When working for third parties, many financial professionals group their wide variety of disparate offerings under catch-all terms like bookkeeping, accounting or fractional CFO services, but clearly communicating what exactly it is that they do can help both practitioners and clients, according to finance educator and business coach Joe Woodard.
“You wonder why you can’t seem to get past a certain pricing threshold or a certain profit threshold. It may be that you conflate recording what happened in the past with operating in the present,” Woodard said at his eponymous firm Woodard Event’s Scaling New Heights conference Sunday in Orlando, Florida.“By not conflating the two, we can get the pricing we deserve and our clients can pay for just what they want.”
Woodard’s talk at the confab, which focused on accounting technology, comes as opportunities for part-time CFO executives who work flexible hours are rising, CFO Dive previously reported. In addition, amid an accounting shortage, an increasing number of firms are also contracting outside providers for all manner of finance work.
But determining exactly how to price freelance or third-party finance services can be more murky art than exact science. Woodard argued that ambiguity over terms has sometimes led to what he called “nature creep” where, on paper, the agreement may show the customer is buying bookkeeping services but, in practice, that client is getting a broader swath of financial operations or controllership services. This can sometimes lead professionals to underprice their services or let work get out of scope.
Imprecise service descriptions are common when it comes to fractional CFO services. In the minds of some clients, a fractional CFO is no different than a bookkeeper and, unfortunately, some professionals touting these services think so too, Woodard said.
“When you say ‘I offer fractional CFO services’ spell it out,” he said. Also, he urged those selling fractional services to be honest with themselves before offering such services. “Ask the question: ‘Am I really?’” he said.
To Woodard, a fractional CFO is someone who represents the company as an executive before third parties. Like permanent senior executives, they have a business card with their name and the company’s name; they deal with banks to get financing; they sit in on board meetings; they talk to investors and prospective investors. In other words, a fractional CFO should be someone who acts as a CFO for their clients.
Woodard said his own company had a fractional chief marketing officer for a while. That person wasn’t drafting press releases or processing market data; he was leading the marketing team and acting as, functionally, an executive in the company, doing all the things an actual CMO might be expected to do.
“So why are we treating fractional CFO the same as financial analysts?” he asked. While there’s synergy between the two, they’re not the same roles.
He acknowledged that, because of these similarities, it can be easy to be drawn into providing disparate services while, on paper, the client is only buying one.
It’s natural for finance professionals to interpret financial data for their clients and they may well be pulled into conducting some operational work, he said. “The question is, have you defined it? Have you priced it? Have you packaged it? And does the client understand they’re buying new products from you, new realms of service from you, new outcomes from you?”
