44. Your Clients Need Better Reporting: What To Do

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Have you ever onboarded a new fractional CFO client and quickly realized that they don't have all the systems or the technologies or the reporting in place to give you the insights that you need to be able to put strategic financial plans and goals in place for your clients? If so, you're in the right spot. Because today I'm working with a TCA pro client who came to me and Carlos and asked for help figuring out how to approach clients that don't have all the things in place that they need in order for the CFO to be successful. We're gonna walk through how to have those conversations with the client so they don't feel like you're just adding additional costs with no return on investment. And we're also gonna do a deep dive into how to have conversations with your clients with business owners when they're not moving the initiatives and the projects forward that you know, they need to do so that they can be successful from a financial perspective. So without further ado, let's check out this conversation with Kieran.

Kieran, all the way from Australia. Again, I love it. What's up brother?

So I have two questions. So I don't do any bookkeeping or controlling functions. I'm very focused on more FPA and the higher level CFO functions. I do quite a bit in sort of capital raising and helping companies raise capital. I'm very big on like data analytics and KPI tracking and things like that. One of the challenges that I'm coming up against is I rely a lot on the existing functions of the bookkeeper and software systems that are in place collecting data. So for example, on the E commerce front, I worked with an E commerce business. Their cost of goods were being recorded on a cash basis, but sales were being booked as they're being sold. So there was a big misalignment on the gross profit. And so the owner said to me, hey Kieran, what's my gross profit per sku? And I had to go away and do a whole bunch of manual work, try and work that out. And the key underlying problem, problem to that one was they weren't tracking inventory at all. So there was no way for them to allocate the cost of goods sold appropriately to the month sales were done. Another issue that I'm facing is software systems that are in place aren't set up or haven't had any time invested to capture these KPIs. You know, for example, Google Analytics for E commerce business, you know, conversion rates, website traffic. They haven't Set that up. They're not looking at it. And what generally happens is I need that information and I'm not in the position to go away and update all these things and have the bookkeepers normally there to, you know, have the books all in order. I'm not in position to update that directly. And so therefore I'm relying on other parties which may require additional costs from the business to have that sort of, what's the right word? Have it all prepared and all in order. How do you approach. Any thoughts on how you could approach that? Because, you know, let's say it's costing them two or three grand to use my services, but then they're going to have to spend another few grand to get these things in order before I can really provide value.

Let's go all the way back to where I would start with at that. Right. So one of the benefits of the niching down, you know, so if you're going to be in E commerce is an example, Kieran, on the sales call towards the latter half of it, actually towards the very end of it, I like to say things like, look, obviously I won't know until I get into your systems and your books and start reviewing everything. But one of the things that I've learned over the years of serving companies like yours is that a lot of times there's not adequate systems and reporting in place to be able to tell the kind of stories that you want my help telling. And so I just want to be upfront with you to let you know there might be some additional software things that we need to get put in place to be able to give the level of reporting that you need. And that's very common in the E commerce industry. So I just want to give you a heads up so that there's no surprises later. But again, during the onboarding process, I'm going to dig in and evaluate it. You know, hopefully if it's not very expensive and these platforms are maybe a couple hundred dollars a month as an example, so that they're not thinking, oh my gosh, is this going to cost me another $5,000 a month? Now maybe it is 5,000 for the software. I don't know. There's certainly platforms that cost that much, but I like to hit that stuff right during the sales call so there's no surprises later. But again, I like to do that pretty much after they've already agreed to work with me.

Right.

I don't want to. I want that verbal agreement first and then I'll hit them with and oh, by the way, there might be some additional costs. Now if you're already in a relationship. I think all it is is a simple business case and I wouldn't overthink it too much, Karen. Just go to them and say, look, one of the things that we've been talking about for the last month, two months, three months, is that we need visibility on a SKU level, right? We've got to understand how profitable X, Y and Z are so that we can figure out what the right product mix is and we can figure out what can we do from a promotions perspective and a shipping perspective, all those kinds of things. And in order to do that we need a software. So I've done some research and here's three that I evaluated. The clear winner was this one. And the reason that I think this is the right one for you is because of this, this and this. And it's, you know, it's going to take us about 30 days to get it set up. Here's the value that it's going to bring and here's the price you and if it were my business, this would be a no brainer for me because we've got to be able to make these kind of decisions, right and really kind of sell it to them. I don't think there's another way around that. As the cfo, you want to done the due diligence, you know, show them that you've done the research. Why is this valuable? What's the cost going to be, what's the payback going to be? And I think that if you've got a good relationship with them where they trust you, they're not going to scoff at getting a thing that's going to enable you to be successful and help them be successful.

That's the approach I've taken so far. It just becomes another thing I need to work out or sort out. They're trying to be the, the cmo, the cfo, the CEO, they're trying to, you know, the founder's trying to be all, all and everything. And then I've, I've come in and then it's like, hey, we can do this. I can do it manually for you and give you the information you need, but it's going to take me X amount of time we need to look at getting into software, but it just sort of becomes a, okay, I'll add that to my list of a thousand things to, to work through. And then because I'm not a part of the, I'm not in the business Day to day, I can't have any drive or impact on that. It's fully reliant on the business owner or someone taking action, which, you know, in theory everyone's keen to do it, but in practice there's a. The things they're trying to get done. So it ends up causing a delay and holding up, you know, me adding value to the business.

