Why Virtual CFOs are the future of the Education Industry?
The financial industry has dramatically changed over the last decade. The system has evolved into a virtual world that uses cryptocurrencies as a mode of payment and digital patterns to work out financial analysis. In addition, working from home is the new normal. Many workspaces have been converted into hybrid models saving time and money. With these growing changes, a virtual CFO in the education industry is becoming a prominent position to digitalize the company’s financial structure.
This change has affected the highest finance position, the CFO, to transform into a Virtual CFO. Virtual CFO services complete the job description and use its networks and connections with other Virtual CFOs to gain first-hand insight into developing future financial patterns. In this article, we will discuss the importance of a Virtual CFO in education and the services they provide in an educational institution.
CFOs and Virtual CFOs – The Difference
A Chief Financial Officer (CFO) is the highest financial position in an organization. They are senior executives responsible for developing the company’s strategic initiatives and are responsible for mitigating any fraudulent activities. They must reach the board of directors and CEO for queries related to these activities.
In addition, CFO is the second most honorable and respected position in a company after the CEO. Mostly, the selection of a CFO is the responsibility of the Board of Directors. However, a CFO’s role can differ depending on the company’s nature. For example, a CFO working in a stock brokerage is responsible for analyzing stock trends, working on stock ratings with rating agencies, developing strategies for best over-the-counter products, and sharing dividends and profits among investors.
On the contrary, a CFO working in a technology company is responsible for dealing with angel investors, bringing in more investors, developing cost-cutting strategies, and making capital allocation decisions.
The new addition to a CFOs role is their ability to work remotely. However, not every CFO is comfortable doing work from home. Many new enthusiastic professionals are penetrating the market as Virtual CFOs.
The Virtual CFO
A virtual CFO in education can design critical analyses of your company’s financial report. Virtual CFOs work remotely and sometimes part-time to maximize a company’s financial performance. In addition, virtual CFO services include everything an on-site CFO provides at a lower cost.
They assess your company regularly to look for system flaws and give recommendations accordingly. They also work as a mediator between stakeholders and employees of the company. In short, Virtual CFO services are outsourcing CFO services offering financial assistance remotely to small-scale and mid-size companies.
These companies have limited cash flow and need to hire a full-time CFO. However, to fulfill the company’s requirements, they hire a virtual CFO that does the job for them. The position of these CFOs can be as small as collecting data from the bookkeeper. However, can be as big as developing better financial plans for the company. The basic concept behind Virtual CFO is to save a company’s time and cost.
Virtual CFOs in Educational Institutions
The educational institute is a communal institute that teaches children the essential virtues of academic knowledge and fundamentals of society, like learning skills and social culture. These institutes convey knowledge and skills to students through a systematic order. Every part of this world is equipping itself with educational institutions. However, they may differ from each other. They provide students with certifications and qualifications through which they prepare for work environments and make a living for themselves and their families. With the changing world systems, education is now a very profitable business, and it uses many financial managers to manage their cash flows and draw patterns for financial management.
The Job Responsibility
CFOs have always been part of educational institutions. Besides, they are responsible for developing and organizing financial policies and programs. These include the utilization of financial control, procedures for college fees, and personal financing for students. Furthermore, CFO’s job includes creating scholarships for new and current students.
The success of an educational institution depends on the CFO’s strategies. Education is a complicated business that requires multiple levels of complex decision-making to fulfill business objectives. Different Virtual CFOs in education and multinational companies can create strategies to help students provide with a proper career path and what they should focus on while studying to improve their abilities in the working environment.
Current Economic Situation and Higher Education
In the current post-covid scenario, many educational institutions have faced challenges acquiring a breakeven level. As a result, many companies are shifting towards Virtual CFO Services to reduce costs. Moreover, virtual CFO service also includes creating digital financial patterns for the company’s future.
