Why Outsourcing CFO Services ?

The best way to find yourself is to lose yourself in the service of others — Gandhi
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Why Outsourcing CFO Services ?

Our objective is to provide high impact shared CFO (Financial Controller) services to businesses as one of the key stakeholder & value creator while creating a vibrant & value driven finance function by leveraging comprehensive tools, domain expertise & rich network.

Our Services are not advisory consulting services but rather we perform the role of financial controller/CFO with hands on approach while executing and delivering engagement.

Rationale & Positioning Virtual & Shared CFO Services

Business landscape in India, especially in the SME segment, is far wide with lot of hidden jewels & emerging value creators

With acceleration in consumer centric & globalization driven GDP growth in services, manufacturing & distribution businesses, leading to transformation by tapping capital & strategic resources with generation shift at ownership level demand for finance professionals

With high influx of sophisticated investors (PE/VC/MNC's-JV) & market positioning , there is growing need for optimum financial management, need for integrating business & finance function well

Current skill deficit & cost for full time CFO to SME is prohibitive

We offer shared CFO services by competitively positioning in terms of best of quality, measurable matrix & value pricing

We provide flexible engagement model by providing seasoned CFO with hands on approach

  • What does CFO stands for?

    CFO stands for Chief Finance Officer. This is also known as Finance Controller position.

  • What is the role of shared CFO?

    As a shared CFO, we basically manage the above functions either on retainership basis for complete management of finance function or manage only certain specific set of projects where Organisation does not have that particular skill set within their finance function.

    At a strategic level as a shared CFO, we also advise business Strategic areas for example partnering with the CEO/Board in conceptualising future growth strategies, financial strategy including the framework and state of readiness required to support the long term business strategy with economic & market dynamics.

    Effectively, in nutshell, we provide complete integration & alignment of business with finance.

  • How does the shared CFO assignment is being crystalised in terms of time & deliverables?

    With the advent of technology and finance being a back-office function, shared CFO services model is being worked out primary in terms of quantifying deliverables with the mix of on-site and off-site presence of our personnels.

  • What is the qualification & experience our people have to serve as shared CFO?

    At IxCFO, we bring the pool of experienced CFO's/Controllers having rich experience across businesses viz Trading, Manufacturing or Services sector with MNC, family offices, first generation entrepreneurs and established domestic corporate in SME/Large Organsiations. Therefore, we pool the knowledge, practices and methodology in our team to serve clients with well define framework and consistent quality services. Generally, our people are Chartered Accountants/MBA with not less than (post qualification )8+ years of industry/business experience (is must) supported by 15+ years of experience at the other end to bring hand on approach in execution. We do not provide fresher CA/MBA at any of our client's site and it is strictly against our business policy as a service provider in line with our business objective.

  • How do we differentiate with practicing chartered accountants or any other finance consultant ?

    Practicing CA is generally well versed with financial accounting, audit, assurance, attestation & compliance practice on direct/indirect taxes front etc. They may not carry the necessary business oriented skill to work at an operating level within finance on a controller kind of role to resolve the business finance issue. While full time controller or CFO via us will bring rich experience in integration of business & finance issues coupled with internal business controls.

  • Why should business hires shared CFO & what is the rationale for shared CFO ?

    With ever changing business & finance, shared CFO is in a position to bring strategic advisory role & value to businesses in SME sector with their expertise across various issues. Also, full time controllership/CFO position cost is high coupled with SME's inability to offer challenging work environment is limited which lead to high level of attrition at CFO/Controller level. This lead to challenges in hiring full time in SME function and shared CFO fills this gap based on their offerings perfectly positioning towards business finance requirement.

  • What happens when the business grows beyond where shared CFO services can not manage?

    In such a situation, we proactively advise business owner to shift to full time controllership function or CFO role by hiring suitable person under our guidance and we assist migrating to full time CFO as and when it comes up with suitable candidate replacing shared CFO services provider.

  • What could be the special situation where shared CFO comes on project specific basis?

    Shared CFO services are targeted to serve SME where they may have full time controller but due to special situation require altogether different skill set. For example assignments like Joint venture structuring, private equity raising, capital structuring, M&A or corporate restructuring, long term funding, process outsourcing mapping & migration or creating cash flow model & management accounting business analytics framework etc. So we in a way also supplement the existing CFO/controller function by providing our shared CFO services in the above mentioned situation.

  • What it cost to hire shared CFO services ?

