Accounting firms are looking for ways to increase the value of their service by leveraging their expertise and the technology tools available that change the relationship. Where do you start? This webinar discusses the 1st steps to this lucrative busines model.

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How to Take the First
Steps to a Lucrative
Virtual
Controllership/CFO
Business Model
A Special CPA.com Webinar
September 24, 2014

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Thomas Gawne,
CPA, Director, CPA.com
Director of Professional Services for CPA.com.
28 years in the tax and accounting technology
sector.

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Empowering CPA’s and businesses for the Digital Age
CPA.com is a subsidiary of the AICPA

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Dixie McCurley
• Trusted CFO Solutions, Co-founder & Partner
• Headquartered in Atlanta, GA (9 Staff)
• Certified Intacct® BPO Partner & Bill.com
• QuickBooks ProAdvisor, Member of Mindshop
International
• After spending six years in Corporate Accounting
at EarthLink, Inc and four years to Business
Advisory at GH&I, LLP, Dixie is building the
Client Services Accounting Practice at TCFOS.
• Nationally recognized thought leader in cloud-
based accounting.
• As a self-proclaimed “foodie”, Dixie spends her
free time dining at the hundreds of restaurants
Atlanta has to offer.

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• Expanded CAS Verticals – to Professional
Services, Distributors, Start-ups
• Currently 12 staff
• 2 CPA’s
• 1.5 Business Developer (FT)
• 1.5 Intacct Champion
• 3 Managers
• 3 Staff
• 1 Project Manager
• Fully Integrated Intacct, Bill.com and Paychex,
Avalara
• Complete Paper-less System
• Vertical Restaurants - CAS
• Started with 2 clients & 3 staff
• Used many different accounting systems
• Attended CAS Roadmap to Profitably
workshop in DEC 2011
• Consulted clients as outsourced CFO &
Controller Services
• Realized by the hour and “consulting” wasn’t
as great a value as outsourcing their
accounting operations
• Signed on with Intacct & Bill.com
TCFOS OCT 2011: TCFOS 2014:
Trusted CFO Solutions Then & Now

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• Assessments - $10,000
• Implementations - $10,000 - 25,000
• Monthly Services - $7,500 – 10,000
• 2014 - Projected 230% Revenue
Growth year over year
• Now, fit clients to our services
• Say “No” a lot, if not a good fit
• Profitability = 30-35%
• Assessments - $2,500
• Implementations - $2,500
• Monthly Services - $2,500
• 2013 - Experienced 338% Revenue
Growth year over year
• Started with 2 clients
• Would fit our services to clients
• Say “yes” a lot, even if not a good fit
• Profitability = 10-15%
TCFOS OCT 2011: TCFOS 2014:
Trusted CFO Solutions Then & Now

7. Our Agenda
Opportunity in the Cloud
Restaurant Niche Example
Key Elements to Success
Next Steps

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The Second Industrial Revolution - 2010
“The full implications of the new
machine age are going to take at
least a century to play out.”
- Erik Brynjolfsson, MIT Professor,
co-author NY Times Bestseller
“The Second Machine Age”
Source: TED Talk (Feb. 2013)

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Growth of Cloud Computing
And Many Others
Small Business
Has Moved to the Cloud
Network growth:
>150% last year$150M recently
raised
QuickBooks® Online
500K users
Paychex Equity Investment
Efficiencies saving 90
minutes per employee
per day
Serving over 10k firms
and top US banks
$45M recently raised

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Hype Cycle for
Emerging Technologies - 2013
Source: Gartner’s 2013 Emerging Technology Hype Cycle
Cloud
Computing
Technology Trigger
TIME
VISIBILITY
Peak of Inflated Expectations
Slope of Enlightenment
Trough of
Disillusionment
Plateau of Productivity
Big Data

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Moore indicates that we have
crossed to early majority…
CHASM
Helping Firms With
Adoption Curve
Firm Solutions
CPA
Profession

