The FD/CFO Role: As FD/CFO you and your team are required to undertake two roles/activities, one relates to planning, forecasting, reporting and supporting the MD / CEO and the other line managers. The other relates to line management, or oversight of financial staff, the technology, systems, and processes employed.

The Financial function must align with, and support the overall goal of the business and key stakeholders, including the owners whose ultimate goal is likely to be to increase the value of the business and exit successfully.

Good bookkeeping is essential, without it there would be no business, but most businesses struggle to get this right.

80% of Accountants only offer compliance services and don’t see bookkeeping as their problem, however, to obtain meaningful Management Information bookkeeping issues must be addressed, which requires management oversight.

The Portfolio or Part-Time FD’s first task is to identify and address bookkeeping issues which frequently requires the chart of accounts to be changed to support future financial analysis, reporting and control.

If the chart of accounts are changed, reporting performance vs history becomes impossible, so it is critical the develops a robust forecast that can then be used to track and report progress vs forecast.

The management team can then work to systemise and scale the business (increasing the equity value for the owners), whilst de-risking which of necessity includes planning for succession and an eventual exit.

A key part of the FD’s role also includes oversight of the finance team, ensuring the right people are doing the right jobs, using appropriate technology, working efficiently and effectively. How this is remunerated becomes a key issue and potentially a poison chalice for the FD if not done correctly but, presents a tremendous opportunity for the client and the practice/Part-Time FD if done correctly.

Target Market for Part-Time FD/CFO Services: It is important to be clear on your target market and in broad terms this can be segmented as follows:

Larger businesses, e.g. over £10M turnover will almost inevitably have a full time FD in situ. 100% of these businesses will plan, forecast, and track Performance vs Forecast.

The Sweet Spot for Part-Time FD services is therefore in the sub £10M turnover band where there is frequent financial mismanagement i.e. a problem looking for a solution.

Below about a million turnover, most businesses are too small to justify the expense of even a Part-Time FD but those ambitious growth minded businesses will invest in a more cost-effective Part-Time FC service.

At the base of the pyramid will be the micro and lifestyle businesses who arguably don’t need or want, but more important, cannot or will not pay for part-time FD support. This does not mean there is no commercial opportunity with the micro businesses, see ‘Return on Investment’.

With this in mind it is important to understand where your potential client is in their business growth journey to identify those who need and would be prepared to pay for your financial guidance and support.

The two roles the Part-Time FD fills can be described using this diagram.

The role everyone pictures is the person who supports the Managing Director / CEO and the rest of the Board / Management Team, planning, forecasting, and contributing to Management Decision Making.

The second role for a typical SME is very hands-on and relates to oversight of the Financial Personnel.

Frequently, because ‘Finance’ is responsible for paying the invoices of the specialist suppliers such as IT, HR, H&S, Finance ends up also being responsible for this part of the business, which opens even more opportunities.

VFD Way Fast-Track Training and Mentoring:
You will be supported by experts with years of experience working both as full time and portfolio FDs, AND with considerable expertise training, and delivering ongoing one-to-one mentoring and coaching for Accountants in Practice.

You and your team can be confident, whatever challenges you or they encounter along the way, you always have an expert to call on to discuss, support and help ensuring your clients are onboarded successfully, and retained, and Gross Recurring Fee Income grown over time.

The formal VFD Way Coaching/Mentoring builds on the VFD Mastery Training that is effectively an introduction to the suite of VFD tools and how to use them in isolation. VFD Way Fast Track is normally delivered face to face, on-site, but can be a hybrid on-site and online where appropriate.

Over and above group work, where each participant works on their part of the client portfolio, using the VFD tools and processes at the same time as working to engage, discuss, sell, and deliver to clients.

For most Practice Accountants, their client base is dominated by smaller businesses for whom the full part-time FD service is not appropriate. However, the various VFD tools, training and reporting are relevant to just about every business provided they are interested in growth*.

* Growth can be articulated as ‘Want more profit / cash for less effort’ which should include every client, but we have to accept a property landlord, or perhaps farmer is unlikely to be interested in how to grow a trading business.

Business Development: VFD Way Fast Track is not all about Service Delivery, it is essential to also invest time and effort on Business Development which breaks down into two key activities:

1. Lead Generation
   
   
2. Sales Presentation and Processes (conversion)
     

Failing to invest sufficient time and focus on developing the skills to present your proposition effectively, scope the ideal solution, and agree appropriate commercials, two things happen:

1. Sales opportunities are missed – sales not made where, with the right training and support, a successful sale could have been made and more clients helped / supported.
   
   
2. Many clients are sold too little, or under-scoped, leading to an inability to live up to expectations resulting in engagements being short lived with unsatisfactory endings.
     

To address Lead Gen challenges calls for total clarity on the firm’s purpose and a consistent message across all media, the messages transmitted verbally by team members, the company website, social media and email.

The check-ist below is not intended to be either prescriptive, or comprehensive, but is intended to guide your initial Business development thinking and planning.

The more clearly identifiable your niche target markets and the related routes to market, the easier it will be to generate leads and make sales.

You will need to build, test, measure and optimise multiple lead generation / new client acquisition strategies adopting at least three key metrics for each over time:

1. The number of leads generated by each primary lead source.
   
   
2. Your conversion rate of leads to clients (broken down by lead source and by individual).
   
   
3. The quality* of the Business signed and its expected potential.
   (*Quality = Profit Generation and expected Lifetime Customer Value)
     

Your targets will flow out of the diagram below with the numbers of clients and percentages refined to be appropriate to your firm and potential penetration, augmented by new client acquisition over time.

