TaxUdyogValue Added Service

WHAT IS VALUE-ADDED SERVICE?
The term value-added is used in accounting when the services that the accounting firms offer adds value to the client’s business. These services are responsible that the clients being able to generate more revenue & lower their production costs. It can also be considered the utility of the business as it helps in creating value. It is the economic value or additional features that a company adds to its services and products before it offers them to the customers. It also helps companies to attract customers on a larger scale which helps in boosting the profits of the company. At Taxudyog, we give services like Virtual CFO, Valuation, Project Report, and Business Finance as Value-Added Sservices.
Virtual CFO
Valuation
Project Report & Business Finance

What is Virtual CFO?

It is a new-age concept that helps small businesses to avail CFO support that they would not have been able to afford otherwise. It helps small businesses to get CFO in a fraction of cost compared to full-time CFO's cost. Basically, a virtual CFO is a chief financial officer who is responsible for helping the owner of the business in making important decisions based on his or her expertise in the field.

The expertise of the CFO includes making financial reports, financial planning and financial strategy. In the initial years of starting a business, usually, all the roles are being played by the owner of the company but when the business starts growing, the need for experts in the various fields arises. Having a virtual CFO has evidence of bridging the gap from small-size businesses to mid-size businesses. A virtual CFO is a good way for small-cap companies to get their work done without spending much money. At TaxUdyog, we help businesses to get virtual CFO as a part of our value-added service. 

What is the role of VirtuaL CFO?

* A virtual CFO helps in budgeting and forecasting the business

* It helps in providing deep insight into the finances of the business

* Helps in analysing the business activities to give comprehensive & detailed financial reports

* A virtual CFO also helps in identifying the business opportunities for the business to grow and expand

* Virtual CFO helps in maintaining the cash flow statement of the company

* The strategic planning and execution also comes under the service that is provided by the CFO

* They review financials of the company, develop insights, formulate strategies for the growth of the business, make recommendations and make the business process more effective and efficient

* The role of the virtual CFO is also to review debt-reduction strategies

* Advice on the latest accounting tools and software are also given

* Virtual CFO helps the owner of the business to identify & evaluate the impact of new offerings in terms of products or services or any new business initiatives

* It is also the role of the virtual CFO to prepare monthly & quarterly financial reports as well as to review the year-end financials

What are the benefits of Virtual CFO?

  • Offers Flexibility
  • Cost-Effective
  • Delegation of Work
  • Networking
  • Credibility in the Industry

A virtual CFO offers flexibility by being present at the time of the need. When a company is hiring a Virtual CFO, the terms for time and cost can be decided by the owner. You have complete control over deciding the tasks for the virtual CFO. From deciding the number of hours to nature of work, type of engagement and required experience, you can decide all of this and much more. The added benefit is even though a virtual CFO provide you with these many services but you don’t have to provide any office space or any other employee benefits to him or her. The ability of the manager to make the virtual CFO work is seen here as it is opposed to hiring an individual for a task for full- time. At Taxudyog, we provide you virtual CFO that helps you with identifying the business opportunities for the business to grow and expand.

One of the main advantages of virtual CFO is that it is cost-effective. A virtual CFO is like an employee who you are paying only for the hours he is contributing towards your work. Let’s take an example, suppose you require a CFO to manage your ongoing compliances and you estimate that this take will take around 40 hours per week. So, in this case, it’s not wise to hire an employee for full-time work. The best-case scenario here is to hire a virtual CFO and only pay for the services that you need. There is no contract as such for the time or the work and you can always ask for more work and more time if your business demands it. At TaxUdyog, we help in providing cost-effective services by providing Virtual CFO to small business owners and startups.

