Role of virtual CFO in an SME

A Virtual CFO, by increasing their financial control and visibility, enables business owners in informed decision making process. The roles and responsibilities of a Virtual CFO are similar to that of any Full-time CFO of a large corporation. A good virtual CFO helps business owners/leaders bridge the gap between finance, operations, and strategy that allows them to focus on long-term goals.

In an SME, a virtual CFO is broadly responsible for the following:

  1. Accurate Reporting
    Virtual CFO is responsible for ensuring the balance sheet records all the assets and liabilities of the company as this helps in better management and planning for the next financial year. The role of a Virtual CFO is to oversee the financial or accounting team to ensure that the profit figures provide a true and fair reflection of the company’s performance for the period.
  2. Develop strong internal controls
    SMEs in India often suffer from management deficit and hierarchical top-down organisational structure and this is evident from their weak internal controls. Very few percentage of SME owners understand the importance of having adequate internal controls in place that promote best practices and adequately minimise risk. A Virtual CFO provides business owners with necessary expertise required to establish strong internal controls that help you manage resources better and bring about increased operational efficiency.
  3. Create a strong financial base
    CFOs role has evolved from being just a financial gatekeeper to part of the senior leadership team. They are expected to maintain and lend a high-level view of the organisation and the business environment. They are responsible for setting up a strong financial base of the company that is vital to the overall organisational success. They are CFOs are also expected to achieve.
  4. Provide wider oversight
    In larger organisations, CFOs are expected to develop cordial relationships with leaders of the various functions to create a common vision and view of the organisational performance, challenges, and opportunities. In an SME, where the leadership team is limited to business owners/partners, a CFO is expected to oversee various functions such as HR, Information Technology, payroll etc. in a bid to increase functional effectiveness and minimise overall expenses.
  5. Maximise Revenues and Minimise costs
    Most SMEs operate in challenging environments where competition is cut throat and limited access to capital. A good virtual CFO can help business owners in improving not just the bottom-line but also the top-line revenue figure. With strong domain expertise, long ranging and wide experience and strong access to a network of specialists, a Virtual CFO can offer SMEs opportunities to open up new markets and propel growth.