Calculating your Return on Investment: No two firms are identical, but most are similar in the structure of their client base, with smaller businesses making up the bulk of clients and a relative handful of larger clients. The example below is for a firm with a total of 500 clients:

Whilst we would expect all clients to be interested in growth, we must assume some are not.

The assumption therefore is 50% of your client base will value the offer of education and management reporting.

Some will be willing to pay for an augmented ‘Year End’ meeting that includes a business growth assessment delivered using the Client Discussion Framework and associated assets.

Management Information (MI): Some clients will want to augment the frequency from annual to quarterly.

Part Time FD (PT FC): And some will want to meet monthly, which is a different relationship as part of the management team.

Part time FD (PT FD): Some will want to plan and forecast and then report performance vs forecast as Part-Time FD.

Part Time FD + Exit Planning: And whilst 100% of your clients will inevitably exit, only a fraction will appreciate the need and be willing to pay for support.

In addition to the ‘primary support services’ outlined above, the opportunity to address ‘gaps’ in your client’s financial operations by providing ‘Outsource Finance’ exists at every level, however, in the instance where a team member is meeting the client monthly, there is an extremely high likelihood of placing ‘Outsource Finance’ staff with the associated income as an additional profit centre.

Recruiting, training and supervising financial staff is difficult and expensive, however, if you are using the right ‘Outsource / Offshoring’ Partner, the cost of recruitment can be eliminated and skilled financial staff retained at a fraction of the cost of employing a similarly skilled person in the UK.

You can do the maths for your own practice, but using the example below, with 500 existing business clients, their target ROI for the next 1 to 2 years looks like this:

Average GRF = £3,000 per client.

The level of fee increase achievable will be arrived at through testing…

• £600 additional per annum, charged monthly = +£50
   
• Full Management Reporting and a Quarterly Meeting = +£250 per month
   
• Going from 4 to 12 meetings per annum = +£500 per month
   
• Part Time FD fees range from £1,500 to £4,000 per month, +£2K is conservative
    

In many cases Part Time FD services also ideally include a success fee as a profit share which is similar to the performance incentive other Heads of Department would enjoy as part of their remuneration package.

Exit Planning is FD services on Steroids so should be much higher and typically also include a success fee PLUS a % of the eventual sale proceeds on successful exit, (ideally paid from the outset in equity = Jam Tomorrow).

In terms of Business Development, this calls for a Sales Process and appropriate pricing / upselling strategy to move clients up the ‘Value Ladder.

Just making a sale is not enough. Existing and new clients are likely to start with a ‘toe in the water’, so the real selling process starts after the ‘First Sale’, which could potentially be paid for training, right through to becoming a key member of the client’s Management Team, PLUS provision of a full Outsource Finance Function and a focus on the corresponding metrics:

1. The conversion rate of leads to client.
2. The quality of the Business signed and its expected potential.  

Your focus will be on achieving two objectives: Moving clients up the Value Ladder, and onboarding new Exit Planning and Part-Time FD clients at the top of the Ladder from day one.

Exactly how fast you and your team can move in terms of getting everything in place, and your team employing their new sales skills varies, but you will start with a suggested timeline and first pass prioritised list of key tasks, detailing the next 12 months to leave you flying solo with everything in place ready to scale.

You can flex as needed but for structure, most VFD Way Fast Track engagement include a monthly face to face Planning and Management Meeting to review progress and agree priority tasks for the next period.

You work together with your coaches and mentors on the Business Development Activities and the practical aspects of delivery, with a combination of monthly management meetings plus a longer quarterly planning meeting to encompass both Service Delivery and Business Development.

Over and above the Planning and Management Meetings, we will also meet / discuss between meetings as necessary to progress the various tasks and initiatives needed to get you, and your team to where you need them to be.

Targets: From a combination of up-selling existing clients and onboarding new clients, you would establish your own targets and time scales, but building on the example firm with 500 business clients, your plan for the first 12 to 18 months could look something like this:

• Increase fees from existing clients: £ 112,000– from enhanced training, education and reporting.
• 50 Future Focussed ‘Year End’ meetings: £ 30,000 – MI plus use of the Client Discussion Model with 50 clients.
• 20 Quarterly Reporting and Review: £ 60,000 – Enhanced Management Reporting and quarterly meetings.
• 15 Part-Time Financial Controller: £ 90,000 – Enhanced Management Reporting and monthly meetings.
• 10 Part-Time Finance Director: £ 240,000 – Planning, Forecasting & Reporting and monthly meetings.
• 5 Part-Time FD plus Exit Planning Support: £ 180,000 – Adding the support for preparation and eventual exit.
• TBC Outsource Finance Services: £ ??? ,000 – Targets to be agreed.  

Targeted ROI: £ 712,000+ or £59.3K per month, GRF within 12 to 18 months

Other Lead Generation / Business Development Costs: Your objective is to achieve the above without having to invest in activities such as paid for advertising, acquiring lists or paid lead generation. Whether this is possible depends on the ability and willingness of your team to engage in successful commercial dialogue with clients and other referral partners.

Commercial:

1. Service Delivery:
   How to excel in the role of Part-Time FD VFD for up to 4 people. Training, Education and Group discussion, monthly on-site, plus one-to-one coaching / mentoring to allow team members to progress at their own pace. 
    
2. Business Development:
   Marketing the services, or Lead Generation, and coaching team members to present the services, including scoping and agreeing commercial terms. 
     

To commission both in parallel is an investment of £3,470 per month. If you wanted to start with the VFD Way Service Delivery on its own, and move onto the Business Development later, the investment required would be £1,970 per month.