172. What’s Inside My $100k CFO Report

Do you want to know what's inside the CFO report that my firm delivers to eight figure clients to keep them coming back year after year? In this video, I'll break down our exact reporting structure and show you how to apply it in your firm so that you can become irreplaceable. But remember, this isn't about duplication, it's about inspiration. I'll let you know what has worked for us and you can use that as motivation to take your firm to the next level. Let's see what's inside. First up in our CFO report is the Critical four. The key to the CFO report is simplicity and you don't want to bombard your clients with everything all at once. That's why we start our report with what I call the critical revenue gross profit, net profit, and cash. It doesn't matter if you've been with us for one month or 100 months. We start with the same four numbers. We look back 13 months from the time of the call, which gives us last month and the same month last year to compare year over year results. Then we look for trends. We include numerical values and graphical representation because graphs make it so much easier to see the trends. Sometimes the trends look good, sometimes the trends look scary. Either way, they spark conversations that need to happen. The Critical four typically trigger questions like why is our gross profit margin sliding? Where is our cash actually going? What's going on in our business? The Critical four Start those conversations and then we dive into the financial statements. Now pay close attention because this next session has two unlocks that'll separate you from 90% of other fractional CFOs. We we start off the client's financial statements with a 12 month review of the P and L. And here's the first of those two unlocks. Write this down if you need to stay as far away from that decimal point as possible. You're never going to get to the big picture conversations that we're going to discuss later in this video. If you're stuck in the weeds, now is not the time to debate whether or not the $846 spent on travel last month should go to meals and entertainment or travel expenses. That's for the bookkeeper and you're a strategic partner, not a bookkeeper. Now look, if you also include accounting and bookkeeping as part of your Save those conversations for a different call. This call is about goals and decisions that move the needle and get the blood flowing. I'm talking about decisions that make a difference of thousands of dollars Tens of thousands of dollars, Hundreds of thousands of dollars at a minimum. Treat that decimal point like a black hole and stay away as far as possible so you don't get sucked in. After that, we go over to the balance sheet. Now, the trick here is not to get too lost in the details. I've learned the hard way that the balance sheet can make a client's head start to spin if they're not used to financial statements. My advice, as always, is to keep it simple. Next up, we talk about the one financial statement that is treated like the redheaded stepchild of all the financial statements. But it's arguably the most important. Even more important than the P and L or the balance sheet. I'm talking about the Statement of Cash Flow. The Statement of Cash Flow clears up so much confusion for your clients. In many cases, the Statement of Cash Flow answers the kind of questions that led to the CEO hiring a fractional CFO in the first place. They want to know where all the damn money went. They can see the big profit numbers in the P and L, but they don't have anything to show for it. That's when you head over to the Statement of Cash Flow. Again, keep things simple. Here, that section at the top, Net cash provided or consumed from operations, that's usually the big one. The Statement of Cash Flow proved its worth during COVID As an example, Remember all those PPP and EIDL loans? CFOs were walking taller, enjoying the extra cash, smiling more, buying everyone and their Mother A new MacBook. Good times, right? Well, that was until we hopped into the CFO report and showed them how much money was bleeding out from poor operations and operations management. Yeah, you're cruising now, but there's a hole in your boat and this ship is going to sink. Once you have to start making payments on those big loans, people start doing dumb stuff with their money because they have a false sense of security from their cash position. It's our job as CFOs to provide the wake up call. And nine times out of 10 that wake up is in the Statement of Cash Flows. And since most fractional CFOs overlook the statement of Cash Flow, it can be one of your secret weapons that separates you from the pack. It's a must have in our CFO report and I urge you to include it in yours as well. Okay, before we wrap up our talk on financial statements, here are three pro tips to remember. First, look back 12 months, keep it high level, stay away from the decimal, and I repeat, don't skip the statement of cash flow. If you take one thing away from this video, make it that one. Do not skip the statement of cash flow. Okay? That concludes financial statements. But that's all rear view mirror stuff. Our job as fractional CFOs is to be forward looking, right? That's why we spend no more than 10, maybe 15 minutes reviewing the critical 4 in the financial statements. Then, then we start looking to the future. And so now we're onto forecasts and projections. Now our thesis is to keep the forecast and projections a whole lot like the critical four. We keep everything nice and simple for them and we make sure that the formatting matches up nicely with their P and L and their balance sheet. On easy to read spreadsheet, our clients can see monthly estimated revenues, cost of good and services, as well as SG&A expenses. We also layer in projected beginning of month cash balances and any balance sheet cash outflows. That allows them to get a good end of month cash balance as well. And we do this for a rolling 12 month period. Now all of a sudden, they have all the ammunition they need to make informed decisions. So when a client asks, hey Michael, can we hire that new marketing director at a salary of $120,000, I can say, I don't know. Let's head over to the forecast and projections tab and pl the numbers. Then we get the answers to their questions. How does that impact your margins? How does that impact your cash? Can you afford to do that? You're the CEO. Go do your thing. But here are the numbers. Our forecasts aren't there to tell clients what to do. They're more like financial weather reports. Our clients can still plan a party for Saturday. We just let them know if it's going to rain or not. The real magic happens when you empower your clients to make decisions on their own and enforce that behavior time and time again. They don't have to call you every time they want to spend money. When you get on your CFO call, they've already done the napkin math internally. They just need you to point out anything that they might have missed. And that brings us to the final part of the CFO report where we help our clients figure out what they want to build, shift or accomplish over the next 12 months. This is where fractional CFOs like you and me get to shine and make a real impact. In other words, this is where the fun begins. Because now we get to talk about strategic goal setting. Now, I don't know about you, but this is the kind of stuff that I love getting up for every single morning. Based on the financial review and the forecasting we just went over, we strategically map out what the client wants to accomplish over the next month, quarter or years in alignment with their long term vision for the company. Consider the rest of the CFO report building blocks to get to the strategic goal setting and then use that foundation to get some ambitious targets in place that get the client excited. That way your clients leave the call with a very clear vision and a renewed sense of focus. We conclude that section with clear tasks and action items that each person needs to get done before our next meeting. So let's quickly recap exactly what's in the CFO Report. Every month my firm delivers the critical 4 a high level 12 month review of the P and L balance sheet and statement of cash flows, a 12 month forward looking forecast and strategic goal setting and accompanying action items. And that's what's inside the CFO Report and keeps our eight figure clients coming back month after month, year after year. Feel free to take what you need and apply it to your own CFO report. Just remember these two essential things. First, keep it simple. Your clients don't need a ton of fancy reports. They need to know what to do or change to hit their goals. Second, it's the insights and perspectives you discuss during these meetings that add the most value reports. They're a commodity AI can produce reports. Your value comes from your perspectives and your leadership. And listen, once you upgrade your CFO report, your pricing is going to need to reflect that value. So check out this video to steal my exact step by step pricing strategy. It's the same strategy that I used a few weeks ago to land a $50 million client with a $25,000 onboarding fee. Enjoy the video and I'll catch you next time.

All right my friends, I hope you found this episode helpful. If you did, it would mean the world to me if you would leave a five star review on Apple Podcasts, Google Podcasts, Spotify, wherever you're listening to this episode. In the meantime, I can't wait to see you back right here next week. I'll see you then.