    Typically, cost is the function of business scale and growth aspects. Our cost varies from per man day in case of specific on-site assignment OR in the form of fixed monthly retainership kind of assignments (with on-site & off-site presence) with typical lock-in of six months to one year to start with to serve the business as shared CFO. We believe in relationship based engagement with our client and to derived fruit of shared CFO it is advisable to engage with us for certain reasonable amount of time framework in general.

    Fund raising mandates or any other strategic services mandates (not covered under shared CFO) are being charged based on certain % points depending upon challenges & work involved on the transaction amount or on fixed fee basis.

  • What is the kind of businesses where shared CFO is most suitable & how do I decide I need shared CFO?

    Shared CFO is most suitable & this becomes required benchmark to fast growing or steady state SME business , family business with no history of previously working with finance professional (good to start with shared CFO professional for gradually leading to full time CFO ) or had no prior CFO/Controller. In India PE/VC's portfolio companies are picking up and PE/VC firm funding SME's avoid having multiple CFO for each of their portfolio company. MNC segment driven by their corporate HQ to have shared CFO (size of the business may not be large) in each of the country where they operate as a matter of corporate governance & controller for each country is must to meet global financial controls requirement.

  • What are the key segments which full time controller/CFO delivers and how effective is shared CFO model in that respect ?

    To put it we have complete end to end offering equivalent to full time CFO. We provide our offering in three key verticals. While

    Tx = Transaction assurance (Finance operations )

    Fx= Business support services & Financial management/models are continuous offering which CFO churns out on daily & monthly basis with the help of inhouse team or third party service provider,

    Tx =offering is more project based and specialized skill which shared CFO service provider like us brings to the client.

    Each of the above segments are clearly demarcated with key offerings and our executive partner in charge as shared CFO services provider works very closely with business head or finance team to deliver solution in line with client;s requirement.

  • What is our engagement methodology while serving the client?

    We have designed an implementation framework consisting of two stage processes in which works in line with following stages while executing assignment or task under above verticals –

    Stage - 1   Enquire & Evaluate

    Stage - 2   Execute & Experience

    Stage - 3   Enhancement & Enriching

  • What is the level of partnership/advisors network which you have to manage specialized assignment ?

    Wherever we find the existing skill set of finance department inadequate or need such services We bring various specialized experienced partners like payroll processing agency, accounts outsourcing agency, IT implementation partner, Lawyers/Advocates, Direct & Indirect Tax consultants, Investment Bankers, Bankers, PE/VC funds etc & out strong network brings immense value addition at the execution stage with quick turnaround on issues. We manage the KRA/SOP's of all such partners as shared CFO.

  • How do we fit as an shared CFO in the Organisation structure/to whom we report & maintain confidentiality ?

    We generally report to CEO/BU Head. People working full time as Finance Associate within finance section report to us on all important policy or process issues. Functionally, such finance associates may also report to CEO on day to day operations once operations framework has been handed over to them.

    We sign NDA & disclose conflicting interest upfront while taking up mandate to ensure we adhere to full disclosures and code of ethics.

ixCFO

The Business Case for engaging a CFO Services firm by SME.

The Challenge

Take a scenario – It is easy going when the economy is bullish, business sustenance for medium sized firms should not be a big stuggle, but using the opportunity and taking the organisation to the next level with guided financial controls is a CHALLENGE. Equally challenging is business sustainability and financial supply chain with risk of business running out of cash flow.

The shift in generation

This is where many SME's firms fail, and have remained in a state of inertia for GENERATIONS. Equally while taking collaborative route via Joint Venture or PE/VC induction is commendable, managing expectations on finance & business front is another challenge.

Management & Ownership

To grow business owner has to constantly discover new opportunities and build internal capabilities to deliver value to the customer profitably. It requires dedicated resources to forecast, monitor, measure and take decisions based on data. Many such SME lack such visions, discipline and in turn, decisions are largely gut feeling of the business owner. There lies a bias due to incapacity & limited bandwidth to handle such complex business challenges with just internal resources, to judge the impact of decision as there is absolutely no difference in MANAGEMENT & OWNERSHIP.

In-house Management

Many times exclusive teams (devoid of an independent and integrity led Controller/CFO's) are not free from group think, it is political, and selling their ideas internally is difficult and ultimately becomes glorified suggestion box which no one cares within internal MANAGEMENT.

Emergence of CFO/Financial Controller (FC)

Chief Finance Officer (CFO) as an independent business guider and navigator and can help in validating ideas & gives require confidence to execute with refine performance framework. Risk mitigation is prime area & fencing of risk in execution is something which can be monitored by CFO with closer look at financial supply-chain side.

