Why a VCFO service makes sense for your business

Why a VCFO service makes sense for your business

The Chief Financial Officer, or CFO, is one of the staples of the C-suite in many companies, especially the large ones. Finance is the glue that binds all the disparate parts of a company together. Success and failure of the business is finally in financial terms. Finance is the resource that enables a company to procure raw material and services for its activities. It is also the form in which compensation for its products and services is received. It stands to reason, therefore, that the CFO is a part of the leadership team of the company, deciding on its strategies and direction.

 

The role of a CFO

The CFO helps the company steer its path with the judicious management of its financial resources. The CFO ensures that finances are available for the key initiatives of the company, in time, while the money that others owe to the company is being realized in full and in a timely manner. He/she ensures that regulatory financial requirements, such as filing of tax returns, is done correctly and, in time.

The CFO has an important role to play. The person playing the role is usually an experienced professional with a suitable educational background, who expects and receives a compensation package that could be called handsome.

The leadership team of oWorkers, with a combined experience of several decades in the industry, are well equipped to play multiple roles, as may be desired by the business situation.

 

Virtual CFO

While the traditional role of a CFO is that of a full-time employee of a corporation, increasingly, the concept of a virtual CFO is gaining prominence among organizations who need one.

A virtual CFO does all that is expected of a CFO. The experience and educational background of the two are also likely to be similar.

So, what is the difference?

The difference is that while a CFO is an employee of an organization, the virtual CFO is not. It is somewhat like a contractual assignment either based on the amount of time the individual devotes to the organization or based on specific, identified deliverables.

Additionally, since the virtual CFO is not at the beck and call of the organization at all times, that organization needs to bear only a proportionate amount of his/her compensation; to the extent agreed based on the deliverables.

All delivery locations of oWorkers are equipped to operate on a 24×7 schedule. This facility is available to any service operating from their facilities. In a global world where clients have operations across several time zones, 24×7 CFO support may also be required.

 

Why is VCFO becoming popular?

The VCFO model has been gaining traction with companies. What are the reasons?

Greater flexibility

This is perhaps the major reason for the VCFO to have caught the fancy of many companies. While large corporations may have the scale, as well as variety of operations, to engage a CFO fully, smaller companies may not. A VCFO engagement can be negotiated between the company and the individual in a manner that works for both parties. Moreover, the engagement can be renegotiated as the business situation evolves, either with the same individual or with others. This allows the hiring company to manage their affairs in an optimum manner.

Evidence of the flexibility of oWorkers is their ability to offer additional staff at short notice. Thanks to their reach, they are in a position to hire an additional hundred resources for a contract within 48 hours.

No compromise on services offered

A VCFO service, either offered by an individual, or an accounting firm, is usually a comprehensive service. In other words, it is not as if a VCFO service can only do a certain set of activities while a full-time CFO can do more. In both formats, you can expect budgetary management, cash flow management, data analytics, and strategic decision-making to be handled in a professional manner. Of course, the VCFO might be limited based on the terms defined in the engagement. Apart from that there should be no difference.

If anything, on account of wider exposure, VCFOs, with their wider exposure, may be better equipped to handle the challenges that invariably crop up from time to time in the path of a company.

Though the cost might be higher initially, the oWorkers’ strategy of working with employees, and not freelancers, pays off in the long run. They have greater control over the time of employees, while ensuring that deserving ones get recognition and growth.

Lower cost

Many small and medium size companies may not have the balance sheet strength to afford a traditional full-time. When they negotiate with and engage a virtual CFO, the budgetary requirement for a part-time engagement usually reduces in proportion to the time and effort, or the agreed areas of responsibility. This becomes a superior proposition for the company who gets the benefit of a full-fledged CFO and all associated business benefits for a part of the time for a part of the cost.

The sharp pricing offered by oWorkers is well known and understood to be a function of their operational efficiencies. Many clients swear by the savings and often note values that go up to 80% of pre-outsourcing cost.

