For past, few years there has been a lot of buzz on Part-time CFO’s in, Bangalore the silicon valley of India. Financial consultants like us have been getting more and more call to refer a part time CFO in various small to mid-sized organisations.
In this article, we will try to through some light on what it is all about.
First of all, Who is a CFO ?
The chief financial officer (CFO) of a company is a senior executive responsible for financial affairs of the company. The responsibilities of a CEO include financial planning, managing financial risks, record-keeping (accounting, taxation and payroll), and related compliances.
The title of CFO is equivalent to Finance Director and it reports to the president/chief executive officer (CEO) and it assists the chief operating officer (COO) on all strategic and tactical matters relating to budget, cost and benefit analysis and funding (debt or equity).
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It’s always recommended to hire a full-time CFO. But for a small to midsize organisation managing their labour expenses carefully is very important and a full-time CFO can ask for annual salary in eight-digit figure (INR). That is why many business owners (entrepreneurs) try to crunch the numbers themselves.
However, a growing number of companies have started to embrace the idea of hiring a part-time CFO. They have started to realize it is an investment, not a non-billable operating cost as CFO tend to save expenses for the company and help them in making informed decisions on financial terms.
What are the Key Disciplines a ppart-timeCFO will bring with himself ?
Sometimes this can be a very tricky affair for a business owner who tends to be more focused on core activity of the business rather than crunching numbers. A part-time CFO can create budgets that will be the basis for the fee quotes. It may also prepare a rolling budget that is updated regularly, based on needs of the organisation.
Being an expert in finance, a part time CFO will get the accounts ready as per the best industry practice, will save in taxation of the company, it will make sure that company complies with local rules and regulation in regard to taxation, payroll, and industry licencing. This helps the president/ CEO of the company to focus on their core competency and not bothered about day to day backend work.
Strong cash management is absolutely crucial to both growing and sustaining any type of business. An organisation may show high profitability, but be insolvent, it may sound absurd but there are many instances where this has happened. The profits may all be in the receivables. If the receivables are not collected the firm will not survive. The part-time CFO will assure that receivables are collected timely and if not, recommend appropriate action, like stop work, collection agency, legal action.
WHEN to hire a Part-time CFO?
It is quite common that many of the CEOs face a sought of anxiety and confusion as they don’t have a clear idea of their financial structure and standing. Due to this pressure, they turn out to make many decisions which are not in the best interest of the organisation.
Hence, it’s always recommended to have a financial expert from day one, in initial stages a part-time CFO will do that for you. By working with a part-time CFO, organisation get that expertise much earlier in the organisation’s growth cycle.
To end, a part-time CFO can be a great way to gain the financial stability any business needs as it continues to grow and expand.
About the author: Author is practicing chartered accountant in Bangalore, India. He can be reached at firstname.lastname@example.org or on +91 99861 59793.