So, Hiring a CFO a good choice for your company?

the decision to hire Virtual CFO Services in India in the company depends on the scope of financial activity and the needs it raises.

A common mistake of entrepreneurs at the beginning of their journey is to expect the accountant to assist with budget management, when his job is not at all to produce a budget in the foreseeable future but to summarize and document past activities. In addition, auditors are entrusted with presenting the activity data according to fixed and professional criteria, which often do not meet the needs of the management, which expects to receive financial information that will help it control its financial management and make decisions. Questions such as what is the profitability of a particular product or market segment, what is the monthly investment in development, and what is the rate of the company’s overall cash burnout, are questions that the auditors’ reports are not intended to answer.

The role of the CFO

The person who is focused on the ongoing control of financial activity, assisting management in making decisions based on “live” information, and planning ahead for the budget is the Chief Financial Officer (in short: CFO), with the assistance of the company’s accountant. Unlike an external accountant, the role of a finance manager is to examine the business plans from an economic point of view and to manage the budget accordingly – to manage the financial system in a way that allows control over the financial activity, and the achievement of defined business goals.

At the same time, the decision to hire Virtual CFO Services in India in the company depends on the scope of financial activity and the needs it raises. Especially when it comes to a startup company, the business development is gradual and at every stage, there are other financial needs.

What about formulating the business model?

Another thing that is required in the economic aspect already at this stage is someone who will build the business model towards the development of the company for profitability and more serious capital rising. You can also hire an outside consultant for this and many companies do. Recruiting the right person as a CFO is not an easy task – apart from knowledge in business modeling, it is desirable that he also has knowledge in finance, business thinking, the ability to negotiate, and preferably also basic knowledge in law that will help the company later.

On the other hand, the company will probably need someone in the future who knows how to deal with building the business model, and proper construction at an early stage will be able to leverage it. Therefore, each case on its own merits; if there is the possibility of hiring someone suitable with potential; you may want to consider this.

So a CFO or a consulting firm?

Although the volume of work and financial activity is starting to grow, most startups are not yet recruiting Virtual CFO Services in India at this stage. Most companies opt for outsourced money management services for and after the recruitment period, mainly because the cost of a full-time finance manager is very high and the scope of work still does not justify it. However, it is worthwhile to examine the scope of the position that will be required in the near future and to examine whether it is better to recruit someone who will constitute the operational and financial function, in collaboration with the accounting firm that handles accounting.