Role of Virtual CFO in this Dynamic Corporate World


What is a Virtual CFO?

A business that does not have an in-house finance department can utilize alternatives such as outsourcing the finance function to another firm. Apart from this, the business can also utilize virtual CFO services. Virtual CFO services can be offered either remotely or through an external consultant. 

Due to digitization, businesses have to adapt according to the changing circumstances. Some businesses, such as Start-ups and SMEs, may not have the necessary resources to hire an in-house Chief Financial Officer (CFO). Hence, these businesses would opt for virtual CFO services.

The advent of digitization has made the role played by a CFO more Classified, dynamic, and challenging. In this competitive environment, a CFO needs to have relevant skills to carry out financial functions, management, and business functions. Every organization requires appointing a chartered accountant, and the CA is responsible for the financial functions carried out in the organization. A Company Secretary can also Act as a virtual CFO Advisor in a corporate.

What are the advantages of having Virtual CFO Services ?

Digital Challenges have made the business environment more competitive. Hence, it is crucial to have virtual CFO services. There are different advantages to using virtual CFO services.The following are the advantages of using these services:-

1- Integration:- Using virtual CFO services would offer the organization advantages of technology integration. Virtual CFO firms use advanced technologies such as artificial intelligence, data analytics, and big data to enhance the process in which compliances are maintained. Accounting compliance can be maintained through this process. Apart from this, a firm using virtual CFO services can get timely updates on compliances to be followed.

2- Financial Projections:- A firm using these services would be able to receive financial projections and budgetary analysis. The services offered would help the organization predict the budgets and finances of the organization.

3- Accounting Compliance:- Using this service would provide the organization with an added advantage of compliance with accounting systems. In India, an organization has to maintain compliance under different regulatory authorities. These include the Institute of Chartered Accountants of India, Ministry of Corporate Affairs, Securities and Exchange Board of India and the Income Tax Authorities. Using virtual CFO services would provide not only your organization accounting compliance but also compliance with the relevant regulatory authorities.

4-Budgetary Control:- Using this service would also provide you with a means to control your budget. Every organization has a fixed budget that is allocated for carrying out different activities. Team of professionals, such as CA, CMA, and CS, will plan and prepare a budgetary report per your organization’s requirements. Through this service, your organization can receive a detailed report on budgetary analysis and reporting. A traditional CFO cannot offer this. Even if offered, it would take a considerable amount of time and effort to produce the required level of results.

A Virtual CFO Shall Take Care of these Compliances:-

1. Goods and Service Tax Compliance:- All businesses that provide services have to register with the respective authority for GST compliance. Under Goods and Services Tax Act Compliance with the respective GST rates for a different form of services offered by a business undertaking.

-Procedure on using the HSN Code for different products and services (Unique Generated Code).

-Minimum Eligibility for GST registration for your business.

-Documents required for GST registration.

-GST Reconciliation Services in case there is any form of mismatch.

-Electronic Way Bill (e-Way Bill) compliance.

-Input Tax Credit Compliance and Calculation.

-Letter of Undertaking (LUT) application compliance in case of export of goods.

-Systems of Appeals under GST.

-GST Refund process.

2- Tax Deducted at Source Compliance:- When an individual or an organization makes payments and if the threshold goes more than a specific amount, then the payee has to pay the tax deducted at source. When this is carried out, compliance must be maintained as per the provisions of the Income Tax Act, 1961.

-Compliance of general rules of TDS.

-Calculation and Interpretation of TDS rules.

-Timely notification of TDS payments, which are made by the payee.

-Supporting the system of payments that are made in the TDS portal.

-Filing of Returns which are made quarterly.

-Form 16/Form 16A compliance.

-Reconciliation Services of TDS through Form 26A.

3- Human Resources Services:- Modern CFOs need to know more than accounting and financial services. Hence, CFOs need to take an active involvement in the major activities that are carried out in the organization.

-Payroll Support for your organization amongst all hierarchies.

-Agreements include contractual agreements between the company and the employees, executive agreements, and non-compete clauses, which are predominately used during post-termination.

-Employment Policies.

-Executive Policies that apply to key management executives of the organization. Such clauses will include non-compete clauses, garden leave clauses, restrictive covenants, and blue pencil clauses.

-Agreements for the outsourcing of human resources services for your organization.

-Compliance with different labour legislation such as the Industrial Disputes Act, Workmen Compensation Act, Shops and Establishments Act.

-Human Resource related work at all levels of the management of the company.

-Documentation Support for HR-Policies of the company, Handbook, Exit Clauses, Terms and Conditions for employment, etc.

-Non-Disclosure Agreements (NDA), also known as confidentiality agreements for secret information and highly confidential matter.

4- Filing of Income Tax Returns:- Income Tax Returns have to be filed by every individual or organization, securing some form of taxable income. Filing of income tax is under the Income Tax Act, 1961, and respective income tax rules which apply to the entity.

-Compliance maintained under the Income Tax Act, 1961.

-Timely Filing of Income Tax Returns by Companies.

-Assisting with filing the tax for companies at the respective applicable rates.

-Computation of Tax Returns.

-Income Tax Reconciliation Process through Form 26AS.

-Advanced Tax Calculation if applicable to the company.

5- Compliance with Registrar of Companies (ROC):- When an entity is formed, it must satisfy the requirements of the Registrar of Companies. Similarly, entities have to file specific returns with the ROC.

-Annual Filling of the Financial Statements with the Registrar of Companies.

-Ensure compliance is maintained while taking the minutes of the meeting.

-Know your Client (KYC) Compliance for Directors.

-Assisting in the Preparation of Board resolutions for the company.

-Company Secretary of Services and Support Functions.

6- Legal Support Services:- Procedure for the formation of a different form of corporate entities.

ROC Legal Compliance.

Vetting of Legal Contracts and Other policies.

Service Level Agreements (SLA), Distribution Agreements, Master Service Agreements, Franchising Agreements, and Leasing Agreements.

Support with appeal and litigation services.

Legal Templates for entering into contracts with different entities.

7- Management Information System Reporting (MIS Reporting):- MIS reporting is the process in which a report is provided to the organization’s management. This assists the management in making decisions that can affect the organization in the long run. MIS reporting is usually an online process of reporting which will affect the key decisions of the organization.

-Budgetary Reports.

-Financial forecasting.

-Drafting the reports and ensuring that compliance is maintained.

-Spread Sheet Analysis of reports.

-Book Keeping :- Book Keeping is understood as the recording of financial transactions daily.This is carried out by an organization to understand the number of purchases, sales, inventory, and supply present with the organization.

-Management of Ledgers.

-Management of Accounts.



-Payables Management Services

-When an organization has specific payments to be made, and if the payments are outstanding, it becomes a debt to the organization. Payables Management includes the allocation and management of payables for an organization. This would include the following:

-Allocation of Different forms of Expenses.

-Settling the order of priority of different forms of debts.

-Negotiating with Creditors.

Interim CFO:- Interim CFO is a form of CFO that carries out different services for different forms of organizations. This CFO is known as an interim CFO as the individual is acting as a CFO only for a particular period.

1-Interim Virtual CFO services,

2-Financial Management

3-Management of Finances of the company.

4- Preparing a Report.

Corporate Governance:- Corporate Governance is understood as having transparency between different stakeholders of an organization. The stakeholders of the organization include the directors, shareholders, and the customers of the organization.

-Implementing the Framework for Governance.

-Assisting to clarify different roles played by executive and non-executive directors.