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1990
2000
Today
Transformation of Client Accounting
Today’s opportunity
 Cloud-based
 Integrated
 Paperless
 Dashboards
 Real-time
Small businesses push work
back to firms to focus
more on their business
Role of firms reduced,
QuickBooks introduced
to small businesses

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Accounting Services Today
• The Opportunity
• Ride the wave of demand for outsourcing
• Leverage cloud technology to achieve productivity
• The Challenges
• Commodity practice
• Low margins
• Hard to scale
• Hard to upsell to higher value “virtual CFO” services

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Firm Value Chain
Input
Data
Assemble
& Verify
Report
Analyze &
Interpret
Advise &
Consult
Higher Value
& Future Focus
Lower Value &
Historical Focus

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What is Needed?

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What is Needed?
The Roadmap to Success
• Model for evolving Accounting Services as a practice
• A guide to technology investments required
• Change management strategy – internal and external

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3 Key Strategic Decision Points
• Determine current and desired state of your
client accounting service practice
• Evolution of client accounting services
• Identify technology investments appropriate to
stages of transition underway
• Organize change management around specific
business practice transformations and
technology deployments
• Orchestrate change initiatives that minimize
wasted efforts and maximizes lasting
improvements

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Getting Vertical through the Cloud
Business
Intelligence
Reporting
Real-Time Client
Collaboration
Standardized
Workflows
Client
Accounting
Capabilities
driven
through
cloud
computing
• Professional Services – 90%
• Construction – 76%
• Retail – 75%
• Not-for-Profit – 73%
• Manufacturing – 65%
• Wholesale Distribution – 61%
• Technology Companies – 59%
• Transportation – 48%
• Hospitality – 45%
• Franchises – 40%
• Government – 29%
Most Popular Client Verticals
for Outsourced Accounting Services

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How the Restaurant Niche Got
Started for us . . .
Passionate about the
food service industry Existing clients
•Accounting Cleanup
•Disparate Systems
•Inaccurate Data
•Out-of-balance
accounting
•Tax Compliance
•Employer Tip Credit
•Cost Segregation
•Opening new
locations
Client Needs
•Management
reporting
•Uniformed,
standardized
accounting system
and structure
•Internal Controls
Restaurant
Industry
Niche
WhytheRestaurantIndustry?

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To Transform Restaurant Accounting
Restaurant
Group
Consistent
Processes
Cash Control
Consolidated
Financials
Multi-Entity
Reporting
Full Financial
Visibility
Cloud Based
Systems
Today: Disconnected Systems Ideal: Connected/Holistic
QuickBooks POS Payroll
Manual
Processes
Restaurant
Managers
Many
checkbooks
Several
locations
Bookkeeper Inventory

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Significant Growth Opportunity
• Vertical Growth – distributors & suppliers
• Customer Loyalty & Financial Reporting
• Management Accounting & Restaurant Consulting
• Scalable from 1 to over 1,000 clients
• Leads to other Niche areas – retail, hospitality, private clubs,
franchises, etc.
• Are you keeping up with the growth?
WhytheRestaurantIndustry?

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Typical Restaurant Structure
M-Console
Shared
Corp Restaurant 1 Restaurant 2 Restaurant 3 Restaurant 4
Company
M-Console
Company, Inc.
Currency USD
Company
Currency: Cayman
Company
Currency: Cayman
Company
Currency:
Cayman
Company
Currency EUR
Company
Currency: EUR
Company
Currency: CAD
Company
Currency: GBP
Consolidations 1
Currency: Cayman
Consolidations 2
Currency: EUR
Consolidations 3
Currency: USD
SIMPLE
COMPLEX
Single Accounting Console
• One common set of data across all locations
• Locations are created within single
transactional environment
• 1 TIN for entire company for all locations
• No ability to manage locations independently
• Books maybe balanced by location and/or by
entire company
Multi-Entity Shared
• Shared Data
• Chart of Accounts, Customers,
Vendors etc.
• Single Intacct Database
• Single Base Currency
• Each entity may be managed
independently or from top
• Books maybe balanced by entity or by
entire company
• Consolidations performed from top
level