The pandemic has caused many students to lose their studies. In addition, student debt, which has become an almost unbearable burden for many and a more competitive market for high-achieving kids, has irreversibly transformed the world of college admissions. Because of these facts, the higher education industry is under financial and other demands to assure college affordability and effectively control expenses.
The traditional education system needs better versed in strategies to reduce student costs. Virtual CFO in education benefit the industry by creating student scholarships to manage expenses. Securing and maintaining a healthy financial position and increasing operating performance is crucial to moving a university’s strategic goals forward. It is likely the most visible manifestation of an institution’s dedication to providing students with a high-quality, low-cost education.
Virtual CFO and New Academic Programs
Although college affordability is an essential component of the total value offered, providing the best value for students takes into account several vital aspects, including graduates’ ability to transfer their degrees into professions in their chosen industries.
One Virtual CFO service in an educational institution is to check whether a particular program is working in favor of the company by researching the historical cost patterns. After the research, a Virtual CFO can build a new cost-effective academic program that ensures better student and institution results.
A critical aspect of this scenario is that Virtual CFOs look into managing the institute’s finances and serve parents through community engagement programs. These programs work similarly to career counseling. However, instead of working with students, they will cater to parents in financial planning for their children’s future education. Healthy parents and management relationships are the foundation of a productive education system.
Financial Problems Faced by Educational Institutions
With the growing virtual reality, students are shifting towards the online mode of education. This change includes all certifications and diplomas that are available online to save time and cost. This shift also encouraged a few educational institutes to create online degrees for bachelor’s and master’s programs. Such institutes are called innovative schools or intelligent universities. In addition, the post-pandemic scenario is not in favor of traditional educational institutions; the number of enrollments is decreasing every semester, creating financial worries for these institutes. Due to this, many educational institutions will only survive in the future if they find the right solution for them.
The solution to these problems lies in the financial structure of the company and the way the company manages it. They have to be a proper balance between debt and equity and a justified cost-cutting program that would look for every flaw in the system. These flaws are crucial when developing a financial structure as they tend to manage how your company will perform shortly. For this purpose, Educational institutions are well aware of using Virtual CFOs. A Virtual CFO in education would boost their entire financial team in the worst-case scenario.
Budget Cut Issue in Education
At the time of the budget cut, CFOs have to ask every head of department or director to cut a certain percentage of the allocated budget. And HoDs should set all the new academic goals for students around this new budget. As a result, financial aid has become the most influential factor for students on whether they should opt for post-high school education. This disruption puts finance officials in a dilemma of creating a profitable business model while providing quality education to the students.
In addition, virtual CFOs meet with parents to make them understand how the institute receives its funds, also how it plans to utilize them in the coming future.
This explanation is necessary due to any country’s changing economic conditions. For example, fast-increasing inflation and interest rates have prevented people from taking student loans or going to live in any other city or country for higher studies. As a result, the student mindset shifts from studying and paying college fees to invest that money into a business. They believe that is a better way to secure a future than paying prominent institutes hefty fees. However, due to limited resources and no knowledge of business, in the end, these kids lose their money.
Due to this, the urge to make money through unethical sources is increasing.
How is a Virtual CFO Beneficial to the Education Industry?
We understand that Virtual CFO in the education industry is the new craft in finance. However, does it help the educational industry?
Let’s see how Virtual CFOs can benefit the industry:
1. The Overall Digital Strategy
Virtual CFOs are part of a comprehensive team of Remote CFOs working under an umbrella company for different sectors. An organization looking for a virtual CFO sends a request to the umbrella company with its essential requirements. The umbrella company provides the organization with a Virtual CFO that matches its criteria. This networking helps them network around international institutes and create strategies that create a win-win solution for multiple institutes simultaneously.
From an educational institute’s perspective, a Virtual CFO can consult with other financial team members on the possible future scenarios for students trying to get employed in different companies. These suggestions can help develop digital programs that would provide the institutions with the solution they need to become more student-centric. Simultaneously, it will be productive for their shareholders.
