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In today’s episode of ‘From the eLearning Trenches,’ we asked one of our learners to review the time-cost challenges associated with providing virtual CFO services to business clients.

We are currently providing a relatively comprehensive VCFO service to one of our clients.

Their systems are very chaotic, so we are still in the process of adjusting the original system and data while also continuing to maintain their current accounts. We have made significant changes to their AP, AR, payroll, and stock.

We hold meetings with them every three months, and we have had two meetings so far. We charge different service fees for bookkeeping, inventory, and consulting. However, it appears that we are currently losing money overall with this client.

I think our problem stems from the lack of proper planning and pricing for the VCFO service in the early stages, and the client may not fully understand the value of our services. Nonetheless, the client does require this type of service.

Next, I plan to create a 12-month plan for this client, which will include a systematic plan, detailed work, and routine financial meetings. I hope that through this client, we can make a qualitative improvement to our VCFO service.

Feedback from our experts

Accounting and business advisory firms often struggle with managing the ‘return on investment’ in working with business clients in a management accounting and advisory role. A key issue that inevitably arises is the challenge of data collection, processing and analysis, to ensure that reports are available in a timely and accurate manner.

The best way to deal with this is to ensure that systems and processes for data analytics are addressed BEFORE commencing management meetings. A separate project scope and fee for service will help to separate systems development activities from business advisory work.

I recall an accounting firm that was successful in getting approval for a $10,000 per month ongoing business advisory project. In starting the project, the partner realised that the business client’s approach to financial reporting was inadequate and needed a lot of work at a bookkeeping level. Given the size of the fee, they were reluctant to review project scope and fee with the client, so decided they would absorb the additional time cost until the bookkeeping issues were sorted out. 3 months later, the problem had not been resolved and the partner decided to speak with the client about the issues. The client was extremely unhappy that the discussion had not occurred earlier. The accounting firm ended up losing the client.

Managing expectations is key to a successful business relationship. It’s critically important when commencing a vCFO project that scope and fee are clear and transparent. Break down services into their components so that the client can see what’s included, and not included, in the agreement. Finally, review the scope regularly during the first 12 months of a new engagement. 

This assessment task and response is taken from the Virtual CFO Essentials eLearning Course. Click here to explore this course

Also, you might want to take a look at the Advanced vcFO eLearning course.

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