There is a great opportunity for accountants/bookkeepers to clearly differentiate services to SMEs by implementing virtual CFO services, in conjunction with the 52-Week Business Enhancement System. This will give your clients an advantage in the marketplace.
Business operators need ongoing financial/management data daily, weekly and monthly throughout the year.
There is a significant END benefit for your firm – your team will be trained in the delivery of business management systems, which will give your clients key financial information that they can utilise in their daily business activities to ensure their survival, whilst adding value to their businesses.
This involvement in “real accounting work” by your team will generate additional knowledge and skills, which will assist your accounting firm to attract and retain talented people. Your firm will be recognised as a market leader in the supply of financial data, which contributes to the financial success of SME businesses.
As you negotiate with clients to offer more in-depth range of services, some key questions to be answered are as follows…
What is the “purpose” of the virtual CFO service with your client’s leadership team?
“What is our purpose with this client?” This is the question that you will need to discuss with your accounting team so that they understand the key role that your firm is going to play.
Specific team training sessions should be undertaken with your accounting team so that they clearly understand their purpose with this client and how they are going to guide the client’s team into performing their part of the overall role, relative to delivery of these services.
There will be the necessity for team training with the client’s team so that they understand their role and your role in this overall process of implementing real-time financial management systems for their business.
This is the end result of the commitment of resources to the implementation of great systems which your clients will “buy into”, because they can envisage the end results as being beneficial to their business.
Let’s go back to the beginning of this process because every client is different.
You would start with the SME Needs Analysis, developed by ESS BIZTOOLS. This will help you ask the type of questions that will provide an understanding of the worries and concerns of your client. It will then assist you to design a package of services that will help the client to have greater confidence in their business activities.
The Business Due Diligence Review – “an inch wide and a mile deep” – is the next task to be undertaken by your accounting team so that they gain an appreciation of the following:
- All aspects of the business from the team member engagement and on-boarding to training.
- Sourcing of raw materials or products and the supply chains necessary to ensure the on-time delivery of those raw materials and products.
- The processes to ensure that all products and services that have been purchased are received in good condition and that the payment authorisation is appropriately processed.
- Gaining an understanding of the labour manning and production processes used within the business is important.
- The rhythm of meetings that have been implemented throughout the business, to ensure that all of your client’s team members have an understanding of their role in how they fit in the total organisation.
- How does your client sell their products is an important concept to be reviewed as part of this process. Who makes the sales? Is your client using social media marketing to sell? If so, does your client employ “experts” in this computerised selling process?
- The processing of sales invoices, the debtors ledger postings, the calculation of debtors days outstanding and an understanding of the follow-up processes that are implemented for debtors is also an important facet of this review process.
- If your client is an exporter, who is responsible for the preparation of the export documentation and the shipping of the goods to overseas markets?
- What are the risks faced by this business? Have risk mitigation strategies been introduced?
- Once this review is finished, you are then in a position to prepare or to significantly review the organisation’s business plan. This process should be undertaken with the client’s leadership team so that they have direct input and “ownership” of the final business plan.
Your role is then to become the Financial Storyteller based on the vision contained within the business plan – what does all this mean financially?
The Predictive Accounting Reports contains budgets for each business operation within the organisation.
Key drivers of subaccounts debtors, creditors and inventory are all very important because some very relevant key performance indicators and metrics can flow from these items.
The cash flow forecasts will give an indication as to when cash flow difficulties could occur during the year or even in future years. With this forewarning, key decisions can be made:
- Where is the additional finance going to come from?
- Can the cash flow be improved by implementing cost improvement strategies, reduced inventories and reduced debtors balances?
- Will external financing be required? This could be loans but if the sum being sought is over $150,000, the business will undoubtedly need to be able to offer security for the loans. Alternatively, will the directors be interested in trying to raise capital direct from the public?
As part of this process, we recommend that an annual business valuation is prepared based on improvements and changes that have been made in the business’ operations, which hopefully have created an arguable reason why the multiplier factor used in the valuation of the business calculation could be increased.
The projected balance sheet is one of the most important documents, especially when it relates to the financial storytelling role. This document will give you the opportunity of being able to clearly articulate to your client and the leadership team what the end result will be in a number of years’ time basically from decisions that they are making now.
At month send the individual profit and loss account for each business unit will be prepared with a comparison to the budget.
The actual cash flow position will be analysed against the original cash flow forecast and variations investigated.
The KPIs and metrics will convey important information for the client’s leadership team.
This monthly cycle culminates in the monthly business review meeting to enable the leadership team to evaluate all segments of the business.
This process repeated each month gives real accounting information to the leadership team and has assisted your client to have significantly more control over their business than what most of them would have had in the past.
Your team members will be happy as they will be undertaking interesting and challenging work which, in turn, will contribute to talent attraction and retention for your firm.
The overall take out is that your client has received meaningful business management information daily, weekly and monthly throughout the year and your team members have been involved in real accounting work.
From as little at $197 (including GST) per month, ESS BIZTOOLS can assist your firm to commence this process.
To find out more, visit our website and explore the different product packages on offer. Alternatively, contact us on 1800 232 088 or email peter@essbiztools.com.au to arrange a suitable time for a complimentary initial consultation via Zoom, where we can identify how these types of services could be implemented in your firm.
Peter Towers – Managing Director | ESS BIZTOOLS Pty Ltd | peter@essbiztools.com.au | www.essbiztools.com.au
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