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Role of CFO for better financial management


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Published in: Economy & Finance
  • CFO is the backbone of an organization in regards to finances and cash flow. A good CFO can help reduce expenditure and increase efficiency while cutting on cost.
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Role of CFO for better financial management

  1. 1. Role of a CFO for better Financial Management
  2. 2. Introduction <ul><li>Services: </li></ul><ul><li>Strategic Planning </li></ul><ul><li>M&A Support </li></ul><ul><li>IPO Management </li></ul><ul><li>Corp. Governance </li></ul><ul><li>Cashflow /Cost Mgt Business Plan </li></ul><ul><li>Fund Raising </li></ul><ul><li>Engagement Models: </li></ul><ul><li>Virtual CFO </li></ul><ul><li>Interim CFO </li></ul><ul><li>Special Purpose CFO </li></ul><ul><ul><li>About Bhairav Kothari : </li></ul></ul><ul><ul><li>Founder & CFO Partner, of SuperCFO </li></ul></ul><ul><ul><li>Prior to SuperCFO , worked with CBay Systems, world’s largest Healthcare BPO as its Group CFO. </li></ul></ul><ul><ul><li>Extensive involvement with Growth Companies. Handled IPO, M&A, Fund Raising, Restructuring, Compliances, Negotiations, etc. </li></ul></ul><ul><ul><li>Best Young Entrepreneur (2010) </li></ul></ul><ul><ul><li>About SuperCFO Services Pvt. Ltd. </li></ul></ul><ul><ul><li>Leading Provider of CFO Services </li></ul></ul><ul><ul><li>All CFO’s have multiple years of Private and Public Company Experience having raised PE/VC funding and handled IPO’s. </li></ul></ul><ul><ul><li>Cost Effective Solutions </li></ul></ul>
  3. 3. Who is a CFO? <ul><li>CFO stands for Chief Financial Officer. </li></ul><ul><li>A CFO not only heads the accounting function, but drives : </li></ul>M&A <ul><ul><li>Fund Raising </li></ul></ul><ul><ul><li>Compliances </li></ul></ul><ul><ul><li>Business Plans </li></ul></ul><ul><ul><li>Robust Systems & Controls </li></ul></ul><ul><ul><li>Cash Flow & Cost Management </li></ul></ul><ul><ul><li>Investor Relations </li></ul></ul><ul><ul><li>BOD Reporting </li></ul></ul>Planning & Strategy … ..and more….
  4. 4. Sharing Experiences
  5. 5. Mergers And Acquisitions <ul><li>Planning & Researching </li></ul><ul><li>Due Diligence </li></ul><ul><li>Risk Assessment and Safeguards </li></ul><ul><li>Integration Strategy </li></ul><ul><li>Funding Requirement – Upfront & & Ongoing </li></ul><ul><li>Unbiased Assessment to the BOD </li></ul><ul><li>M&A Cost Containment </li></ul>
  6. 6. Systems and Processes <ul><li>Implement robust Accounting Systems </li></ul><ul><ul><li>Illustrations: </li></ul></ul><ul><ul><ul><li>Bank Reconciliation (Cheque Return - Finance Company) </li></ul></ul></ul><ul><ul><ul><li>Bank Interest (rate reduction benefit) </li></ul></ul></ul><ul><ul><ul><li>Cost Centre Accounting: Poor MIS – wrong business decision </li></ul></ul></ul><ul><li>Ensure timely and complete Statutory Compliances </li></ul><ul><ul><li>Illustrations: </li></ul></ul><ul><ul><ul><li>ROC Annual Report </li></ul></ul></ul><ul><ul><ul><li>Disallowances of expenses and penalties </li></ul></ul></ul><ul><li>Cash Flow Forecasting : 2 years Plan and 13 weeks Rolling forecast </li></ul><ul><ul><li>Plan for the worst. Await no surprises </li></ul></ul><ul><li>Receivables Management: Revenue is Vanity, Profit is Sanity, Cash is Reality </li></ul>
  7. 7. Cost Management ILLUSTRATIONS: Rentals – Measuring Chargeable Area. Employee Exps – e.g. Business Development Lunch Lawyers Bill – Billable Hours Support Services Provider – Cafeteria / Transportation, etc. Travel – Cost vs. Frequent Flier Miles Banking Operations – OD / CA Utilization
  8. 8. Funding / Structuring <ul><li>Debt vs. Equity </li></ul><ul><li>Structured Finance </li></ul><ul><li>Costs vs. Repayment Tenure </li></ul><ul><li>Arbitrage </li></ul><ul><li>Valuation </li></ul><ul><li>Fund Raising Strategy </li></ul><ul><li>Smart Deployment of Funds </li></ul><ul><li>Assessment of Real Requirement </li></ul>
  9. 9. Audits <ul><li>Confidentiality vs. Transparency – </li></ul><ul><li>A Balancing Act </li></ul><ul><li>Quality of Audit and Auditors – </li></ul><ul><li>Cost vs. Investment </li></ul><ul><li>Audit Report – Management Responsibility. Disclosures made by Auditors should be thoroughly checked, esp. in case of SME’s </li></ul><ul><li>Annual Report – Huge Opportunity for Investor Relations </li></ul>
  10. 10. IPO - Initial Public Offering <ul><li>Robust Business Forecast </li></ul><ul><li>Identifying & Negotiating with Advisors </li></ul><ul><ul><li>Performance Linked Payouts </li></ul></ul><ul><ul><li>Drop Dead Fees </li></ul></ul><ul><ul><li>Scope of Work </li></ul></ul><ul><li>IPO Due Diligence </li></ul><ul><li>Analysing target Investors </li></ul><ul><li>Investor Road Shows </li></ul><ul><li>Corporate Governance </li></ul><ul><li>Post Listing Compliances and Public Company Reporting </li></ul>
  11. 11. Financial Reporting: Numbers to Text Reporting Financials is an Art and finesse in financial reporting distinguishes a good finance professional from the rest. ILLUSTRATION Option 1: The Company closed Q3 with $ 5 mn in sales and $500K in losses. Option 2: The Company closed Q3 with $ 5 mn in sales, as compared to budget of $6 mn and Net Loss of $ 500K as compared to budgeted loss of $200K. Option 3: The Company closed Q3 with $ 5 mn in sales as compared to $ 4 mn sales last quarter, registering a growth of 25%. The company however generated sales of $ 2mn in the same quarter (Q3) last year thereby posting a growth of 150% year-on-year. While the company had set an aggressive sales target this year, since last BOD meeting, efforts are on to control costs and instead of only chasing revenues. While the net loss for the quarter was $500K, the company incurred a one-time non-cash cost on account of ESOP’s issued to key employees of $ 1mn. If excluded, the company generated a profit of $500K, being the highest profit per quarter since inception.
  12. 12. The list can go on……….. Summing up : Today’s CFO is like Clark Kent, who appears simple, but doubles up as a Superman, performing multiple challenging tasks – so he is not just a CFO but a Super CFO .
  13. 13. Thank You 104, Marathon Max, Mulund - Goregaon Link Road, Mulund (West), Mumbai: 400 080, India. Phone: + 91 22 259 26052 / 57 Email: [email_address] Website: www. Follow Super CFO : Blogs: http:// / Facebook: http:// /SuperCFO Twitter: http:// /SuperCFO LinkedIn: