With emerging softwares and progress in automation, the role of the modern accountant is changing. We’re not saying that tech is here to take an accountant’s job—far from that! But we are saying that it’s changing the game for all levels of accounting professionals.
This provides an exciting new opportunity for accountants. With low-level bookkeeping tasks off their plate, accountants have opportunities to expand their service offerings. Advisory roles are highly coveted and can be big-time money makers—especially for businesses that don’t have a comprehensive financial plan in place or a chief financial officer to help create and maintain it.
That’s where the role of the virtual CFO comes into play, and it shouldn’t be overlooked for firms with big growth goals in mind; a virtual CFO can charge around $1,500 a week per client (on average).
Adding virtual CFO services will help your firm earn more revenue, but it will also help you attract more clients with a more diverse set of services. If this sounds like the next big step in your firm’s growth, here are five of the most highly anticipated deliverables from a Virtual CFO—and how to provide them at the highest level.
You might like this ebook:
According to a study by Palo Alto Software, only 33% of small businesses employ a bookkeeper, and just 29% employ a CPA. The remaining businesses don’t have anyone to ensure everything is accurate and complete on a routine basis. This is a huge opportunity for firms!
When businesses don’t stay on top of their bookkeeping, they lose touch with their financials and can start falling into bad decision making, which is most often a product of incomplete or incorrect information.
An important fact to remember is that these business owners aren’t expecting a virtual CFO to become their decision maker. Instead, they want information and insights—including process improvements and a sense of structure with your level of expertise—to help with their decision making. This starts setting up an accounting system that actually works and provides actionable information.
Setting up the structure and providing reports doesn’t have to be difficult or time consuming. With technology and AI progressing, you can automate the whole process. With that saved time, you can boil down necessary information into a one-page executive summary. A virtual CFO who can provide the “reader’s digest” version of their financials is invaluable to business owners who are strapped for time.
2. The Big Picture
When providing reports or summaries, it’s important to go beyond just financial metrics. Business owners want more than the usual cash flow statements and monthly budgets. As important as they are, these reports alone miss out on the total picture they need to understand.
This is where having relevant and measurable KPIs can come in handy—they can keep you accountable and help make sure you’re focusing on the right data for your clients. Virtual CFOs provide a key role by connecting the dots between a business’ financials and business goals, which goes beyond basic accounting data.
To effectively do this, go beyond basic financial reporting by connecting data to other key metrics. Some examples of metrics to include are:
Marketing conversion rates: Is the money being spent on marketing creating the necessary revenue to be worthwhile? Could that money be better spent elsewhere? With marketing, it’s easy to fall into the sunk cost fallacy and put more money into it to make it effective. Cost per acquisition can show business owners just how effective a marketing campaign is.
Site metrics: It takes a lot of effort to get eyes on a website. It then takes even more effort for that website to convert leads. If a business’s website isn’t effectively creating sales, it’s time to reevaluate the design, copywriting, or navigation. Finding enough money in the budget for a one-time cost of hiring someone to do it all can pay off in the long run.
Investment prospects: If a business is looking at bringing on shareholders or external investors, take time to go over the balance sheet, income statement, and cash flow statement from that perspective. Analyze these reports with clients exactly as an investor would, and provide tips on how to make it look better.
3. Analysis & Advice
Business owners look to virtual CFOs to streamline how they understand their reports. They want someone who will go beyond the “what” and can talk about the “why.” It’s essential for them to understand what led to the results they’re seeing and to adjust their planning going forward.
If a business has set certain goals, you as their virtual CFO can talk about the progress they’ve made toward them. Will they be able to meet or even exceed expectations? Or will they potentially fall short? What factors caused the result to happen?
Once you’ve gone over the “whys” of the historical data, it’s time to get critical on what needs to be changed. Any negative feedback is hard to deliver but necessary. Business owners want that critical eye on their side. Douglas Stone wrote a book on difficult conversations and found the main reason feedback isn’t acted on isn’t because one person didn’t want to hear it. Instead, it was because people providing criticism will use general language to avoid being too critical.
By being direct and concrete with your feedback on their financial statements—along with what you suggest they do moving forward—your client will more easily and quickly recognize the value you bring to the table.
And to really bring your value as a CFO front and center, you can shift the conversation toward forecasting so they get an idea for what their potential roadmap looks like.
4. A Glimpse of the (Potential) Future
Forecasts are essential to Virtual CFO services. For business owners, they provide some clarity on their future. They start to understand just how sustainable their business is long-term and whether their growth goals are attainable.
When you’re providing CFO services, forecasts are your ultimate tool to enhance any future planning conversation. You’ll want a quick, versatile forecasting tool you can use to cover different “what ifs” and other strategies. Having forecasts makes conversations more engaging and provides essential information to business owners. With forecasts, the impacts of their decision making becomes so much clearer because the client can better understand the goal and how to reach that goal. Truly, effective forecasting is an invaluable way to promote more desirable behavior.
Your forecast should be precise but to a point. Taking too many factors into consideration will bog down the model and make it difficult to change. Ultimately, you’ll want something that’s easy to modify on the fly. This will allow clients to bounce ideas off of you while you use forecasts to provide the essential feedback on their efficacy.
As much as Virtual CFOs provide concrete feedback, insight, and advice, the greatest thing they provide to business owners is confidence.
When an entrepreneur decides to start a business, they enter a world of uncertainty. If they leave their 9 to 5 to pursue this opportunity, they’re putting their financial well-being on the line and introducing new feelings of fear and anxiety to the mix. Every decision they make can have a major impact.
Having a trusted advisor to help talk through these decisions and provide their own insight changes everything. You’ve worked with businesses before and have likely seen the successes and failures—clients want your expertise.
As cliche as it is, knowledge is power for a reason. It helps us understand cause and effect better and analyze the past with clarity. But before a business owner can get there, they’ll need outside help. As your relationship with your client strengthens and their knowledge grows, the conversations and impact you have grow, as well.
The Bridge to Offering Virtual CFO Services Is Paved in...Automation
Adding Virtual CFO services can be a time investment, but it’s well worth it. It opens up new money-making opportunities for your firm, and it gives your clients a necessary boost to their own success.
But all this said, we recognize that creating and offering virtual CFO services isn’t something that’s easily done overnight. It takes time to plan and build an effective virtual CFO offering, but it can be an essential part of your firm’s growth.
The first factor to consider is bandwidth and availability at your firm, and that’s hard to do when you simply don’t have enough hours in the day. But that’s where an effective toolkit comes into play—and yes, we’re talking tech!
If you’re targeting growth via virtual CFO services, we’ve got your back. Get to know more about how advisory and CFO services can work for your firm by reading our article on that exact subject. Then whenever you’re ready, reach out to a specialist who will answer all your questions and give you a tour of the technology!