Hyper-personalization uses Artificial Intelligence and real-time data to design systematically organized products or services to cater to every individual according to their preferences. For example, large educational organizations have always used hyper-personalization to generate financial aid for students according to their income, lifestyle, nationality, and degree preference. This tactic will also provide students with scholarships if they are eligible.
Virtual CFOs have more advanced technological insight into hyper-personalization than on-site CFO. They design digital financial patterns and user-friendly computer programs. Parents use these programs to look into the comprehensive picture of where they stand and how they can improve their financial situation for their kid/s.
This technology is currently in use by many institutions to understand their customer by accounting for all the significant demographic information.
3. Experience as a Differentiator
What makes Virtual CFOs different from other olf-fashional economic officials is their ability to look into the future. They continuously predict future outcomes for many organizations giving them a good grip on what products or services will stay in the future and what is about to disappear. In addition, it is an essential part of their job to review the financial flaws in the company’s past and the entire financial system.
For example, apart from a few finance managers in the 2007-2008 financial crisis, most could not understand what created such a disastrous housing market drop that haunted the world for more than 15 years.
The same situation occurred in March 2020, when Covid-19 affected the globe, and the stock market dropped by 3000 points in a single day. However, Virtual CFOs and other digitally strong finance managers could predict this fall and take the market out of calamity in less than four months.
One critical Virtual CFO service in an educational institution is formulating economic outcomes of different programs offered by the institute.
4. Rethinking Revenue Sources
Revenue is one of the most important aspects of a business. Higher revenue works as a financial improvement in interactions with narrow profit margins. A company can work on multiple income streams to generate more cash flows. A Virtual CFO in education studies new income streams for the institute. These include designing new degree programs and market-competitive diplomas such as, in the current market, the combination of Mathematics and Financial Technology (FinTech) or Advanced Environmental Engineering. These programs create profits for institutes and prepare students to work in top-notch Wall Street financial institutes and multinational corporations.
Due to the increase in competition in the education industry, revenue is limited for these institutes. Therefore, increasing revenue streams through multiple channels is the primary initiative for education businesses to fulfill their stakeholders’ requirements.
5. Digital Frauds
Financial fraud has increased on digital platforms in the current scenario. These include selling fake cryptocurrencies and hacking into digital accounts, among others. These frauds take place every day, making it a billion-dollar issue. Traditional CFOs are by the book and need help to address these issues in the time ahead. There have been several digital financial frauds of billions of dollars in the last few years, and no financial institution has found a flaw in its structure.
For this reason, Virtual CFOs are the most prominent professionals to overcome these challenges. They have advanced knowledge of Fintech and can develop financial firewalls to stop hackers from sneaking into customers’ accounts.
6. Future Initiatives
The world is continuously evolving into a virtual reality. The way of education has shifted from traditional in-class study to online mode. Several online course offerings websites are under development, trying to penetrate the student market as much as possible. As a result, educational institutes with considerable fixed and variable costs are facing a decline in their revenue. Virtual CFOs are responsible for addressing this issue with good future patterns. These patterns can be anything from analyzing the number of students enrolling every academic year or the change in costs for students when they shift their studies from on-campus to online mode.
Furthermore, after analyzing the patterns, they will create ultimate solutions to these changing environmental problems. These measures take place to prevent any issues coming in the future, so they don’t have to face a situation similar to the one after the pandemic.
We conclude that educational and financial institutes are co-related in the 21st century. There has to be a link between these institutes that would create solutions for teaching students in the best way possible and create more financially stable patterns for the institutes to follow. The financial team of an educational institute has to look up every complexity in the system and design it in a manner that helps the institute to survive on the minimum cost possible.
Education is the right of every individual. Therefore, an educational institute’s top priority is to equip every student with the best academic knowledge and skillsets possible. And to successfully do this, educational institutes should have cost plans that cater to students from any background. Virtual CFOs can develop these patterns to help these students in their future studies. They also develop strategies for educational institutes to survive in the worst scenarios.