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Becoming a Virtual CFO

Posted 7 years ago in Advisors by
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Over the past six weeks we’ve spoken to a number of accounting firms as well as experts on the topic of a virtual CFO. While the notion of helping clients remotely or virtually has been around for some time, we continue to hear more about firms moving up the value chain and offering higher value-add services to their clients.

What is a Virtual CFO?

Throughout our conversations the following definitions stood out:

  • A Virtual CFO plays the CFO role on a part-time business for a fraction of the cost of a full-time CFO
  • A Virtual CFO cares about the health and well-being of the business
  • A Virtual CFO acts as a sounding board and provides financial sanity

A Virtual CFO is essentially a financial advisor. Someone that becomes a trusted source for financial perspective at a fraction of the cost of a full-time CFO.

Why is this role emerging?

There was widespread agreement that the following overarching trends are occurring in the industry and have been for some time:

  • compliance work is commoditizing
  • increased competition
  • increased fee compression
  • technology is helping to automate basic functions

Against this backdrop it becomes important for firms to differentiate their services. Offering compliance, financial statements, and tax returns are status quo and are increasingly seen as commodities. The firm of the future  is one that is providing insight and analysis beyond basic compliance.

There are many types of firms across the public accounting industry ranging from small bookkeeping firms to large firms with outsourced accounting divisions. The following image is a simplified view of public accounting breaking it up into four segments—bookkeeping, bookkeeping+, accounting & reporting, and CFO advisory.

Of course there is more to each segment than described and not every firm will fit cleanly into one of these segments, but it is a good approximation. As you move to the right along the chain you are adding more value for your clients. The services to the left are the ones that are facing, and will continue to face, more commoditization and automation as illustrated by the greying.

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Connectivity to bank feeds, for one, is driving efficiencies that are saving some firms months of employee hours. Many accounting firms are focused on working smarter, not harder.  The more efficient the process, the less time spent on fixing errors and making adjustments. This frees up time so to work on value-add services and drive more value to clients.

In addition to this, roughly 50% of small businesses don’t make it past the five-year mark. While there are several reasons for business failure, many small businesses simply aren’t making the wisest financial decisions. Unfortunately most small firms can’t afford an in-house finance head to help navigate the dark art of accounting and finance. Nor do they want to. They’d rather be running the business, talking to customers and drumming up that next sale. They need the help of an accounting professional more than ever. Interestingly, the vast majority of small businesses are unaware that their accountant can help beyond compliance and tax.

Stepping into a CFO advisory role is an obvious next step for firms. To get there, practitioners need to see themselves as a CFO first. Yes it’s a mindset shift, but not a huge one, as most have the knowledge and capabilities already.

I’m going to be chatting with several experts in a three part series on the subject over the course of this month in an unscripted interview format. If you are interested, you can register here for the first one:

Becoming A Virtual CFO: A holistic view of a new industry trend with Leslie Shiner


Don Cameron, CA
June 12, 2013 at 3.30 am

Hey Jamie, Great article. Having been in the virtual CFO business for over 10 years now, where pitching the value was more one-dimensional, we’re viewing this as a great time to be in this line of business. With all the changes happening there are a great number of doors that we professional accountants can step through with our clients and prospects and add value, including the “• Etc… line at the end of your graphic

Michael 'MC' Carter
June 16, 2013 at 11.51 pm

It’s true, as you say, that most practitioners already have the knowedge and capabilities to deliver these services. The missing skill is the ability to sell the value. Spotlight Reporting’s most recent survey of the profession found that 9 out of 10 accounting firms *want* to deliver more value-add services to their clients, yet only 1 in 10 currently provides these services to a significant number of their clients. That ‘Value-Add Chasm’ is not wide, but it is deep. Most firms hurtle down it. The short footbridge across the chasm is learning how to market and how to sell value-add services. The cold hard reality is that, as far as value-add services go, you never get to deliver what you never learn to sell. The flipside is that for the progressive firms who learn how to communicate value well, they quickly become stars to their clients and in the market. Exciting times, for some.

Manish Gulati
April 30, 2014 at 11.41 pm

Superbly written and lucid blog. Captures the industry dynamics quite well. I am based out of India so my experience might be different. What I would like to add onto it is – that there are not just “Economies of Scale” in technology (IT Software etc) and efficiency of Virtual CFO firms, there are also Economies of Scale in sales and business development and there is leverage (which is an Economies of Scale) – leverage with the banks in terms of servicing the client s concerns, leverage on things like forex rate spreads, leverage on negotiating insurance premiums for medical insurance. Also, in India, there is one more trend – a new generation of entrepreneurs are coming in replacing the old generation. When we started Aristotle Consultancy, we were sceptical of companies outsourcing a critical function like finance. Firms run by the older generation were unreceptive but the response from new generation firms has been great

Maureen O'Connell
May 30, 2014 at 5.54 pm

Jamie those are some really great insights… the concept of a virtual CFO is slowly and surely taking precedence. A lot of firms especially startups have started to embrace this concept.

May 18, 2017 at 12.41 am

I don’t think an accounting firm can act as CFO. Depending on client requirements, a CFO has a great many skills that accountants do not have for example a CFO can often bring about change in culture where the business requires a change in accountability by staff or lead staff in cost cutting meetings, etc. A true CFO can lead and guide the business together with the owners. CFO’s don’t usually do tax returns and accountants in practice cannot lead like CFO’s. It is like a brain surgeon and a paediatrician both are doctors, but neither one really knows much about what the other does.

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