The Rise of the Fractional CFO Firm - V
It takes a different DNA
PART 5 of 6
Generally, clients of CPA firms are unhappy and looking for better customer service.
You can’t just want to change, you must be that change. That means being different!
To embrace this work, firms need a totally new set of values and structures. Client service needs to be at the forefront of these efforts. Many will say that they are already doing this. How many are ACTUALLY doing this though? The 2021 Accounting Industry NPS (Net Promoter Score) Benchmark for CPA firms operating in the U.S. was 38% (clearlyrated.com). So less than half of clients would recommend their current accounting firm to a peer? Something is broken here.
The competitive nature of compliance services at legacy CPA firms has driven much of their current structure. This will be very difficult to overcome. The billable hour, partner structures, and deadline-driven culture are all sacred cows that will need to be dealt with to be successful in this new industry.
As a result, early success will come from firms that embrace this new model from the start. A business owner or someone looking for a Fractional CFO team should ask about the firm’s blend of work. If the CPA firm gets 80% of its revenue from tax preparation, you can be sure they will be unresponsive during tax time. It is important to point out that with the complexity of the tax code and business filing extensions, it is tax time a lot of the year now. The other reality is that people gravitate toward tax and audit work for a reason. They like the structure and certainty that compliance work provides. This is a far cry from the ambiguity, struggles, and exposure that are common working with scaling SMBs. The DNA of the Fractional CFO Firm is just different.
The advent of the Fractional CFO is really a return to the advisory nature of the CPA profession. They are a needed specialization in an ever more complex world. Highly trained staff using the newest technology can cut costs and provide SMBs the advantage they need to thrive. It is time for SMBs to gain the economies of scale in their administrative functions historically reserved by large corporations.