In today’s episode of ‘From the eLearning Trenches,’ we asked one of our learners, a partner in public practice, to review the core virtual CFO services that their firm currently provides. What software platforms and people are used to deliver these services. What could be improved?
Learner Reflection
We have been providing services on an ad-hoc basis for a couple of years, however now looking at taking on new clients simply on an advisory level – and passing the compliance to trusted third parties – either other local accounting firms or offshore.
Current services include review of historical data from past meeting to now, assessment V’s Budget prepared and reviewed regularly, review of 3-way budgets for remaining period of the financial year (we are starting to introduce rolling budgets from now on – just getting business owners to look beyond the current financial year is a challenge). Also provide advice on risk management, senior employee performance and bank negotiations (either new proposals or annual reviews).
Software used – Xero and Spotlight (not sure if I’m 100% happy with Spotlight in terms of flexibility. However, I have not really undertaken any training!! Looking forward to finding out more in future modules). Excel of course is a given – however trying to wean off in favour of other offerings.
I rely on my compliance people to provide timely data. We have a bookkeeping arm so that is useful. In future, we will ensure if we refer on compliance work, that the firm will provide timely data. Analysis and advice will be my responsibility. My senior bookkeeper has a keen interest in all of this, so I am hoping to get him involved in smaller client discussions in future.
Internal systems are only average! We are under resourced so no spare time for the “worker bees” (this is the reason for offloading future compliance work). Leverage (if you mean reputation) is pretty good. My networks are wide and my former life as a commercial / corporate banker stands me in a good place having advised businesses all of my working life – not just provided historical financial and tax information! I am also a managing director of a rail company in Aus which has furthered my reputation by way of running large businesses and the experiences I have encountered.
Feedback from our experts
A Virtual CFO is a financial expert who provides the services and expertise of a Chief Financial Officer (CFO) on a flexible, part-time, or remote basis. Unlike a traditional, full-time CFO who is employed directly by a company, a vCFO offers their services to multiple clients, often through consulting firms or independently. The vCFO role can encompass a wide range of financial management and strategic planning tasks, including:
- Financial Strategy and Planning: Developing and implementing financial strategies to support the company’s goals.
- Budgeting and Forecasting: Creating budgets and financial forecasts to guide the company’s financial planning.
- Financial Reporting: Preparing and analysing financial statements to provide insights into the company’s financial health.
- Cash Flow Management: Monitoring and managing the company’s cash flow to ensure sufficient liquidity.
- Cost Control: Identifying and implementing cost-saving measures.
- Risk Management: Assessing financial risks and developing strategies to mitigate them.
- Fundraising and Investment: Assisting in securing funding or investment and managing investor relations.
- Compliance and Governance: Ensuring compliance with financial regulations and maintaining good corporate governance practices.
By leveraging a vCFO, small and medium-sized businesses can access high-level financial expertise without the cost of hiring a full-time CFO.
Clearly, accounting firms are generally not in a position to provide all of these services to clients, nor do all business clients require these services from their accountant or other business advisor. To begin providing virtual CFO services, advisors need knowledge and experience as well as strong internal systems and processes. IT’s simply not possible for a partner in public practice to directly provide all vCFO services in a cost-effective manner without strong internal leverage and software systems.
In this example, the learner has identified some key challenges faced in developing a stronger business advisory focus. Where do you see your challenges? What actions can you take now to improve the way you provide virtual CFO services to your clients?
Consider the following 3 key actions as a starting point:
- Building a Client Base
Challenge: Lack of business clients who need or can afford these services.
Action: Develop Targeted Marketing and Education Campaigns
- Identify Potential Clients: Conduct market research to identify small to medium-sized businesses that could benefit from vCFO services. Focus on industries where financial management is crucial but resources for a full-time CFO are limited.
- Value Proposition Communication: Clearly articulate the value and benefits of vCFO services through educational content, such as webinars, blogs, and case studies. Highlight how vCFO services can provide strategic financial guidance at a fraction of the cost of a full-time CFO.
- Networking and Partnerships: Build relationships with other service providers, such as banks, legal firms, and business associations, to create referral networks. Attend industry events and conferences to connect with potential clients.
2. Enhancing Staff Capacity
Challenge: Lack of staff and capacity to effectively deliver these services.
Action: Invest in Training and Hiring Specialised Talent
- Upskill Existing Staff: Provide training programs and professional development opportunities to upskill existing staff in financial management, strategic planning, and advisory roles. Encourage certifications such as Certified Management Accountant (CMA) or Chartered Financial Analyst (CFA).
- Hire Specialised Talent: Recruit experienced professionals with a background in CFO roles or financial consulting. Consider part-time or contract hires to manage costs while building capacity.
- Leverage Technology: Utilise financial management software and tools to automate routine tasks and free up staff to focus on higher-value advisory services. Implement cloud-based solutions to enhance collaboration and efficiency.
3. Strengthening Internal Systems and Processes
Challenge: Lack of strong internal systems and processes for data collection, reporting, and review.
Action: Develop Robust Internal Processes and Implement Advanced Technologies
- Standardise Processes: Create standardised processes for data collection, financial reporting, and client communication. Develop templates and checklists to ensure consistency and accuracy.
- Implement Advanced Financial Tools: Adopt advanced financial management and reporting tools that integrate with clients’ accounting systems. Tools like QuickBooks Online, Xero, and cloud-based ERP systems can streamline data collection and provide real-time insights.
- Continuous Improvement: Establish a feedback loop to regularly review and improve internal processes. Collect feedback from clients and staff to identify areas for improvement and adapt services accordingly.
Key takeaway: Accounting firms can successfully establish Virtual CFO services by strategically targeting potential clients, investing in staff development, and implementing robust financial management systems and processes.
This assessment task and response is taken from the Virtual CFO Essentials eLearning course (assessment task 1.3). Click here to explore this course
Also, take a look at the Virtual CFO Advanced eLearning course.
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