The term delegation means to transfer the responsibility of specific tasks from one person to another. Delegation of work helps in freeing up a manager’s time to focus on activities that have a high value. It also helps to keep employees engaged with greater autonomy. When the business starts growing, it is not humanly possible for a manager or the owner to do all the tasks by himself, so delegating the work becomes essential. It helps in the smooth functioning of the business and all the activities that concern the company’s finances can be performed by the virtual CFO. Generally, virtual CFO plays an important role in the startup and small businesses and virtual CFO shows a willingness to take the work that regular CFO might not be comfortable doing. The allocation of work is done on the basis of time and work that both parties have mutually decided. 

As virtual CFOs work for many people in the accounting & finance field, they tend to have a rich network that helps the startups & small business owners in networking.  If any need arises, they can also leverage their network to help you with any specific problem that may arise due to any reason. The network that Virtual CFOs have is more powerful in the case of entities which also means that your business can benefit from a wider network that otherwise would not have been possible. Access to a vast network of professionals like industry experts, investors, people who have influence, etc is all in the contact of Virtual CFO. This network of professionals can help your business in many ways when raising capital, can help you in expansion and even for professional advice. We at TaxUdyog are associated with IR global that has its presence worldwide.

When CFO is working in the industry and from time to time proving their work, it earns them credibility in the industry. A virtual CFO may have more experience and knowledge how of how to tackle various challenges than an in house CFO. They also have the ability to raise more funds and solve more problems as they have faced more challenges in various industries and have a network of people belonging to various industries. A virtual CFOs credibility comes from the fact that they have worked with many people when compared to in-house CFO as they have experience working in the same organisation only. The experience comes from working with all sizes of businesses, industries & working at various stages of growth, stages of an emergency, etc. 

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Valuation

What is Valuation?
It is a term that is used to refer to all the tools and techniques used by investors to know the true value of a company's equity. The term equity in accounting means the book value of stockholder's equity on the balance sheet that is assets minus liabilities. The main purpose of the valuation is to estimate a value for a firm or its security. The key assumption of any fundamental value technique is that the value of the security and in this case, stock or equity, is driven by the fundamentals of the company's underlying business at the end of the day. There are three primary valuation models at present: The cost approach, The discounted cash flow (DCF) approach and the comparable approach. The comparable model is a relative valuation approach. The basic meaning of the comparables approach is that an equity’s value must bear some resemblance to other equities in a similar class. In Accounting, valuation is described as a process of determining the fair market value of an asset. Valuation refers to the process of determining the fair market value of equity securities.
What is the Process of Valuation?

Step 1: To understand the macroeconomic factors 

the first step is to understand the macroeconomic factors and the industry. We all know that no company operates in a void. The performance of every business is influenced by the performance of the industry in which it operates as well as the economy in general. The macro-economic factors must be accounted for before making an attempt to value a business. A reasonably accurate prediction regarding these factors creates the base for an accurate valuation. It is important to do the first step right to lay the base for others in that direction. 

Step 2: Make a reasonable forecast of the company’s performance

Just the knowledge of the company’s current financial statements does not mean a good forecast. A good forecast tells how the company may change its scale of production and other things in the upcoming future. Then, it also makes sure to take into account how changes in this scale will affect the costs. The movement of costs and sales does not happen in a linear line. An analyst would require intricate knowledge of the company’s business to come up with an accurate forecast. 

Step 3: Select the appropriate valuation model

The process of valuation is more of an art and less of a science. There are various valuation models available. However, it is also possible that all these valuation models do not necessarily give the same conclusion. Therefore, it is the job of the analyst to use his expertise and tell which model would be most appropriate according to the type and quality of data available. There are three primary valuation models at present: The cost approach, The discounted cash flow (DCF) approach and the comparable approach. The comparable model is a relative valuation approach. The basic meaning of the comparables approach is that an equity’s value must bear some resemblance to other equities in a similar class

Step 4: Arrive at a valuation figure based on the forecast

The next step in this process is to apply the valuation model and come up with an exact numerical number and that number according to the analyst defines the worth of the business. It may be a range or it could be a single estimated amount. Investors prefer a range so that they clearly know what their upper and lower bounds for bidding should be. Taxudyog helps you in each of these steps and provide guidance throughout.

