Concept of virtual CFO Service in India

Concept of virtual CFO Service

• It is rightly said that the crises also open the new opportunities. The pandemic has taught us lesson to manage the things through the best available resources. The CFO ‘s role in an organisation is full time job and requires handsome fund to avail such services.
• The CFO on the board of the company helps company to grow financially strong, improve profitability, control cost, improve financially literacy in the organisation, tax management, formulation of SOPS and financial policies, alignment with Company’s Mission and Vision.
• Most of small sized companies may not afford to appoint CFO. To cater the need of CFO in such company, the concept of virtual CFO is emerged.
• The virtual CFO may not available physically but his wisdom, advices and guidance are always available. In lock down period during COVID 19 ,
• You can also approach to virtual CFO to get specialised services like project report preparation. Profitability analysis, Break Even analysis, debt planning, MIS reporting, SOP & internal Controls and other financial services.

Requirements of Outsource Compliance Services to a Professional

• Every company, from SMEs to Fortune 500 businesses, is required to abide by specific laws and regulations or else suffer the serious repercussions. One compliance management flaw can actually cost you your entire company. You must therefore manage your compliances with great care.
• Due to the higher regulatory complexity that compliance teams must understand and negotiate, today’s compliance function requires more expertise, skills, and knowledge than ever before, making the task for business people even more challenging. They should be knowledgeable about the rules and legislation as well as stay up with any changes that are made on a routine basis. As a consequence, an increasing number of companies are opting to outsource various parts of their compliance job to professionals who provide legal compliance management services.
• In order to help you decide what’s right for your organisation, we will examine why you should hire professionals to handle your company’s statutory compliance needs, as well as its benefits and suitability for start-ups.

Why Need to Outsource Compliance Services?

• Complex Laws
• Frequent Amendments
• High Penalties
• Strict Enforcement

Advantage of Outsourcing Compliance Services to a Professional

• Expertise
• Accuracy
• Helps in saving a lot of time
• Scalability options
• A better understanding of the laws
• Focus
• A professional reputation
• Prevents legal trouble
• A permanent solution to disruptions in compliance management

Why small and medium sized company to go for Virtual CFO services

• • A CFO is a part of leadership Team of an organisation whose primary responsibility includes providing professional advice, managing the financial risks, financial reporting, taxation, compliances, Fund Flow management, Budget preparation and record-keeping.
  • They can also help in reconciliation of input credit with GSTR 2, 3B and book, they can help in tax planning and tax management.
  • They can also help in timely and appropriate reply to various notices received from the tax departments.
  • Company Law: All the compliances and advisory related to company law matters can be provided by your virtual CFO.
  • In the present tax scenario, there are heavy penal cost consequences for filing incorrect returns/forms or for not complying to legal issues in a timely manner.
  • We  have realised the importance and association of virtual CFO to protect our business from financial crises. Hence , Virtual CFO and his team can provide expert and professional service at affordable price.
  • By taking service of virtual CFO, the company specially MSME unit is benefited by saving fixed heavy cost of hiring full time CFO and make available time to CEO to focus on core business.
  • The company has option either to hire CFO and establish full fledge accounting & taxation department or go for Virtual CFO with small team of 1-2 persons in accounts department.
  • It is always beneficial for start-up company and small and medium sized company to go for Virtual CFO services as it helps in reducing manpower and establishment cost in initial years of operation and saving lot of time of top management to focus on development and growth of the business.
  • Secondly, it helps in getting timely expert guidance for compliance under various commercial law, labour law, tax law and corporate law.

The CFO services For Small and Medium sized organisation

• For Small and Medium sized organisation, it is the luxury to hire full time CFO due to limited funds. The concept of virtual CFO comes in picture to render CFO services at reasonable cost on part time basis to Micro, Small and Medium Enterprises (MSME).
• MSME is relatively small organisation and where timely fund availability of funds and its proper utilization are extremely challenging for survival and success in long run.
• The present union government has launched various schemes and relaxation to MSME unit for the nurturing and development of industries under ‘Atmanirbhar Bharat’ and ‘Make in India’ initiative.
• MSMEs have gain tremendous recognition and consequently, a number of economic and financial reforms in the form of availability of easy and collateral free loan at affordable interest rate and participation in share capital on selective basis.

• Compliance is one of the basic services provided by your virtual CFO, which enables your business to adhere to the necessary legal requirements in a timely manner as per all the latest provisions under the Income Tax Act, Companies Act, GST, Profession Tax Act etc.
• The accurate and timely preparation of financials helps the management to check the health of the business and it is basis for taking timely decision by the top management.

CFO Services Solutioning following services

A virtual CFO service provider may provide the following services:

1. 1. Accounting and book keeping services
   2. Taxation services –Income tax, GST, Professional tax
   3. Company Law compliance
   4. Financial Statement preparation
   5. Monthly reporting & MIS
   6. Cash Flow forecasting and Budgeting
   7. Other Miscellaneous services

• In the present business monitoring era, the evaluation and preparation of the financial statements are conducted on a monthly as part of monthly reporting to management.
• The virtual CFO can help in development of in house Team in longer run by sharing knowledge and awareness about tax laws, accounting treatment and compliance under tax law and commercial law.
• In present scenario, real time accurate accounting in line with tax laws is essential for the company to avoid penal charges in case of non –compliance.
• It is better to be aware and cautious in time to avoid unnecessary tax compliance cost by timely and accurate deposit of tax, taking right input tax credit under GST, filing of tax returns monthly, quarterly and yearly as the case may be.

What is Cash Flow and CFO Services ?

• The Cash is the blood for the business. Book profit is no relevance unless and until it converts in cash . Cash flow preparation on monthly and weekly basis need lot of knowledge of business.
• Cash flow analysis helps the management to know fund requirement for normal business and extra fund for certain projects / expansion or capital expenditure. It helps to take actions for timely arrangement of fund.
• Virtual CFO can help you prepare financial statements such as Profit and loss statement, Balance Sheet and Cash Flow Statements as per Companies Act and Indian Accounting standard.
• Core job of the CFO is to work out funds requirement for the company and arranging it from bankers or Financial institution. The proper management and utilisation of funds requires financial acumen, deep understanding of business and knowledge of government policies. Really it is job of an expert and that’s where the CFO or the Chief Financial Officer steps in into picture.
• The small business owner generally is not aware the involvement and impact of tax law and corporate over day to day decision making.
• There is always risk of non-compliance due to mistaken decision which may cost by paying higher taxes, interest and penalties.

In Summary :

The significance of the compliance function must ever be understated, regardless of whether your organisation has 50 or more people. Outsourcing compliance functions may be the key to success for any company wishing to become legally compliant. To disrupt the conventional in-house approach to compliance may require guts, but the advantages of outsourcing the duty far outweigh any imagined difficulties. To achieve systematic compliance, you must contract out the work to the appropriate expert.

For more details on above services you may contact us at singh@carajput.com or reach at @ 9555 555 480

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