ITR filing GST filing Accounting outsourcing services

What are this virtual CFO services or outsourced CFO services and how it works good for startups?

What are this virtual CFO services or outsourced CFO services and how it works good for startups?

Having worked as CFO of company and worked in accounting/finance department for almost 20 years, I have seen virtual CFO services are need of the day and will continue to grow.

Now, I am helping multiple startups as Virtual CFO as same point of time and I am independent also.

With this article I would like to share important insights as to virtual CFO services, which will help you as startup/SME business owner or as professionals.

What is Virtual CFO services in one line?

It’s mere outsourcing of CFO function to save costs #payasyouuse

Why startups/SME want this type of services?

  1. Experts are better at accounting: Experts are doing this thing in day to day job and they can do it better and faster. Many compliance changes and experience gained while working for other clients would be added advantage for your business while performing your accounting. for e.g. how to deal entry of TDS deducted but not paid by due date, later it was paid after due date. Experts can do it better 100%.
  2. Less dependability on staff on payroll: Most of SME and startup faces issues of hiring staff and retaining them. It is very big problem for SME as they have limited staff and limited amount to pay them. Once accountant see better opportunity, he will naturally leave organization. Issue here is that SME hires staff and gives him/her multiple responsibilities and over a period becomes dependable on the staff. Now if staff leaves them it becomes more difficult for SME as it starts with again new challenge i.e. hiring, training and again retaining...
  3. Cost efficient: It helps you to save lot of cost in terms of hiring costs and training costs. In addition to the same, if you check at day to day schedule of accounting employee, if it has its core function for not more than 2-4 hours a day, you can give a thought about outsourced accounting and evaluate options of outsourcing accounting. If your accounting work is less than 2 hours a day then you should definitely go for outsourcing accounting. generally, for 2 hours kind of job a day which is 8 hours a week, experts charges INR 15,000 to INR 20,000 per month, which is very cost effective considering other cost attached to inhouse accountant like space in office, higher salaries, training costs, infrastructure in office, bonus, labour law compliance, accounting software costs etc.
  4. Third party opinion: Advise from third party who is not on your payroll would be much better than advise from person on your payroll especially when you as boss doing something wrong which is not good for your business. Many times inhouse team view things collectively and miss the third party independent review and opinion. In case of outsourced accounting you get opinion of third party expert for free, which acts as third eye for your business or CCTV camera for your business.
  5. Value added services: Many outsourced accounting professionals provide value added services like periodical MIS reporting i.e. predefined report sent at regular intervals i.e. stock statements, debtor ageing analysis, sales mix, product mix which helps SME or startups to make better decision.
  6. Sustainable services: It is business for accounting service providers and it will be more sustainable than employee. Further to say, it is cost effective for outsourced accounting professional as he will hire the same quality of accountant which you were planning, but professional has more utilization capacity. i.e. Accountant will be hired by outsourced firm and he will be given 4-5 such accounting tasks. It makes it more cost effective for outsourced firm same as ola and uber, who just do better utilization of car and human resources. This is to say your accounting partner is not going anywhere as he is making enough money.
  7. Focus on core business: Once your accounting is outsourced you can focus on your core business and stay relaxed for your accounting and compliance needs as they have been given to experts. In fact now you as owner of business have more time to focus on core business and new business initiatives.
  8. Service options as per your business needs: You as startup can have multiple options i.e. daily reporting, weekly reporting, monthly reporting and also some of outsourced partners provide managed human resources on their payroll but they will operate from your office, if you as SME or startup want it that way for data privacy issues.
  9. Outsourcing contract: You can define your service requirement, get quotation and finalise the outsourcing accounting contract to give it legal value. You can include important points as to service requirement, deliverable definition, handover clause, ownership of accounting data, payment clause etc. Outsourcing contract is B2B contract which holds better legal value in terms of enforceability. It can be entered on letter head of client as well as stamp paper(franking).

Now looking at these benefits, you can understand why more people are opting for this service.

If I can be of any help for your startup/SME you can reach me on pravintawle@rediffmail.com

Hope this was helpful to you.

 

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