Step 5: Take action based on the arrived valuation

Finally, the last step is that the analyst has to give a hold, buy or sell recommendation based on the current market price. The analysis that appears is the intrinsic worth of the company. Now, the action can be taken based on the arrived valuation. 

The process of Valuation is sometimes complicated and difficult to understand, especially for the new business owners and startup holders. Thus, having an accounting & finance company like TaxUdyog can help you achieve your goals of business growth in less time by making your business have effective & efficient. 

What are the benefits of Valuation?

*Helps in Stock Selection

Valuation using different methods calculates the value of the stock which is considered as fair market value. The fair market value may be below or above the actual market value. The stocks whose fair price is more in price than the actual market price is considered undervalued and a good investment. Valuation helps in finding stocks that are undervalued. Thus, it helps investors in picking the right stocks to make a good portfolio.

*Helps Identify Risk

Valuation, especially when done through the method of balance sheet helps in identifying the risk areas of the company. These may include questions such as Whether liquidity is too low? whether the debt is too high? etc. When these factors are identified, analysts and investors can take precautions to avoid stocks that can turn the portfolio red. At Taxudyog, we help you identify risks associated when the valuation is not rightly done. 

*It aids Comparative Analysis

When relative valuation methods are used to consider the value of a stock, it becomes extremely easy for the analyst to compare stocks within the industry and sector. For eg, if the price to earnings ratio is used for valuing the stock of company XYZ, it becomes easy for the analyst to compare the price-earnings ratio of the company XYZ to the price-earnings ratio of its competitors. There are even some benchmark price-earnings ratios available for the whole sector. The analyst just has to compare company XYZ’s price-earnings ratio to that sector of the benchmark. Further, it helps investors and analysts in making informed investing decisions.

*Evaluation of Corporate Events

Corporate analysts, Investment bankers and Investment analysts use valuation tools to assess the impact of corporate events including acquisitions, divestitures, management buyouts (MBOs), mergers, spin-offs and leveraged recapitalizations. Such events may affect a company’s cash flows in future. Thus, impacting the value of its equity. Especially in mergers and acquisitions, buyers tend to use the company’s own stocks which are common as a currency for the purchase. Investors need to know whether that stock’s price is rational or not. Further, valuation is a key factor in knowing the fairness of a merger’s terms.

*Inferring Market Expectations

There are times when the market is clearly bullish & then there are times the market is bearish. Sometimes, market signals may not be easily understandable and investors might be confused about the direction of the market. This is when valuation comes into the picture. The idea of inferring market expectations is to arrive at the fair value of every stock and compare it with the market rates that are currently prevailing. If the market is overvaluing most of the stocks, then investors are viewing the market in a positive way and the market expectation are good. On the other hand, if the market is undervaluing most stocks, then it is a negative sign.

Project Report & Business Finance

What is a Project Report?
A Project Report is a document that has details on the overall picture of the business that has been proposed. The project report gives an account of the project proposal to make sure the prospects of the proposed plan or activity is done. A project report is a written document related to an investment. It has data on the basis of which the project has been appraised and found attainable. It consists of information on managerial, technical, economic, financial and production aspects. It enables the small business owner to know the inputs and helps him to get loans from Financial Institutions or Banks. The project report has detailed information about Manufacturing Capacity per annum, Land and buildings required, Requirements of raw materials, Marketing Cost of the project, Manufacturing Process, Machinery & equipment along with their prices and specifications, Requirements of Power & Water, Manpower needs, Production, financial analyses and economic viability of the project.

What is a Business Finance?
Business finance refers to funds availed by business owners to meet their needs that may include obtaining top-up funds to finance business operations, commencing a business, dealing with a sudden cash crunch faced by the business or obtaining finance to purchase capital assets for the business. Prominent people in the industry are loan providers who have your back and provide funds to cater to the needs of your business.
What is the importance of Project Report?

