Understanding the business finances is a complicated and time-consuming process. Business owners who are not accountants or financial experts by profession can face challenges. Every business owner is aware of the fact that a solid financial base ensures financial stability in the long run. Businesses need people with the right expertise and experience is needed to build a strong financial foundation. It is known that every business is built by ideas but sustained by sound financial management. Therefore, it becomes essential to address the financial issues and save the business from financial failure. Businesses are often confused between two names – virtual CFO and financial controller and use them interchangeably. Though both professionals provide financial guidance to businesses, a line of difference exists between them.
A virtual CFO is someone who is involved in the financial department of an organisation but not in a direct way.. The main focus of a virtual CFO is to monitor and manage the finances of the whole business. The VCFOs are mainly inclined towards formulating strategies, including forecasting, reviewing and comparing the business’s financial situation. They devise and implement such strategies which leads to smooth functioning of operations. Let us know what more a VCFO can contribute to your business:
Duties of a Virtual CFO
Virtual CFOs help forecast the financial and cash flow projections that reduce wastage. They assist in budget planning and analyse any cash requirements. VCFOs are responsible for understanding cash utilisation and managing debtors and creditors. Virtual CFOs manage the company’s accounts and analyse the business data to interpret the results.They provide much-needed financial guidance. Their networks and connections help the business owners.The VCFOs provide a complete picture of the overall business finances and guide the business owners.
The roles and responsibilities of a virtual CFO are more inclined towards strategy formulation and their implementation. On the other hand, a financial controller is the lead accountant for a company. They oversee all the bookkeeping and accounting tasks and ensure that all the ledgers represent accurate information. Unlike a virtual CFO, a financial controller is actively involved in the day-to-day operations of the financial department. In addition, they are responsible for monitoring debts and compliances. In addition, they provide valuable insights to the external auditors and relevant information for filing purposes. Above all, financial controllers adds more value to your business. Let us highlight some more points about them:
Duties of financial controllers
Financial controllers are responsible for overseeing the day-to-day financial operations. They ensure that all the invoices are appropriately approved and recorded in the general ledger. Financial controllers act as a medium between the organisation and external forces.
The financial controllers enable businesses to identify areas of opportunities for cost reductions.They act as a mentor for the entire accounting team and provide the necessary guidance. Financial controllers ensure that the business remains compliant with all the local tax laws, provisions and regulations as specified.
Many people use the terms “virtual CFO” and “financial controller” interchangeably and view them as synonyms. However as discussed above, both have different roles and responsibilities. Above all, both the professionals are somehow related to a business’s finance function. Therefore, to gain a better understanding, it is equally important to learn the differences between the two. So, let us highlight certain differences between a VCFO and a financial controller:
Virtual CFO VS financial controller
Sl.no Virtual CFO Financial controller 1 The primary focus of virtual CFOs is to formulate financial strategies. The primary focus is to handle the accounting function. 2 The virtual CFO is the senior executive who handles and manages the financial actions of the business. A financial controller is the head of the accounting team. They are responsible for the preparation of financial reports such as balance sheets, income statements, etc. 3 The role of virtual CFOs is more inclined towards the company’s future. They provide advisory services that affect the business owners’ decision-making power. On the other hand, financial controllers perform accounting tasks that affect a business’s daily operations. 4 Virtual CFOs provide creative and new ideas to the business owners. As a result, the ideas are used to achieve the overall business goals. A financial controller suggests ways to enhance the profitability and manage the overall expenses. 5 Virtual CFOs are critical thinkers who aim to lead the business in the right financial direction.Financial controllers are more of number crunchers whose focus is to develop efficient strategies. Their strategies help to raise profits and enhance the productivity.
What does your business need?
Without a financial controller, a business might suffer due to lack of significant accounting improvements and ideas. Similarly, without VCFOs businesses might lack accurate financial predictions for the future. Therefore, both professionals highly contribute towards a successful financial future. However, to gain a better understanding, the below two points can be taken into consideration:
If your business is expanding quickly and lacks financial guidance regarding investment decisions and financial predictions. In addition, business owners believe that accurate financial forecasts can be helpful. In that case, business owners can consider the services of a virtual CFO. On the other hand, if your business wants accounting records based on accounting guidelines and principles. In addition, business owners observe that their accountant cannot keep up with the financial data. In such a case, financial controller’s services can be considered.
Are virtual CFO and financial controller related?
Though both services are quite distinct and independent from each other, both professionals still work closely. A virtual CFO might be unable to gather reliable financial data for decision-making without a financial controller. As a result, VCFOs cannot formulate financial forecasts and plans without the correct financial data.
Similarly, companies may lose out on strategic and financial planning without the experience of a qualified CFO. As a result, the financial data is useless if it is not utilised properly for financial predictions and forecasts.
Final thoughts
In conclusion, the needs and requirements of businesses helps to choose between a financial controller and CFO. Therefore, a business should consider its size, nature and budget requirements to use their services. However, a combination of both can prove to be a game changer for businesses. Since both the services directly or indirectly ensure overall financial success, a combination would help to reach newer heights.
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