One of the biggest challenges when people hear the term “Outsourced CFO,” or a variation thereof, is they do not actually know what that means. Adding to the confusion is that it means different things to different people whether they are a bookkeeper, an accountant, or the client.
When you are trying to define what a CFO is, first consider the accounting principle of Substance Over Form.
Definition -Substance Over Form: “Substance over form is an accounting principle used “to ensure that financial statements give a complete, relevant, and accurate picture of transactions and events.”
While at first this definition may seem unrelated, the core of the principle states that what is important about the financial statements is their substance. Regardless of the form they are presented in, if they substantively cover all the events and transactions that occurred throughout the period, then the financial statements can be relied on.
Similarly, when you are trying to define what a CFO is, it matters less about the title and more about the actual substance of the relationship with the client. It is recommended that you use the title CFO as it simply sounds more valuable, higher-end, and important than a bookkeeper, accountant, or Accounts Payable clerk; however, at the end of the day, what matters most is the actual substantive detailed work and value that will be performed on the engagement.
Therefore, when you are explaining to a client that you will be their outsourced CFO, it is important that you outline with them exactly what the engagement will include, whether it be monthly accounting reconciliations and inventory tracking with sub-account management as well, or if you will be performing strictly as an outsourced CFO delivering high-level value services.
What we call it vs. what the clients think
Keep in mind that what you call a CFO and what the client thinks a CFO is may not be the same thing. There is nothing wrong with this. Simply understand that when you are trying to scope an engagement to figure out exactly what needs to be done and you are giving the prospect a quote, it is important for you to focus on the way of thinking that is presented in the coming pages.
“ONCE YOU UNDERSTAND THIS WAY OF THINKING, YOU WILL FIND THAT YOU HAVE THE ABILITY TO MEET WITH ANY SMALL BUSINESS OWNER AND START CREATING
A CUSTOMIZED CFO SERVICE FOR THAT SPECIFIC NICHE AND INDUSTRY RATHER THAN TRYING TO FIND THAT ONE PERFECT SPREADSHEET OR EXCEL DASHBOARD OR FINANCIAL ANALYSIS REPORT THAT WILL WORK FOR EVERY COMPANY AT EVERY STAGE BECAUSE THAT SIMPLY DOES NOT EXIST. “