*Project reports are an important source for stakeholders and managers to measure against the original schedule and monitor the current progress

*It helps to develop proper steps to recover and to predict the threats

*The project report makes it easier to control the budget and cost apart from the budgeted cost

*It is a source of information to respond to stagnation, success, team results, or quality of work.

*The project report requires accuracy and completeness and it also ensures coverage of all dimensions of the project making the data more feasible. 

*It helps the project manager to prepare for potential or upcoming risks during certain projects.

*The amount of visibility increases into your projects and will give you a complete understanding of how your project is performing.

*It helps to avail certain fundings and loans from various banks, Govt Schemes such as Mundra loans, Private Equity, NBFC, Venture Capital funds and Financial institutions.

*It helps the small business owners to get an exact idea about the initial inputs required for the business.

*It is an important document for bank loans including business plan, viability study, projected financials, technical analysis, etc, for availing of the loan.

What is the importance of Business Finance?

*Exploring new products and markets

All businesses are constantly looking for new products and markets. Therefore, without exploring new spaces and an effective financial structure in place getting into different markets with fresh products or solutions may be rather difficult. Business Finance helps in exploring new products and markets. 

*Creating more assets for the business

All company owners’ long-term goal is to improve production by buying more assets for the business. The business finance department helps the company in making sure that they have certain savings plan independent of short-term finances in order to meet the goal. An organization requires a very skilled financial management team to adequately invest in items such as land,  equipment and machinery that will improve the production scale.

*Making sure operational expenses are met

In most companies, the Finance side of things involves operational costs like interest payments, raw material, remunerative packages for employees, inventory, and so on and making sure that these expenses are met is what usually keeps the company going. A good financial plan will make sure that there is stability in the management of the profit that is coming in relative to the operational expenses to be met on a regular basis.

*Managing inevitable risks

Entrepreneurs, small business owners as well as established business owners, know very well that running a business is all about taking risks. However, challenges are unavoidable and not all risks will result in success and failure will come. Thus, having financial management skills will be very useful in developing a contingency plan before that time comes.

*Managing the cash flow of a business

No matter the size of a business, the larger the amount of cash that flows in and out of business, the better it is for the business. However, not having a well planned financial system can cause a lot of difficulties, including some legal issues.

*Exploring new products and markets

All businesses are constantly looking for new products and markets. Therefore, without exploring new spaces and an effective financial structure in place getting into different markets with fresh products or solutions may be rather difficult. Business Finance helps in exploring new products and markets. 

*Creating more assets for the business

All company owners’ long-term goal is to improve production by buying more assets for the business. The business finance department helps the company in making sure that they have certain savings plan independent of short-term finances in order to meet the goal. An organization requires a very skilled financial management team to adequately invest in items such as land,  equipment and machinery that will improve the production scale.

*Making sure operational expenses are met

In most companies, the Finance side of things involves operational costs like interest payments, raw material, remunerative packages for employees, inventory, and so on and making sure that these expenses are met is what usually keeps the company going. A good financial plan will make sure that there is stability in the management of the profit that is coming in relative to the operational expenses to be met on a regular basis.

*Managing inevitable risks

Entrepreneurs, small business owners as well as established business owners, know very well that running a business is all about taking risks. However, challenges are unavoidable and not all risks will result in success and failure will come. Thus, having financial management skills will be very useful in developing a contingency plan before that time comes.

*Managing the cash flow of a business

No matter the size of a business, the larger the amount of cash that flows in and out of business, the better it is for the business. However, not having a well planned financial system can cause a lot of difficulties, including some legal issues.

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Are you worried that you’re not meeting the legal requirements to run a company? or it's hard for you to keep up with a dynamic environment? Don’t worry, we got you covered. Contact Taxudyog to get a seamless experience for your business needs.

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