MSMEs are the mainstay of the Indian economy owing to their massive contribution to the nation’s socio-economic development. They have garnered increased recognition, & many fiscal & economic reforms have been launched for this sector.
MSMEs lacks better management of funds and thus, seeks an improved supervisory of the same. And this where VCFO services (Virtual Chief Financial Officer) come into the picture. In this write-up, we will talk about VCFO services in details.
Who is a CFO?
CFO or Chief Financial Officer predominately responsible for overseeing the financial aspects of the organization. Such individuals can take strategic decisions regarding financial risk, taxation, and compliances so that the organization can stay afloat and operates seamlessly.
Apart from that, CFO also provides periodic financial reporting based on various aspect. The presence of CFOs ensures better management and utilization of funds.
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Virtual CFO Services for MSMEs
An in-house CFO can help a firm achieves fiscal stability by taking informed decisions. The cost of appointing such individuals is somewhat on the higher side, making them less preferable for most MSMEs in this country. However, it seems that the concept of virtual CFO has solved that problem to a certain degree.
As the name suggests, Virtual CFO is somewhat identical to remote services. Such individuals do not necessarily provide on-site services to the client, but they are available when you need them most. VCFO services are widely-recognized for their vast knowledge and pool of expertise that assists in decision-making. Also, their charges are not as stringent as compared to hiring the real CFO.
Covid-19 pandemic has changed the way firm handles their managerial tasks. Amid unprecedented economic slowdown, MSMEs are in desperate need of experienced personals who can seamlessly handle their financial aspect and let them focus on what they do best. The compromised economic condition has led to the growth of VCFO services in India.
How can VCFO Services help MSMEs Achieve Growth?
Good VCFO services can oversee different facets of an organization, including;
Let’s discuss each of these in detail
Accounting and Bookkeeping
Having an error-less accounting system is a daunting task for firms having a low workforce and budget. The manual handling of account requires unprecedented attention and frequent cross-referencing.
Another difficulty that MSMEs usually encounter is to ensure conformity with prevailing tax laws and other legal requirements while handling accounting functions.
Having the best VCFO services can ensure that no untraced invalid data find its way to the accounting books. These services can provide you with timely reporting so that you can make a legit and quick decision.
Taxation part like Income Tax, GST, etc
Well, most MSMEs operators are unfamiliar with the fact their decision-making could impact their taxes in one way or another. Here they misestimate & end up paying massive taxes and penalties, which eventually reduced their ROI.
The VCFO services have expertise in such areas and help firms timely cater to various tax requirements, including the reconciliation of 26 AS or GSTR 2A -3b in case of unexpected tax encounter. Effective planning regarding potential taxes and saving is also a forte of these firms. They ensure that every information coming from the tax authorities are handle with utmost care.
Company law
The Virtual CFO can provide all advisory & compliances that revolve around company law.
Compliance
At present, there are stringent penal charges for filing the invalid and untimely return. Ensuring conformity with basic compliances is a necessity for registered entities in India. But, due to a shortage of skilled workforce, they fail to do so. By appointing a Virtual CFO, firms can overcome such problems with ease.
VCFO services never let you go off track in this regard by providing adequate assistance on setting up seamless coordination with prevailing compliances under various Acts like Income Tax Act, Companies Act[1], etc.
Preparation of financial statements and management of records
The virtual CFO can help you resolve potential discrepancies with financial statements and records management via effective management. They have expertise in preparing a P&L statement, cash flow statement, and balance sheet with unparalleled accuracy.
They can alter the frequency relating to the preparation and evaluation of the statement as per the management demand.
Banking services
A business has highs and lows in terms of sales and cash flow, but convincing statements allow firms to get a loan from banks even at a time of a downturn. One can bank on their virtual CFO for such banking services.
Cash flow forecasting and budgeting
A thorough understanding of the cash position for a target period is vital to make an informed decision. The fund forecasting services of the virtual CFO aids the firm to ascertain how much surplus fund is required for a specific project and arrange funds for timely execution.
Miscellaneous services
The virtual CFO also renders a wide array of miscellaneous services such as break-even analysis, audit report, cost management, MIS reporting, & internal controls.
It is evident from the facts above that VCFO is not an option anymore, at least for someone who seeks rapid growth through effective management. Management under the influence of Virtual CFO is more likely to take accurate and well-informed decisions than those who lack such services.
Conclusion
MSMEs are widely known as the smaller establishment which seeks constant accessibility of funds and skilled workforce to meet their short and long term objectives. Seamless management is what they need to cater to liquidity and management crisis effectively. Hiring VCFO services is the best way to keep critical anomalies at bay and ensures that businesses stay afloat even in the most challenging scenario where the likelihood of survival is relatively low.
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