The best investment that a start-up can make, is to hire a Virtual Chief Financial Officer (CFO) right from the beginning of its Journey. While starting a new company is exciting, it is often stressful. It’s essential to assemble a team of seasoned advisors, including accountants, who can help you make important financial decisions.
As your local accountant in Strathfield and greater Sydney, we can help you create an Initial business plan, cash flow projections, break-even analysis and future forecast.
Statistics indicate that 90 per cent of the startups fail, and one of the core reasons for this failure is the lack of cash flow management. This is because it is the Virtual CFO – a financial and operational professional, whose main responsibilities are managing the cash flow of the organization, supervising departments dealing with company finances, managing liability, development of the budget, and managing expenses. All of these aspects of businesses are integral to business success.
We have collaborated with IT, HR, legal and marketing professionals to create your “C” suite.The intention is to have one firm where a group of professionals works together seamlessly, and without the client having to share their requirements several times and educate multiple people on their needs.
However, for most startups investing to hire a full time CFO is not possible due to budget constraints, and this is where virtual CFOs fit the bill. As your local accountant in Strathfield and greater Sydney, we provide you with a virtual CFO that works remotely on a contractual or a part-time basis offering the same services, but at a lower cost.
Some specific ways in which a virtual CFO can help include:
Formulating a Business plan
Business plans are highly important documents for startups, especially because a well-formulated business plan with budgets and forecasts can help in securing funding. When business owners can demonstrate that they have a viable short and long term plan for their business and that they have crafted a well-thought-out and practical business model, investors can be more readily convinced to be involved with the venture. With a virtual CFO guiding the business about revenue streams and cash flow projections, the business plan can stand out among all others.
Apart from securing funding, business plans can also serve as a solid guideline for strategy formulation and cash management, especially when goals are laid out in detail with the help of a CFO’s expertise.
Budget and cash flow forecasting
Budgets are details of how finances will be utilized – typically over 12 months. Business owners rarely can get the time to chalk out a budget in detail. Our virtual CFO helps in ensuring that considerations of revenue from all the different varieties of products/services sold is accounted for.
Some other major expenses that CFO will include in budgets include employee salaries, where expected increments, superannuations, insurance, and pensions, will all be factored in. Moreover, it is important that a budget is strategically aligned with business objectives and includes performance benchmarks that can be measured and controlled.
Cashflows, simply put are details of cash receipts and payments. The importance of cash to start-ups cannot be understated, which is why a good cash flow statement that can predict income, expenses, and balance sheet movements as closely as possible can mean the difference between survival and failure of a business. A CFO can help develop a good cashflow that includes considerations for projected payments and receipts, capital purchases and drawings, as well as balance sheet liability payments.
Pricing and cost analysis
Setting a price can be a challenging task, especially when competing in a highly saturated market. Our Virtual CFO can help set a fair price based on costs, the sensitivity of the market to price fluctuations, factoring in competition, and maximizing profits.
Overheads can claim a chunk of a start-up’s budget unless these costs are duly identified and taken into consideration. Overheads include utilities, rent, and insurance, and cannot be attributed directly to the production of a unit. Therefore, it is also important to set out how these overheads are apportioned, and a Virtual CFO who has sound knowledge about cost centres can streamline the process so that strategic decisions about pricing can be made effectively.
Accounts set-up and bookkeeper training and mentoring
A virtual CFO can help you implement a good cloud based accounting software and also train your bookkeepers to help them collect data reliably and accurately, so that insights derived from these can be improved. Moreover, bookkeepers can be mentored by the virtual CFO to be eventually able to help to make strategic decisions in the long run.
Business process systems
Startups tend to have fluid business models as they grasp their clients’ and market’s needs. Virtual CFO’s can help design business process systems that help start-ups maximize resource efficiency. Some of the aspects of business process systems that can be elevated with a CFO’s support include modelling, automation, as well as activity flows with vendors, customers, and other supply chain partners.
Business reporting set-up, publishing and interpretation
Business reporting is an important regulatory requirement and can be a useful tool to maintain transparency and report to stakeholders regarding business activities and processes. At the same time, it is a complex and painstaking task that needs careful management and execution. As your local accountant in Strathfield and greater Sydney, we can look after all your management reporting.