Virtual CFO Services in Chennai

 Accounting and Finance Leadership

The moment you hire us as your CFO, you will get a leader in your finance and accounts team. The CFO will be responsible for following:

1. Overseeing Finance and Accounts department
2. Ensuring Compliances are done on time
3. Monthly Closure of Books on time
4. Implementing policies and check-list
5. Implementing Payment and Collection Policies
6. Liaison with Bankers and Investors

 Working Capital Management and Cash-Flow Planning

In any business, working capital management is the biggest challenge as customers do not pay on time and there is constant pressure from suppliers for their payments.

At the same time, company is in dark as to the requirement of funds in future. This situation can be only handled when there is proactive handling of this issue.

With our Virtual CFO Service, you get following:

1. Analysis of existing cash-flow generation in the business to understand how the money is generated and its application
2. Mapping Books Profits to Cash-Flow to understand the shortage of cash in the business
3. Establishing Break-even point
4. Measuring Average collection days, Average Payable days
5. Establishing a target to manage the working capital cycle
6. Designing and implementing polices
7. Working with key stake-holders to give the realistic forecast of cash required in the business

 Proactive decision making

It’s quite surprising to learn that most of the companies do not have clarity on the financial results until the audits are performed. In some of the situations this delay could be in the range of 14-18 months.

This leads to delayed decision making

With our CFO Service, you get following

1. Monthly MIS reports to track the performance of the business
2. Break-down of the revenue at customer and verticals
3. Measuring the profitability at respective levels
4. Developing reporting system that captures activities from all areas in organization
5. Compliance check-list to ensure all compliances are taken care of

 Tax Incentives and Planning

There is lot of incentives which government offers to the business. Many companies are not aware of it. This can literally increase the cash-flow in the business.

With our Virtual CFO Service you get following:

1. Analysis of existing tax incentive applicable to the business
2. Mapping of all the tax incentives schemes with schemes availed
3. Quantifying the impact of tax incentives
4. Helping and realizing the tax incentive

 Corporate Strategy and Governance

To build a sustainable business, a company should have goals. The goals should be backed by a strategy with actionable items as well as continuous monitoring of the same

At whatever stage the business is, it should have a strategy with financial modeling in place and to ensure things are going all right in the business there should be periodic review of the business performance as well as sound corporate governance

With Soatech CFO Service, you get the strategy design and implementation along with following:

1. Preparation of Business Plan based on the situation of the business. This could be based on the Zero Budgeting method or the future outlook of the industry. This will be very realistic plan rather than painting of the numbers
2. Breaking down of the plan at monthly targets so that there is accountability from all the departments in the company
3. Review meetings to bring transparency and accountability in the company

 Fund Raising

In any business, there is always the requirement of funds to fuel the growth or manage the working capital requirements.

Our CFO’s assist the companies in their fund raising process.

We provide following

1. Preparing projected financials and other reports required by investors
2. Preparing Pitch deck to raise equity
3. Holding meetings with prospective investors
4. Reviewing Term sheets

All the above services can be availed as a stand-alone or can be combined.

Our Virtual CFO services are highly customized.

CS1: Implemented Internal Controls in Revenue Process-Company had to Pay 0.21 Million

Background: Client was in the business of selling and buying garments. We were engaged to look at the existing process on discounting and billing and internal controls for financial transactions.

What We Did: We took the sales register for one year. Against the sales, we plotted the received amount. We then calculated number of days to receive the payment invoice wise. We also added a column, where cash discount was given. Then we looked at the report for the correctness of Cash discount.

Results: Finally, it was concluded that the company paid close to excess of INR 0.21 Million. When we reported this to the client, then client agreed to it saying it was attributable to manual systems and lack of proper control.

Basically, the system of giving cash discount was not formalized. Post this; we set up a discount master data in the accounting software at the customer level.

So the moment there was an error in cash discount, the software sent out the alerts to responsible parties in the company. Since this company had a large volume of sales on daily basis, a review mechanism to review the cash discount on weekly basis was setup.

Also for excess cash discount of INR 0.21 Million was subsequently recovered from the customers via debit note.

With this information in hand, we also looked at cash flow statement of the client on month to month basis.Cash discount was given to plug the gap between the receivables and payables, and at times it was not necessary to really give a Cash discount.

Mind you our client was giving on an average of 2% Cash Discount. We estimated that if the client had managed Cash Flow well, it could have avoided 0.202 Million of Cash Discount.

What We Can Learn from this: It’s a good idea to review the cash discount calculations on a monthly basis

CS2: How a Purchase Order Term helped our client to recover 0.8 Million in Freight and Insurance

Background: This client was in the business of manufacturing forged parts and had a plant in Bangalore.

It used to procure raw material from the South Korea on a continuous basis. Since it was an international transaction, delivery terms and other conditions were established. We were called on to examine to check whether cost incurred by our client was in line with the agreed terms with the supplier.

What We Did: This transaction was not straightforward, as purchase was handled by the purchasing department whereas logistics was dealt with by a different department and finally we had to check how transport and insurance costs were accounted.

As per arrangement with the supplier, it was responsible for delivering the material till factory. So we looked at documents such as Bill of entry, delivery challan, clearing and forwarding bill.

We found that supply only cleared the material till Chennai. Our client incurred the transport charges from Chennai to Bangalore.

Results: We listed down all such transactions and quantified the impact of it. It came close to 0.8 million. Subsequently, vendor paid the amount by adjusting in the next bill.