Many heads are better than one

A virtual CFO is becoming a popular service provided by many established accounting firms, as they seek to cater to the needs their clients have, beyond the traditional regulatory ones.

In such a situation, the accounting firm usually provides the service with the help of a group of professionals, each being assigned to different clients based on requirement and arrangement. This creates a back-up pool for a client when the primary resource is not available. This talent pool is also useful during times when your company faces a complex financial situation. In such situations, the multiple heads can be put together to work out a suitable strategy, a task that would need to be handled by the CFO on his/her own.

With an avowed policy of employing multi-cultural and multi-national talent, oWorkers has got multi-lingual capability as an outcome. It is able to support clients in over 20 global languages.

Wide experience

When a CFO works within a company, he/she develops within the context of that company, based on encountering and addressing situations that arise. Of course, they also usually access resources such as industry and professional associations to enhance their knowledge and stay current.

In comparison, a virtual CFO, on account of operating in parallel with multiple clients, encounters a richer vein of situations and environments as a result of which the development in terms of knowledge and experience is multi-dimensional. At the same time, since no two companies are the same, even if the person engaged by your company had experience of working for a competitor, it would probably be in an environment different from that in your company and, hence, richer. Of course, he/she could come from a different industry and situation altogether.

oWorkers draws a steady supply of resources from the talent pool in the catchment area of its delivery centers, thanks to its position as a preferred employer. The rich, diverse talent pool is assessed and deployed to client projects based on suitability.

Network leverage

Individuals and firms offering a VCFO service can be expected to have built up a reservoir of connections through interactions over many years and many engagements. That network travels with the VCFO. When they take up a new assignment, this network is available and can be leveraged for the benefit of the company they are working with. The VCFO may also have an interest in leveraging their network as doing so not only makes them more effective but also raises their stock within the network. For a company, such a network could be beneficial in situations like fundraising and service or territorial expansion.

oWorkers has developed a network of friendly technology companies. It is able to leverage the latest in technology for delivering on client projects.

Technological awareness

On account of different assignments with different companies, the exposure virtual CFOs might have to developments in the field of technology that impacts their area of work is likely to be wider. They are in a position to recommend the most suitable technologies that would be useful to an organization they are currently engaged with. A full-time CFO, on the other hand, might need to reach out to many different people to collect similar information.

A technologically aware company, oWorkers offers super secure facilities & protocols for the security of client data, along with ISO certifications (27001:2013 & 9001:2015). It is also GDPR compliant.

 

Disadvantages of the VCFO model

The VCFO model clearly has many benefits of value to companies. Are there any down sides?

The concerns about the model seem to be primarily around the security of information since the VCFO might be working with other companies as well. Besides, if the VCFO model involves the rotation of incumbents by the accounting firm, this risk could increase.

Also, an issue for some organization is the apparent lack of control over the person’s time and schedule. What if we need the CFO’s involvement on an issue that comes up suddenly?

As a pure player in the space of data based BPO services, oWorkers stands apart from the rest. In a short span of eight years, it has notched up several firsts, one of which is its recognition as one of the top three providers in the world.

 

How are organizations choosing

The VCFO model, on account of its flexibility and lower cost implications, has become popular with companies that do not yet have the scale to do justice to a full-time CFO, either in terms of cost or in terms of keeping the person gainfully employed. It gives them access to the best resources and helps them keep costs in control.

Larger companies, with scale and depth in businesses, tend to employ full-time CFOs. In addition, they could also have access to accounting firms for specialized services and for opinions on specific activities, as a support for the CFO.

Agility is becoming one of the defining features of the business world. Finance and Accounting is no different. Going digital is the method many companies have adopted as a way of keeping pace with the rapidly evolving environment. Knowledge, speed of execution, experience in handling situations, are some of the benefits that CFOs are delivering, while ensuring excellence in delivery is not compromised.

oWorkers serves technology companies, including unicorn marketplaces, around the world. If you are looking for a BPO partner, oWorkers should be included in your list of potential partners.

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