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KPI’s
• Number of table turns
• Food categories
• Turnover of total room
• Guest Counts (growth)
• Per person Average
• Controllable Income
• Average Ticket Price
• Food & Beverage Mix
• Historical vs current
• Total # of seats
• Comps
Other Measurements
• Prime Costs
• COGS + total labor + ee
benefits
• Food & Beverage Mix
• Revenue 60/40 average
• COGS 33% food; 25% bar
• 13 week periods
• Labor
• Mgmt 4%; direct 14%; other
5%
• EBITDA: 25-28%
Restaurant KPI Examples

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• Restaurant operators
• Scrutinize food and
beverage costs
• margin by menu item
• by location
• by server
•Business actions that
increase gross margins
• Role-based dashboards
• Management by KPI’s
Reporting Examples
Food
Sales
Liquor
Sales
Other
Sales
Food
Sales
Food
Costs
Food
Margins

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Trusted CFO Solutions – Our Method
Assessment
Phase
•Discovery
•Assessment
•Recommendations
Implementation
Phase
•Project Planning
•Prioritizing Goals
•Take Action
Client
Services
•Back Office Accounting
•Virtual CFO
•Cloud based Solutions
Fixed Fee
Products &
Services
Ron Baker says:
“Billing ≠Pricing”
Alternatives to pricing your services based on client-perceived value, rather than hours spent

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The Critical Pieces of Getting Started
• Learn and Build out Your Roadmap
• Champion Needed to Lead the High-Value CAS Firm
• It starts with the Business Plan
• Don’t go it alone – Employee, Professional and Client Advisory
Boards
• The standardized practice & “Getting Vertical”
• Mandatory Client Assessment as a stand-alone engagement
• “Before-and-after” presentation
• Engagement Letter and Service Level Agreement
• Procedures Manual (shared with client)
• New Client Orientation
• New Client Training
• Technology
• Financial Statements, KPIs, Critical Success Factors

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The Standardized Practice
• Consistent/standard Chart of Accounts (COA) as one package
price. Premium fees for a custom COA
• Standardized services by industry vertical and by type of
service
• Standardized Internal Management Reports/Services
• Procedures Manuals for each client
• Service Order Requests for services outside of the
engagement agreement – retainer always on account for
these requests and for “concierge” services
• Dedicated client-service staff to provide top client experience,
while sheltering our production staff

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Client Accounting Services
• The services offered within Client Accounting Services groups
generally fall into three categories:
Financial statement preparation using the accounting data
provided by the client, which often requires compilation
Transaction processing, such as entering accounts payable,
receiving approval for payments, sending payments
CFO/Controllership services, includes reviewing financial
performance and providing input and strategies to improve business
processes and performance

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Increasing Firm/Client Collaboration
• The economy requires closer CPA firm and client
collaboration to deliver better financial advice, help them
make faster, smarter business decisions and improve their
financial performance
– Real-time vs. after-the-fact decision making
• Firms are focusing on technological improvements to
enable heightened collaboration and are making the
following shifts to their client accounting services practices:

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Client Accounting
Services
• Firm typically has 25-200 clients
• Clients have $1 - 5 Million
annual revenue
Firms are charging value-add bundled retainer fees
for these services – $1,500 - $5,000 / mo.
Most Common Services:
• Financial Statement
Preparation
• General Ledger/Trial Balance
• Payroll Reporting
• Cash Flow Management
• Payroll Preparation
• Transaction Processing (BPO)
• Virtual CFO Services
Majority of Outsourced Accounting
clients have between 5-25 employees
CPA Firm Client Accounting Services Profile