Let me dive into that a little bit because you said it's something that was a little alarming to me. Okay, can we unpack that a little bit more?

Of course.

Okay. So are you reporting directly to the CEO?

Yes.

Okay. So one of the thing that stuck out to me is the comment that, and I don't remember the exact words, but it was something around like the ability to influence the decision making and those kind of things. Because you're not in the day to day.

Right. Yeah.

We got to get you there. You got to be in that position where you absolutely have the ability to influence, not execute, but to influence those kinds of decisions. So when you really get into a spot, I want you to be in with your clients and I suspect you want to be in too. There's no more discussion around, like, I don't have the ability to influence that. Like, you are such a trusted person that if you came with an idea like this that I think is a glaring, Easy. Yes. You're in a position where they listen to you and they're like, oh, yeah, Kieran said to go do this, so we're not even really going to ask many questions. We're just going to go do it. Where do you think that disconnect might be? And Carlos, I would love for you to chime in and ask questions to help flesh this out along the way.

Yeah. So I 100 have a good relationship with this founder and he understands 100% and agrees 100%. It's the taking action part that I can't force. So he agrees he needs to invest in software to, you know, have the inventory tracked. He requires some input from his third party logistics company. It just requires some action of someone because I don't have access to all these underlying reports or the third party logistics company that I can go, hey, let me take care of this for you. I'll do it. It's. This is what you need to do. This is how you need to do it. Okay, Kieran. Yes, I agree. I understand 100%. Let me work on it. And then time goes by and yeah, progress.

I don't know if this is feasible, but let me ask you this question. Why not? Why, why don't you have access to the 3 PL and the softwares and stuff? What would it take for you to have that access?

That could be a strategy and that I could request to take control of it. There's maybe two barriers potentially to it. One is it's his business and so I think he likes maybe having a bit, you know, having that control. And second of all, I'm not an inventory expert. I'm not a inventory software expert. I can do research and provide guidance on where it needs to go to. But for me to go and do that, I could, I could do it. I think I'm smart enough to work it out. But it may be a situation. I could request it because, yeah, cool, you take care of it. And then the implementation's not as clear cut as, or as efficient as maybe what it should be. If I said, hey, this is what you need to do, let's bring on someone, you know, through upwork or a contractor that can just bring it on board, implement it, set it up for you, and then we can work with it.

I think it's a great idea and I don't know that I would necessarily advise you to be the guy that's doing all the implementation. Right. But one of the things that will come up, and I hope everybody's listening to this, what our clients don't want is us to be bringing them more shit for them to do.

Right?

They're already busy. That's why they finally gave in and hired us, right when we're going to them with like more stuff that they have to do. I think you run into this exact situation a lot of times where great ideas that need to be executed on, they just stall because the owner doesn't have the bandwidth, even if they know it's a great idea. So one of the challenges that we have as fractional CFOs is we gotta ask ourselves, how do I become more than the great idea guy or gal, but how can I also help carry the ball across the finish line? That's a US football reference, right? But maybe like in Australia it's like something with rugby, I don't know. But how do we, how do we, how do we help get the projects move forward instead of saying, hey, and I'm not suggesting you're doing it to this extent or anything, but that's the question we got to ask ourselves is how can I get involved now if this is something that's clearly out of your scope of work, which I kind of get that vibe that it is, then I think you're on the right track that you say like here's somebody that we could hire that could implement it right. So we've got solution and that you as the fractional CFO could oversee that from the financial perspective to make sure that the numbers all line up or if it's something you want to do, you're like, hey, this is a thing that I feel like I should need to know more about, I'd like to do it. Then we're proposing a project to the client that's with the scope of work that says, look, this could be a hands off thing for you. I would be in charge of overseeing it. I need access to these three systems and these two people and I would go out and do this and this and this and we could have it, you know, implemented within 60 days or whatever. That's going to be a challenge for all of us. We have clients that are in growth mode. There are things that need to be done and our clients don't have the bandwidth to do it. So as that executive level advisor, we got to show them how we can help and most of the time they're willing to pay for it. You know, we just took on an ERP implementation project. You know, they've manufacturing clients, they're getting big, they need netsuite, right? Their team is just at capacity. So we said how can we be part of that solution? So we pitched a very lucrative high five figure project to help move the thing forward. You know, that's a way out of our scope of work. Once we stepped in and said, hey, we can help with this, all of.

A sudden now we're going, that's what I, that's what I see the solution is as well just finding it a bit that, that a bit more time consuming, but that all all makes sense. So thank you for that.

All right my friend, I hope you found that helpful. If you're interested in learning more about TCA Pro, that's our coaching program that's specifically designed for fractional and virtual CFOs. I would love for you to check.

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Meantime, I can't wait to see you right back here next week. See you there, Sam.