As per the reports published on the website of India Brand Equity Foundation in June 2021, the micro small and medium enterprises (MSME) sector in India contributes about 29 percent towards the GDP. The opportunities available to small businesses have increased manifold. As the opportunities increase, so will the challenges they face. This is where the outsourced CFO services can play a supportive role in their growth. The CFO services have gained popularity, but it is still untapped by many.
The primary focus of a CFO is to improve the overall financial health index of the business. It is important to know the strength, weaknesses, opportunities, and threats (SWOT) of the business to achieve this. By outsourcing the CFO services, the small businesses will be better able to increase their strengths, overcome their weaknesses, make use of the opportunities and be well-equipped for the threats.
It is possible for the business to pick the CFO services the business needs. It is also equally important for the business to know the different CFO services for them to choose wisely. We will look into the different CFO services on offer and how they will help small businesses to grow.
Financial planning and budgeting
Remember the famous quote of Benjamin Franklin, “Success is the residue of planning.” It sums up the importance of planning in business. Financial planning is even more important as it sets the road map to achieve the financial goals. This sets the tone for budgeting as well. It is difficult for small businesses to hire the expertise because of various reasons. Small businesses can avail of this service at an affordable rate when outsourced to an expert professional.
Financial forecasting
It is essential for a growing small business to have an impeccable financial forecast. The CFO will provide a good financial forecast taking into consideration the cash inflow and outflow of the business. This requires extensive research, planning, and proper execution. This will ensure that there is a steady and sufficient flow of resources to meet the short-term and long-term goals. Small businesses can benefit from a good financial forecast by knowing how and when to meet the set goals.
Risk Management and mitigation
Opportunities and risks go hand-in-hand. Any growing business must know the risks associated with the particular opportunity. The modern-day CFO is well aware of the importance of risk management and mitigation. Every successful business must have a healthy risk appetite. This ensures the business does not miss out on any of the growth opportunities. The expertise and experience of the CFO will help attain this healthy risk appetite. Small businesses should avail this CFO service in order to better ride out the storm.
Financial Reporting
Bookkeeping and accounting are essential parts of efficient financial management. So is the ability to make strategic decisions based on these financial reports. This CFO service will ensure that the business receives daily, weekly, or monthly reports for the smooth running of the business. This will serve as a real-time check to financial planning and budgeting. The insights got from these reports will help in the corrections needed, if any.
Audit compliance
Though profit and wealth maximization are the ultimate goals of any business, nothing can undermine the importance of compliance. It comes under the purview of CFO to ensure the tax and legal compliance of the business. Non-compliance is non-negotiable and can prove fatal to the reputation of the business and the bottom line. Small businesses cannot afford to make an error in compliance. Hence, this CFO service is vital to small businesses.
Fund planning
The expertise of the CFO helps in choosing the right opportunities at the right time for the success of the business. This entails the duty of allocating financial help. The industry experience of the CFO will help in finding the perfect strategic partnering to provide for the funds. The Financial projections and planning by the CFO regarding this opportunity will help in finding the correct banking help as well.
Help in Mergers and Acquisitions
This is another area in which the CFO services help the small businesses with their expertise. Mergers and acquisitions are a possible way of growth for small businesses. The CFO will state the pros and cons of the business mergers and acquisitions for the benefit of the decision-makers. It is also important to understand the financial culture of the business which is to be merged. The expertise of the CFO will help in deciding on these processes.
Financial restructuring
Sometimes it is necessary for a business to restructure its finances according to the renewed financial goals. Take, for example, the customers did not receive well a new product introduced by a gadget company. The crucial decision of stopping the production or decreasing the amount of production depends upon the financial advice of the CFO. The financial decisions will also affect the amount provided for the particular product line. Thus, Small businesses will benefit a lot from this CFO service by getting a perfect sounding board for such financial restructuring.
The virtual CFO services have the reputation of getting expert advice in a cost-effective manner. Diligen has always been a frontrunner in providing quality CFO services. The awareness of these services among small businesses is on an upward trend. The CFO services can be customised according to the needs of the business. The duration of availing such services can also be customized accordingly. The data security is well taken care of. The availability of technology ensures minimum errors in the financial reports of the business. The varied industry experience and networking help small businesses in expanding their business horizons.
