A family owned business or a sole proprietorship business achieves certain critical mass after a certain period say 8 or 10 years. At this stage the volume of business is such that the one man army functioning starts becoming increasingly difficult to continue. This also leads to several lapses in overall business management.
On the whole, the organisation starts to become stagnant not only in terms of business but also in terms of its resources including the promoter himself. Entrepreneurs find themselves in a dilemma which neither allows them to completely adopt new strategies nor are they able to pull on with the old style of working.
This is exactly the phase where they need a Chief Financial Officer (CFO). CFO acts as
A Catalyst:
Catalyse behaviours across the organisation to execute strategic and financial objectives coupled with creating a risk intelligent culture
A Strategist:
Financial leadership in strategic business planning, mergers and acquisitions, capital market strategies vital to organisations future
An Operator:
Optimise operational efficiency through, careful study of industry, benchmarking against best industry practices and balance capabilities and costs
A Steward:
Secure assets of the organisation and create reliable financial reporting mechansims for internal and external stakeholders.
The role of a CFO encompasses the entire gamut of finance and also steps in to the shoes of a strategic partner who can aide sustainable business and financial growth
Why a virtual CFO?
Costs of hiring a fulltime well experienced CFO are quite high and MSMEs due to their scale of operations find it burdening.
Despite the fact, MSMEs do need the services of a CFO (catalyst, strategist, operator, steward) to handhold them thru their journey of growth.
Virtual CFO concept allows MSMEs to utilise the services of a full time CFO at one hundredth of the cost.
How does the concept work?
- A highly experienced professional with say at least 15 to 20 years of industrial experiencetakes charge as the Virtual CFO.
- He is supported on site by reasonably experienced staff. Their function is primarily to collect and collate information and present it for analysis and recommendation to the CFO.
- The CFO conducts regular review, enlists recommendations and creates a road map for management to implement the recommendations.
- A whole structure comprising of compliance- accounts – costing and pricing mechanism – Management Information System – Financial management – strategic decision is created
Compliance:
- Review applicable statutes and present status report on each applicable statute
- Recommendation of remedial measures/action plan for achieving complete compliance
- Implementation of remedial measures after concurrence of management
- Implement review mechanism for ensuring complete compliance
Accounts :
- Review of prevailing accounting processes at corporate office as well as manufacturing unit
- Aligining accounting system with Indian Accounting standards and their implementation in the prevailing accounting system
- Review of internal and financial controls, identify gaps and recommend and implement control mechanism
Costing system and pricing mechanism
- Review for assessing suitable costing systems ( eg. Activity based costing, Job costing, Project costing)
- Collection of overheads based on either the time or attribute to particular project
- Devising the best suited system of overhead allocation based on discussion with management
- Developing format for collection of costs based on product type
- Development of a customised pricing mechanism for
Management Information System (MIS):
- Devising formats for data collection, function wise
- Compilation of function wise data in to departmental MIS
- Consolidation of departmental MIS into MIS for top management. Include key indicators and highlights
- Management Dashboard – key highlights of business
- Budgeting and comparison of actual versus budget
Financial management:
- Assessment of optimum working capital requirement
- Review of existing availability, utilisation and management of working capital and optimisation
- Cash flow forecasting and comparison with actuals
- Continuous monitoring for ensuring prudent use
Strategic decisions:
- Business and financial planning for existing business and expansion plans ( short term and long term)
- Planning and implementation for backward and forward integration
- New Project feasibility and viability analysis
- Due diligence for green field and brown field projects
- Each operation is review independently and in integration with all other operations
- CFO adorns the role of a "Change Champion" and creates the ecosystem for the organisation to take the big leap towards building a financially intelligent and efficient organisation
Why Maxentra?
- Over 20 years of collective large corporate experience spanning a wide range of industries including, pharma, chemical, engineering and key operations such as sales, supply chain, finance
- Specialisation in professionalising/ transforming family owned business
- Our services are rendered both in virtual mode as well as onsite
- Our solutions are completely customised to suit the clients business and the industry they operate. These solutions are practical, holistic, easy to adopt and sustainable.
- We don't just mentor, we support you from start to finish to achieve your business goal