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Service Delivery Platform
• The service delivery platform is a term used regularly in the
“cloud-computing” world.
• defined as the available technology components and/or solutions that will
be used in the client accounting service delivery model
• For example: could include the following integrated business
solutions
– Intacct Financials-on-demand
– Bill.com cash flow and bill management
– Paychex integrated payroll services
– XCM workflow management

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Steps in the Prospect-to-Client Process
Qualification of prospect / analysis of existing client opportunities
Ongoing Services
Phase 4
Monthly recurring virtual accounting and Controller/CFO services
(Firms are charging $1500-$10,000+ monthly fees for this)
Short Term CFO/Tech Consulting
Phase 3 Data File Clean-Up, Staff Training, Management Report Package
Preparation, Process Implementation (CFO)
Client Needs Assessment
Phase 2 Initial Client Needs Assessment (firms are charging between $2,000-6,500+ for
this). May be accompanied by financial clean-up and/or other services.
Prospect Qualification
Phase 1 Prospect Questionnaire
Learn how at the Client Accounting Workshop!

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Cost-Estimating Tool

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Defining the Scope

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Assemble Your Team
Partner-In-Charge CAS Business Group
Business Development
Marketing/Sales,
Finance,
Human Resources,
Technology, etc.
Director of Client Accounting Services
Virtual CFO
Implementation
& Client Support
Services
(separate positions
as the firm grows)
Client Relations
(Client Scheduling,
Contract
Maintenance,
Client Satisfaction)
Virtual Controller
Accounting Manager
Accounts
Payable
Accounts
Receivable
Payroll

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Plan

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Marketing – Top Firm Challenges
• Client Accounting Services has not been adequately
positioned and sold “within the firm” so is not positioned for
success publicly.
• Limited resources and lack of year-round consistency
• Strong reliance on passive word-of-mouth for sales
• Focus on developing sales through new customers
• Limited market intelligence and ongoing research
• Lack of complete budgeting and ROI reporting to measure
results vs. expectations

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Segmenting Your Market
• Firms who have successfully identified and built their
marketing and services around industry verticals are able to
get the most from each marketing dollar by specifically
targeting WHO they need to reach and WHERE.
• In the CAS practice, clients expect us to know more than they
know about how to win in THEIR industry in addition to ours.
Firm marketing materials should demonstrate that we “get it.”

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Types of Marketing Activities
Marketing
Activities
Present at
Industry
Events
Georgia
Restaurant
Association
Webinars
Whitepapers
Client
Testimonials
Case Studies
(Simple &
Complex)
Interviews
and Articles
in Industry
Publications
• Speak to the chef, compliment food,
decor, service
Connect with Restaurant Owners
• Ask what systems they use, offer
recommendations for issues, tell them
you’re establishing a niche, get
feedback
Establish a rapport
• Post comments on Yelp, Open Table,
Food Spotter, Social Living. Tell them
you are; tell them you did.
Give reviews and feedback
• At their restaurants, Taste of Atlanta,
Dine America Gala, Georgia Restaurant
Association, Culinary Colleges
Attend Events

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Other Workshop Topics
• Engagement letter templates and service level agreements
• Key cloud based solution case studies to build the model
• How to build your business plan
• Key performance indicators (KPI’s) success factors
• Rich virtual toolbox of templates and documents to
complement
• Collaborative engaged exercises to enhance learning
• Small facilitated group to enable shared learning amongst
participants!

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Join Us for the Next Workshop
Seats still available at
our Atlanta Workshop!
October 22nd & 23rd
Six Concourse Parkway, Ste. 800
Atlanta, GA
• Sign-up through CPA.com

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Workshop Contest
• One lucky attendee will win a complimentary admission to the
October workshop to be held in Atlanta (a $1,295 value)
• Winner will be notified by early next week

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Questions & Comments
Slides available at:
http://www.slideshare.net/CPAcom
Thank you!