How do you make an impact for your clients, when you're working with limited data on a tight budget?
It's a problem Mark Mountford encounters regularly in the course of his work as a fractional CFO.
Mark specialises in helping SMEs that have reached a point where they need financial guidance but can't afford — and may not necessarily require — a full-time CFO.
Instead, his clients hire him to go in a few days a month. He takes charge of their numbers, offers strategic guidance, and fills any skills gaps in their financial setup.
"My typical clients,' he explains, 'are businesses that have hit or are about to hit a plateau. They've grown their turnover somewhere in the range of £3 million to £20 million, but don't know how to get to the next level."
The challenge is that there's often no foundation on which he can build. So he'll find himself spending large amounts of time doing work that, while important, may not produce visible results, instead of focusing on what he's been brought on board to do.
A large part of the reason why Mark's clients don't have a solid foundation in place is down to the very nature of his job.
Mark is often the first CFO his clients have worked with. And, while the client may have the financial basics down, they likely don't have the more advanced systems and processes which a CFO needs in order to do the strategic part of their job.
'A lot of businesses I work with know exactly how to handle the transactional aspects of finance,' he says. 'They know how to issue an invoice. They know how to chase late payments. They know how to pay suppliers. And they probably have somebody who handles the bookkeeping, VAT, and that kind of thing, as well as external accountants who handle statutory filings and compliance.
"What they usually lack is an understanding of performance, profit, and cash flow. So I may know how much I have in the bank right now, but I'm really worried about the next two or three weeks. Or I need to invest in equipment so I can expand, but I don't know if I have enough money and, if there's a funding gap, how big that gap is."
Poor cash flow is an extremely serious issue. 94% of UK businesses experience at least one month of negative cash flow each financial year, and it remains the leading reason businesses become insolvent.
Unfortunately, alongside not having an understanding of performance, profit, and cash flow, many of Mark's clients simply don't have the data they need to gain that understanding. Or, if they do have the data, it's not organised in an easily accessible and up-to-date format.
This means Mark can't hit the ground running. Before he can develop a strategy, he has to build out the systems that will produce the data he needs to inform that strategy.
While working with a fractional CFO is more cost-effective than employing one full-time, it still doesn't come cheap. Rates range from £150 per hour to £300 per hour or more.
This creates a chicken and egg situation. 'There's a lot of pressure to bring as much value to the table as you can, as quickly as possible,' Mark explains. 'But you can't do that if you don't have the right data.
"For example, one of my clients didn't have a stock-management system in place, but data on stock was the absolute essential bit of information I needed. So I had to create one."
Setting up these systems is laborious and takes up precious time the fractional CFO can't spend doing what the client has actually paid them to do.
"I was spending days moving data around in Excel, just trying to make it make sense, and not accomplishing much else,' Mark says. 'That's not good value for the client."
The tipping point came during a particularly tough client assignment.
'I remember working on this spreadsheet, pulling data from Xero, because I needed to deliver a cash flow report urgently,' Mark recalls, 'and my head was exploding. I couldn't make the numbers work. It was impossible.'
As it happened, Mark knew about Float's software. 'And I said, you know what? It does cash flow reporting, which is just what I need right now,' he recalls. 'So why don't I try it out?'
Despite having known about Float for some time, Mark was initially sceptical.
'It took me a while to understand where their software fit and how it could help,' he admits. 'In my line of work, balance sheet, profit and loss, and cash flow go hand in hand. You typically look at the three statements together. But Float is focussed purely on cash flow, so I didn't think it could give me what I needed.'
That all changed when he started working with a client who needed in-depth visibility into their cash flow.
'This client was making big purchases, deposits, and commitments,' Mark explains. 'So we needed an extremely detailed view of the cash flow. Not just monthly, but day by day and week by week.'
Float, Mark says, was nothing short of a revelation.
"Once I connected it to the client's bookkeeping software, I no longer had to build out the data,' he explains. 'It was all there, and I could focus on stress testing and war-gaming different scenarios. You know, stuff like what happens if this invoice doesn't get paid on X date? And what if we don't get paid on this other date?"
The two biggest benefits of Float, according to Mark, are its clarity and the fact that it enables him to view cash flow on a transaction level.
'P&L and balance sheets don't show you individual transactions, so you don't have the detail or the flexibility,' he explains.
'By contrast, Float provides a cashflow forecast based on transactional data together with placeholders for the transactions you haven't raised yet. Aside from being far clearer than "indirect" cash flows from three-way forecasts, you can adjust dates on individual transactions and within projects.'
Even better, the data is pulled automatically from the client's book-keeping software, which means there's no need to manage formulae or move data around.
"Float has made me far more effective at my job… and allows me to help more clients."
Using Float, says Mark, has benefitted him in two key ways:
Instead of spending days trying to work out what data is missing, then figuring out where to find it, pulling it together, cleaning it up, and moving it around on a spreadsheet, Mark can get to the point with a few clicks.
'I have fewer awkward calls with clients who are getting impatient because I can't seem to be able to give them a straight answer,' Mark says. 'I've got the data at my fingertips, so I know what's what within half an hour or less.'
But this newfound efficiency has also been a boon for business.
'I'd have consultations with clients where it would be obvious that hiring me wouldn't make financial sense for them,' he says, 'because they'd essentially be paying me a lot of money to make spreadsheets.
'With Float, what was previously a six-month to one-year timeframe, with most of that spent doing prep work, is now a three-month timeframe. I'll spend maybe a day putting the system together and then I can roll up my sleeves and get on with the real work.'
Float's ease of setup and intuitive interface also mean that, once Mark's work is done, his clients can continue from where he left off. 'Excel is powerful, but fiddly and has its limitations,' Mark says. 'With Float, clients have a tool they can understand and update themselves.'
'Many tools can do cash flow forecasting,' Mark concludes, 'but Float provides something extra.
"I can support my thinking with daily, weekly, and monthly cash flow reports which non-technical clients can understand. And I can produce them efficiently and they remain live. You simply couldn't achieve this on Excel."
