Virtual CFO – Key Challenges in Managing Scope and Fee

A Virtual CFO is a person or a firm that that takes on the role of CFO for a client on a contract basis.  Thanks to cloud accounting systems, they can work largely remotely to monitor finances and advise on key business decisions. Their investment in the development of digital solutions and data analytics is affordable because it can be spread across many clients.

Virtual CFOs are well placed to help business owners focus on essential, long-term strategic, operational and financial planning. They base their planning and forecasting activities around relevant business drivers and report performance against these drivers.

In a recent survey of firms providing Virtual CFO services to business clients, we obtained 138 responses to a question asking for feedback on challenges in managing scope and fee for service.

These responses fitted into 5 broad categories:

1. Convincing business clients of the value of vCFO services

Selling the value of the service to clients can be a challenge if they haven’t received the service before. Also, ensuring that clients see ongoing value in advice can be difficult if the conversation doesn’t develop.

2. Developing a systemised approach to delivery of vCFO services

We still tend to provide these services in an ad hoc manner, as we simply don’t have enough clients to develop systems and processes. As a result, service delivery takes longer and costs more than it should.

3. Delivering vCFO services within the fee and time-cost budget

It can be hard to cost jobs accurately for new clients that we don’t know very well. Staff members don’t always recognise out of scope work and discuss it with the client before starting 

4. Effectively leveraging service delivery to accounting staff

As no-one else in the firm has the experience, I find I am providing these services to a large degree. As a result, we can’t get the return on time cost investment that we get with compliance work.  

5. Getting financial information from clients in a timely manner

We find that we’re continually chasing up clients for data required for financial reports. As a result, reports are often late in being delivered and lack relevance of timely information.

The issue of critical mass is central to these challenges – having sufficient clients and work to invest time and resources into training, systems and processes to ensure that compliance-related work around data collection and processing is completed efficiently. If this is done, the person responsible for the client relationship then has time to focus on the advisory relationship.

So which comes first, the systems or the clients? We’d all like to have systems in place before we start working with clients. That’s why many firms often start by deciding on a software platform for data collection, processing and analysis. In reality, this decision often leads to a ‘field of dreams’ where a process has been identified but there are few or no clients to try it out on.

In working with firms to develop vCFO services, we’ve identified 3 potential solutions to this challenge:

1. Provide a basic level of business advisory support to all business clients and incorporate this in the existing scope and fee for service. Then build in additional services as clients see the need and value of these services.

2. Identify a team of at least 2 people within your firm who have the interest and capability to drive the delivery of these services to client. Generally, this team will include a partner/manager and accountant/bookkeeper.

3. Outsource the delivery of these services to a full-time expert who knows how to engage clients and deliver services. Then simply focus on rich conversations with business clients to identify needs.

To begin the journey, you need to think strategically about what you want to do and how many resources you are prepared to devote to the service. It’s no different to the process you have implemented for the services you already provide.

If you’d like further information on how to develop vCFO services in your firm, CLICK HERE

Dale Crosby | www.cpdforaccountants.com.au

 

Dale Crosby

Director | Senior Consultant & Facilitator at For Accountants | High Tech Soft Touch
Dale Crosby specialises in change management and has a specific interest in client ommunication and integration of compliance, business advisory and financial advisory services within accounting firms. He has worked closely with accounting firms throughout Australia and New Zealand over the past 15 years.
Dale Crosby

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Dale Crosby

Dale Crosby specialises in change management and has a specific interest in client ommunication and integration of compliance, business advisory and financial advisory services within accounting firms. He has worked closely with accounting firms throughout Australia and New Zealand over the past 15 years.