BECOMING A VIRTUAL FD

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1 PAGE 1 BECOMING A VIRTUAL FD The idea of helping your clients remotely or virtually has been around for some time. Advances in mobile technology have made the concept of a Virtual Finance Director (FD) a practical reality. And this means we re seeing an increasing number of firms offering higher value-add services to their clients. But what do we mean by value-add services? We re talking about going beyond basic bookkeeping and compliance, and into the realm of in-depth financial insight, deep analysis of data and becoming a true business consultant. This is a big shift for many accountancy firms. And it s a shift which requires a change in both your business model and your cultural mindset With this in mind, we ve spoken to our partners and cloud experts to find out what makes a Virtual FD and how you make the most of the potential value you can add.

2 PAGE 2 So, what is a Virtual FD? In the conversations we had there were a few definitions which really stood out: A Virtual FD plays the FD role on a part-time business for a fraction of the cost of a full-time FD A Virtual FD cares about the health and well-being of the business A Virtual FD acts as a sounding board and provides financial sanity A Virtual FD is essentially a business adviser. Someone that becomes a trusted source for financial insight at a far smaller cost than a full-time FD. And for most small businesses, cost is a critical factor in deciding the scope of the accounting services they can afford. Having access to an experienced, knowledgeable finance professional was a luxury that many businesses simply couldn t afford on a permanent basis. But linking in with a Virtual FD is now within reach of these smaller companies. Through a combination of practice knowledge, cloud-based accounting software, mobile technology and modern data analytics you can deliver a financial director role that really makes a difference for your client. Why is this role emerging? Everyone we spoke to agreed that there are some significant trends popping up across the industry. And that these trends have been appearing for some time. We ve seen that: compliance work has become a commodity with no differentiation between brands there s increased competition increased fee compression, and technology is helping to automate basic functions. Against this backdrop it becomes important for you to differentiate your services. Offering compliance, financial statements, and tax returns is now the basic package and these services are increasingly seen as commodities. The company of the future is one that provides financial insight and analysis which goes beyond this basic level of data-entry and compliance. There are many types of firm across the public accounting industry, ranging from small bookkeeping firms to large firms with outsourced accounting divisions. In the graphic on page 3 we ve created a simplified view of public accounting broken down into four segments: Bookkeeping Bookkeeping+ Accounting and reporting, and FD advisery. There s more to each segment than we ve described and not every firm will fit cleanly into one of these segments, but it s a good approximation. As you move to the right along the chain you re adding more value for your clients. The services to the left are facing, and will continue to face, more commoditization and automation we ve shown this in the greyed-out section.

3 PAGE So, where do you start? Once you have a cloud-based system in place, it s going to make the basic areas of compliance, bookkeeping, bank reconciliations and tax much easier. Work that would previously have been time-consuming and process-heavy becomes more streamlined, efficient and most importantly quicker. To put this into context: the ability to connect to client bank feeds is one efficiency that could save your practice months of employee hours. This focus on working smarter, not harder, is something we see with many accounting firms. The more efficient the process, the less time spent on fixing errors and making adjustments. This frees up time to work on value-add services, improving your revenues, and driving more value to your clients. Stepping into the cloud and spotting the opportunity Here s one meaningful statistic to think about: roughly 50% of small businesses don t make it past the five-year mark. That s quite a sobering thought! While there are several reasons for small businesses failing, many simply aren t making the wisest financial decisions and this is where having the insight of a Virtual FD comes into its own. There s a clear opportunity here for practices that can pick up the digital business adviser baton and run with it and if you ve got instant cloud access to your clients data, you re already