Changing outlook from a CFO

Often companies, like individuals, feel the need for an external validation that they are indeed moving in the right direction. There is fear of "letting go" for SME not realising that without this they cannot move to the next level. Many Companies do not have a good second line, so when an opportunity arises they do not have the bandwidth to capitalize.

In addition, these Companies also have to constantly scan the environment for growth, re-invent businesses, improve customer relations, while, all the time, keep an eye on costs & finance. In fact, cost and funds are two significant areas of concerns for SME and more so in India due to fast emerging globalisation of business place.

Sometimes SME's are force to take on 'unpleasant' activities like planning and announcing layoffs, cost cutting exercises, improving utilisation of resources and managing all kind of margin pressure on gross profit, EBIDTA and PAT.

Putting processes and discipline in place right from the beginning is seen as waste of time and money and they realise this only when the scaling up happens and they struggle. Understanding the right kind of systems is important for guided controls and growth. There are organisations that overinvest in certain areas like technology and they end up paying huge amount for installations and they do not use it after that. So here comes the role of reporting these dynamics based on independent outlook from CFO.

Emergence of Chief Finance Officer ( CFO)

Not-many sub-Rs.500 crore firms possess internal expertise in these areas due to talent, skill and cost factor. It would also not be wise for these companies to invest money or resources in these competencies.

It is important for business owner at top or the owners of SME to connect with the external world so that they are able to discover opportunities at the right time. Most of the times they are so inwardly focussed that they fail to recognise them. Seeing the large picture, seeing as to where they fit into the value-chain and what is to be done to move up the value-chain in critical.

Many SME's also get stuck because they only see the incremental growth and not the inorganic growth that is possible. When organisations are built on values of transparency, diversity and professionalism, at every stage there is an endeavour to invest with the right business & financial plan that forms the backbone for the growth of the Company.

That brings us to the role of Advisory cum Strong Implementation firms like ixCFO who has an understanding of working with multiple clients and multiple sectors as shared CFO.

CFO becomes a member of the executive management team and provides high level financial expertise and guidance in areas like the following:

Tx = Transaction Assurance Services – Controls. Processes & Scorekeeping
  • Accounting System Design
  • Audit Preparation & Annual Audit
  • Financial Statements with quality closing & integrity of accounts
  • Internal Controls
  • Corporate Governance led by Compliance management
  • Policies & Procedures
Fx = Financial Health Management & Business Support Services
  • Key Performance Indicators
  • Operating profitability Strategy
  • Risk Management Strategy
  • Tax Strategy
  • Executive Management Reports
  • Capital Requests
  • Cash Flow Assumptions
  • Budgets & Financial Plans
Ix = Inorganic & Organic Growth Execution Services
  • Debt/Equity Strategy
  • Financial Strategy
  • Growth Strategy
  • IPO, Acquisition and Divestiture Strategy
  • Joint Ventures/Collaborations
When to hire CFO Services firm
  • Realize that not having access to a Financial Controller/CFO's level of financial expertise is holding the company back.
  • Have a financial staff that is operational, but not strategic, and need some high-level strategic planning insight and direction.
  • Are concerned that their financial staff and key managers suffer from "tunnel vision" and want to bring in an objective outsider who can offer a fresh perspective on business and financial challenges and opportunities.
PROJECT BASED CFO SERVICES

In this scenario, a CFO is brought in to work on a pre-defined financial assignment.

These may include:

  • A specific financial transaction (such as a financial restatement or revenue recognition) for whichintegration assistance is required.
  • The integration of a recently completed merger or acquisition to meet all operational and filing deadlines.
  • A specific financial project that requires focused, project-based engagement, but for which the staffdoesn't have the time or resources to devote to it.
  • A specific business process that is not working as well as it should and that an objective outsider'sperspective could help improve.
  • Upgrading or improvement of existing procedures and/or systems that the company has outgrown.
  • The capture of key business metrics and key performance indicators (KPIs) from systems and software inorder to better manage a growing enterprise.
  • An upcoming audit/due-diligence (from which the CA firm must remain independent) for which the business needs helppreparing (including the preparation of financial statements).
  • Implementing a new accounting rule for which staff doesn't have the time or expertise required.
  • Professionalizing and updating of planning, accounting and administrative systems and procedures toavoid unpleasant "surprises."
  • Assistance in ensuring that policies currently in place are in compliance with state and federal laws.
  • Assistance in creating proper internal controls to deter internal fraud and embezzlement.