What We Can Learn From This: Have the master sheet of all the purchase orders agreed with your suppliers.

Information can be organized in the spreadsheet or can be customised in ERP or accounting software.

CS3: Identified Favorable Clause, Saved Our Client 1.2 Million

Background: This client was in the business of manufacturing automotive parts. Majority of the parts were made up of Steel where the price fluctuated quite a lot.

Therefore, the purchasing department had to issue a purchase order to suppliers for a future period too. However, if the price decreased, Purchase order was amended retrospectively, and supplier had to issue a credit note

What We Did: As the volume of transactions was high, we listed down all the transactions for which there was an amendment to the price retrospectively.

Then we compared this amendment with the bills/credit note given by the supplier.

Results: When we completed this entire exercise, we found nine transactions where the benefit of the reduced pricing was not passed on to our client. We quantified the impact, and this came to around 1.2 Million rupees.

CS4: How Correcting a Purchasing Pattern Saved Solar Company INR 2.4 million

Background: This client was engaged in the business of manufacturing solar water heaters and other renewable energy products. Despite good sales numbers, our client was not making profits. We were called in to help them to increase their profits.

What We Did: As part of our profitability increase exercise, we looked at purchase pattern of the main products which constituted at least 25% of total purchase value

Results: One of the major items which our client bought was batteries. Most of the times, it was bought on ad-hoc and from different suppliers.

We then questioned the purchasing department, and they had no clue. Then we suggested buying from few providers and with better planning. In next one-year company saved close to INR 2.4 Million and a result of this our client will save massive amount of money in future years

What We Can Learn From This: Identify all the purchase transactions, where sporadic purchases take place, evaluate whether such purchases can be planned.

If yes, then identify the right supplier and negotiate a price which can be valid for three months, six months or year.

CS5: End of Struggle to Pay Suppliers and Employees on Time

Background: This Client was in the business of executing industrial projects. The client was in deep working capital problem.

They were not able to pay their suppliers and employees on time. Every month-end they struggled to arrange the fund for salary payments. Management was spending their entire month in arranging funds to pay salary or clear the supplier’s payments to whom PDC’s ( Post Dated Cheque) were issued.

What We Did: We prepared detailed projected day wise cash flow statement for first three months. The cash flow statement was divided into Cash-Inflow and Cash-Outflow. The inflow section was populated with the collection numbers expected from the future sales and existing receivables.

The outflow section was populated with numbers where payments need to be done immediately and where payments could be stretched or delayed.

Results: This exercise helped in assessing shortage of cash on a particular day and helped to prepare the action plan to manage the shortage of funds proactively. Consequently, collections team started following-up aggressively for the payments.

This brought to light the reasons why the payments were not made in time, like non-delivery of products on time. Subsequently, a robust process was designed to avoid such issues in future.

CS6: Availing Hidden Tax Incentives and Increased the Profitability

Background: This client was in the business of providing transport as well as warehousing services to its customers. It had to incur a lot of administrative as well as Capex spend to serve its clients. We were called in to examine whether it was availing the tax benefit on all it spends.

What We Did: We listed all such expenses were tax credit could have been taken such as advertising, sponsorship, admin, office and Capex expenses.

Results: We found that most of the costs like office and admin were incurred by the employees and was claimed by them as reimbursement.

Also, these bills were in their name rather than business name. We quantified the impact of this, and we concluded that company had missed out of credit of 0.3 Million. Going forward, our client made compulsory to take all the invoices in the name of the business to take credit.

Another thing we found that the company did not claim tax credit available on the purchase of fixed assets. Fortunately, we were able to claim this credit. This saved company close to INR 0.7 million

CS7: 0.42 Million of Tax Credit on Exports not availed by the Client

Background: Client was engaged in the business of providing analytic solutions to US clients. The business was completely people driven.

In the process of providing the services, the client used to incur a lot of expenses locally like telephone, consultant, travel, internet, and technical fees on which it paid taxes. We were called in to study whether all the tax benefits applicable to business were taken or not.

What We Did: As a process, we listed down all the tax benefits relevant to the client by segregating various cost and the related revenue. Almost 100% of the business was international; such services would typically qualify as export of services.

When you export a service, you do not have to pay tax. This resulted in non-utilization of the tax credit which was paid on using services like telephone, travel, and internet. Since the tax credit was not utilized, our client could claim for the refund for taxes and increase their profits.

Results: To our surprise, the client had not claimed for the refund of taxes. When we inquired, client responded that they were not aware of such provision.

Then we organized all the information, and guided the client to apply for the refund of taxes. The net result of this exercise resulted in the savings to the tune of INR 0.42 million. In our estimate, going forward client would be saving close to 0.55-0.60 million on year to year basis.

CS8: Measuring Profitability at Projects

Background: Client was in the business of ITeS, where employees used to work on single project with Team Leader or Project Manager. Client was unaware of  Client Profitability and recovery of employee costs.

• Contract with customers were signed without considering the Senior Project Manger’s time getting allocated to the Project
• Customer wise/Project wise Profitability was not prepared

Solutions Implemented:

• We designed chart of account to account project wise
• Teams cost were captured at the project level
• Project Managers were asked to provide their time sheet to allocate the cost for each project
• Separate report was prepared for employee profitability, against each employee cost with revenue earned to check which employee cost recoverability is more

Result: Within 4 months, clients was in position to know the best contributing Customer and best performing employee

Contact us today for a free assessment of your business.

No.672/476, 4th Floor, Anna Salai,
Temple Tower, Nandanam, Chennai-600035