4 PAGE 4 halfway there. Unfortunately, most small firms can t afford an in-house finance head to help navigate the dark art of accounting and finance. Nor do they want to. They d rather be running the business, talking to customers and drumming up that next sale. But they do need the help of an accounting professional more than ever. And this is precisely where the Virtual FD opportunity lies. Interestingly, the vast majority of small businesses are unaware that their accountant can help beyond compliance and tax. That s a big opportunity for any accountancy firm which has the breadth and scope to offer the additional services that a Virtual FD can bring. So, stepping into a FD advisory role is an obvious next step for many firms. To get there, practitioners need to see themselves as a FD first. Yes, it s a mindset shift, but not a huge one most have the knowledge and capabilities already. Managing the delivery of this advice is important, of course. And making the most of the improved technological benefits of instant access to accounts, bank statements and cash flow is critical to making the shift work. But what s most important is the change in your practice s business approach and idealogy. Changing the way you work To become a Virtual FD you need to make some fundamental changes to your underlying business philosophy. It s a move which will be supported by moving to a cloud-based solution, like Xero. The technology, and the benefits of instant access, give you the tools you ll need to make the transition. But it also means changing how you interact with your clients and how you think about your fundamental business relationships. To really embrace the role of a Virtual FD you ll need to: move away from seeing process-driven services as your core business build more meaningful, face-to-face relationships with your clients focus on increasing the touch points you have with clients, both virtually and in person listen and learn what your clients business goals are place your emphasis on helping clients to achieve these goals, and by doing so become a trusted, business adviser. Getting this philosophy in place will be vital as a foundation for your move to becoming a Virtual FD. But once you ve made the change, the power of a tool like Xero will allow you to start adding this additional value for your clients Software which supports your Virtual FD role Once you ve changed your business focus and have the mindset in place, it s the technology which allows you to make the shift. Having access to a

5 PAGE 5 cloud-based accounting solution via a mobile device, wherever you may be, opens up a whole new way of doing business with your clients. You can be the Virtual FD for a number of clients, with access to the data and records you need to give them truly meaningful business advice all of which goes beyond delivering the basic package of tax and compliance advice. Practices tell us they re choosing to adopt Xero for a number of reasons. But there are three core benefits which are vital for the forward-thinking practice that s looking to make the step into becoming a Virtual FD: the core efficiency gains of being able to remotely support their small business clients the additional services they can begin to offer these clients now they can access their clients financial records at a whim, and because it makes them more attractive to new clients. Taking your first steps So, is being a Virtual FD for you? As an accountancy practice, there are questions you need to consider if you re looking to grow the business in the emerging digital world. We re at a turning point in how accountancy services are delivered and there are significant client opportunities for businesses that get it right. If you re ready to evolve from delivering the basic tax and compliance package and emerge from your chrysalis as a fully fledged Virtual FD, Xero will offer you the means to do this. So, some points to think about: Is your practice looking to expand outside the delivery of the basic package of services and into a broader, financial adviser role? Do you want your practice to stand out from the competition in an increasingly crowded market? Are you ready to change your business philosophy away from processdriven services to relationship-driven financial advice? Are you set-up a with cloud-based accountancy solution that has indepth reporting and the analytical tools you ll need? Do you have the scope and resources to deliver a Virtual FD service to a growing number of clients? Do you have a solid customer base of small business clients who would benefit from a deeper level of business advice? The cloud helps you free up time that was previously spent on data entryfocused, process-driven work. You can reduce the data input you do and concentrate on giving real business advice to your clients. In essence, you can become the accountant you ve always wanted to be: helping start-ups, entrepreneurs and small businesses make better business decisions. And that s precisely where you can stand out from your competitors by giving the advice that businesses really need.

6 PAGE 6 Supporting you along the way At Xero we know that transferring to a new accounting system is a big upheaval for any practice. And we also know that changing your entire business approach is not something to take lightly. But taking this leap is vital if your practice is going to evolve and grow in the future. If you re ready to become a Virtual FD, we re here to support you along the way. We know that the support we deliver is something our partners appreciate and we re there to help guide them down the pathway to becoming a truly mobile, digital financial adviser. We offer: free access to the Xero software no downloads and a system that works quickly and efficiently from the cloud free unlimited support, and accredited training for your team. If you d like to find out more becoming a Virtual FD and how Xero can support you, please do get in touch. Find us at or drop us an at partnerteam@xero.com