How to Offer VCFO Services
Are you a proactive CPA firm leader on the lookout for additional offerings to provide your clients and expand your bottom line? If so, you might consider offering Virtual CFO services. Recently, Summit CPA Group shared their years of VCFO experience with our CPA Leadership members. Read on for highlights of Summit's presentation and discover how they offer VCFO services with success.
What does it mean to be a Virtual CFO?
A Virtual CFO is a chief architect, coach, and advisor. As such, the VCFO will need a thorough knowledge of the accounting of the business forecast and be able to design and deliver guidance that is understandable and actionable. The most effective VCFO services are not a temporary solution to a one-time business problem, but a long-term partnership to help small businesses identify and reach goals.
The VCFO's primary goal is to increase the client's profitability. Following are four steps a VCFO should take to improve their client's bottom line:
- Start by learning your clients' motivation and goals.
- Talk with your client about all aspects of their business. Ask questions to gain a big picture of the business as well as a detailed understanding of operations. Use this information to break down the client's revenue into specific non-financial drivers.
- Use financial metrics to build a dynamic forecast based on the non-financial drivers already identified.
- Get involved in the sales process. Connect your operations, sales, and finance into one model for reaching the established goals.
There are four main facets of a client's finances the VCFO will address in weekly or regular meetings.
- Cash flow
- Forecast: look at assumptions and modeling.
- Pipeline
- Financial statements
How to get started
1. Find a niche. Specializing enables the VCFO to be the expert. Clients are more likely to trust the specialized VCFO who exhibits a thorough understanding of the client's business.
How to choose a niche To choose a niche, VCFOs can ask themselves the following questions:
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- Which clients do I enjoy working with?
- What industries am I curious about?
- Can potential clients afford the service?
2. Create service packages. Decide how you can serve clients based on the pain points you observe in their business processes. Explain how you can help address those issues, and present clients with service package options, based on how often you will meet. For example, a small package offers one meeting a month, a medium package includes two, and a large includes four meetings a month.
3. Sell service packages. A one-hour sales call should be broken into two parts: the first part should be used getting to know the client, and the second part should be spent explaining how the VCFO can solve the client's issues. VCFOs can use the following pricing strategies to provide potential clients with a quote before the end of the call.
Two-step pricing
1. Present your service line items with value-based pricing. Costs should be clear up front, and clients can choose which types of services they want and need.
2. Monthly billing is subscription-based. Once needs and services have been discussed, a package can be chosen, and the client can subscribe to a team. Teams include a CFO, a senior accountant, and possibly a tax professional to provide the chosen services.
With this model, costs are a set price, billing is month-to-month, and clients are free to stop services at any time.
Keeping Clients Happy
Develop strong processes. Ensure your clients receive consistent and accurate information by developing strong processes for how you provide VCFO services.
• Begin by standardizing processes such as deliverables, meetings, and client conversations. As a rule, 80 percent of processes should be standardized, leaving only 20 percent to individual style and preference. Standardizing keeps the VCFO from having to reinvent the wheel- with each new client and enables your firm to provide consistent services to every client.
• Timing is key to delivering effective VCFO services. Document successful workflows so they can become a trusted in-house reference for how to serve clients with consistency and best results.
• Maintain an internal wiki that includes information such as documentation of processes, teaching videos, and frequently asked questions and answers.
• Standardize reporting. All clients should receive very similar reports from your VCFO. Summit uses Reach Reporting as a tool to standardize their client reports.
Onboard new clients with intentionality. When you onboard clients intentionally you give them the following:
• A clear path to follow. Explain to the client what you will do for them and when.
• A way to manage their expectations. Let the client know what to expect regarding communication and communication tools, responsibilities for each party, deliverables, etc.
• A greater understanding of your firm's value. Provide an overview of all that your firm will accomplish for the client, and help the client identify the value you provide.
• An opportunity for buy-in on a scalable process. Communicate how and why some processes will change. Remind the client that changes to the process are designed to be scalable for the purpose of facilitating growth.
Successful onboarding includes hosting a kickoff meeting. Use this meeting to accomplish the following:
• Make introductions between your team and theirs. You are establishing the relationship.
• Explain the onboarding process so the client knows what to expect in the coming weeks and months.
• Establish communication methods so both parties are set up for communication success.
• Discuss best practices as well as clearly delineating responsibilities. Bring to the meeting a list of which areas the VCFO firm and the client will each own. Deliver those written expectations at this meeting.
• Establish a feedback loop. Summit VCFOs email a weekly survey to the client asking for feedback on their services. If the client indicates an unmet need or expectation in any area, a Summit VCFO quickly calls the client to address the situation.
Communicate a meeting cadence. As you move forward in the VCFO/client relationship, establish a pattern of meetings and what will be discussed. This process streamlines communication and keeps important issues from being overlooked. For example, each week of the month can be assigned a meeting and meeting topic:
- Week One: Financial performance
- Week Two: Cash flow
- Week Three: Forecasting
- Week Four: Business development and pipeline
Stay equipped and connected. Support your VCFO offerings with continued learning and by building connections in the Virtual CFO community. Two options offered by Summit CPA Group include the Modern CPA Success Show podcast and the Summit CPA Slack community.
Summit CPA provides Virtual CFO Services, including cash flow management, business tax planning, and financial forecasting. They also perform 401(k) Audits and recently launched a CPA Firm Augmentation program, providing other CPA Firms with accounting outsourcing services and Virtual CFO Consulting from their experienced staff.
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