunities for accomplishing the firm's respective goals.
2. It duly generates timely and regular financial reports for the firm, as per its needs. These reports may be generated weekly or monthly, as per need and choice.
3. It undertakes bookkeeping and accounting and ensures that there exists a balance and thorough check of all systems. This helps in strengthening the accuracy of financial records.
4. It presents a better and more accurate financial picture of the company in board meetings.