John C. Maxwell once said, “A leader is one who knows the way, goes the way, and shows the way”. What a leader is for a team, the CFO is for an organization. The CFO is the head of financial operations and is in charge of all the financial activities. Being in charge of the numbers and bottom line of an organization means that the VCFO adds value to the business. The CFO has strong analytical and strategic decision-making abilities to identify the right opportunities and take challenges head-on with guaranteed success and minimized damages.
A CFO is a chief financial executive with hands-on knowledge and experience in finance and accounting. With strong communication skills, the CFO can train the finance department to provide accurate reports and financial statements within the set deadlines. The CFO has vast experience in dealing with various financial issues which result in increased networking with influential individuals. A CFO adopts a proactive approach while developing strategies and a roadmap that charts the growth of the organization. Thus, it is very safe to say that a CFO plays a very important role to help an organization grow and succeed.
The CFO plays a pivotal role in forecasting, budgeting, and tax planning that helps an organization achieve its objectives, including;
- Reducing costs
- Increasing profit
- Improving productivity
- Enhancing cash flows
- Effective capital and asset management
Some of the value additions by a CFO are;
- Promoting quick growth:
A CFO is an experienced and knowledgeable person who understands the entire operations of an organization. Having this knowledge gives the CFO an understanding of all pain areas and potential opportunities awaiting the organization. With impeccable skills, the CFO can easily manage cash flow to earn profits. The CFO can organize and guide the team with ideas and suggestions for efficient cash collections. The CFO has quick access to all the financial reports of the past, present, and future. This data is very useful and helps the CFO analyze the financials and understand any underlying pattern of an organization’s performance. The CFO can identify any bottlenecks in operations and provide suggestions and solutions. Such valuable information enables organizations to take corrective steps and set up their path to success.
- Improving the cash flow position:
Cash is the lifeline of any organization. A CFO helps an organization by actively managing the cash flow cycle in the right manner. And increasing the liquidity position. By managing cash flows, the CFO ensures they do timely collections, pay off debts regularly and manage capital optimally for capex projects and future investments. The focus of a CFO is maintaining a free cash flow position so that funds are readily available for immediate disposal as and when needed.
- Leveraging funds from banks and financial institutions:
Banks and financial institutions provide funds to an organization based on their financial statements. By leading the finance team, the CFO ensures they prepare all the required financial statements and reports accurately. The CFO also heads all negotiations with the banks and institutions when the organization needs to procure funds. Using both financial knowledge and effective communication skills, the CFO negotiates the terms and conditions that enable organizations to get the funds at the best rates.
- Transforming the finance functions:
A CFO has his hands on a wide range of accounting and finance tools. As the CFO adopts a proactive approach to understand the organization’s finance functions in-depth. It helps the CFO to introduce better systems and alternative approaches which add high value and increase the organization’s bottom line. The CFO plays a pivotal role in transforming and shaping the mindset of the finance team. Once the finance function is streamlined and transformed, the same approach can be applied to the entire organization, benefitting one and all.
- Developing strategic plans:
The CFO helps organizations in formulating and implementing various strategies. The CFO can easily provide his insights to all the departments in an organization. While formulating a financial strategy, the CFO focuses mainly on the sales figures. In doing so, the CFO roles in the manufacturing, operations, sales, and finance department to ensure that they meet all the set targets while working in harmony, which is beneficial to the entire organization.
A CFO uses the financials of the organization to understand how well a product is performing in the market. In doing so, the CFO can guide the organization to invest in increasing the quality of profitable products and to do away with the products that do not add substantial revenue to the organization.
Every organization needs a CFO to manage various finance-related functions and fulfill all statutory and tax compliances. However, not all organizations have the resources to hire a full-time CFO. In such situations, a new concept of virtual CFO (VCFO) is now introduced to bridge the gap between the cost and the services provided by a full-time CFO.
Here to help:
Diligen is one such service provider in India that provides cost-effective VCFO services. The VCFO services by Diligen provide end-to-end accounting, financing, and advisory solutions. The highly professional and experienced team of VCFOs at Diligen oversees all their client’s accounts and records to provide immediate help and provide 24*7 support. Diligen’s VCFO services ensure accurate reporting and timely generation of all financial statements and reports. The pool of experienced VCFOs ensures that they fulfill all compliance-related issues within the deadlines to avoid penalties and fines.
Diligen helps its clients to customize the VCFO services to suit their business size and needs. This customization ensures that the client gets the required services at affordable rates. The VCFO services by Diligen provide strategic, transactional, as well as operational support. The financial professionals at Diligen are experts in preparing budgets, managing cash flow, and fund requirements. They also help clients in setting realistic and achievable goals by drawing growth-based strategies.
Diligen ensures that there is the total involvement of the VCFO in the client’s finance and operating function by using advanced management and accounting tools and techniques. So, if you are looking out to find a partner who can solve all your finance-related issues, then Diligen’s VCFO services are the ultimate solution.