The Pitfalls of Hiring One Person to do Three Finance Jobs

Speaker A: So this one's a little different. Today I'm trying something new, bringing a, uh, dynamic duo onto the podcast. Michael Spiro and Tim Johnson co founded Accelera, a pioneering group of CFOs that offers a comprehensive suite of financial services, uh, but really emphasizing the critical role of the fractional CFO in driving the business growth and financial excellence. Michael brings over two decades of finance experience across the various industries and countries. His vision is to empower SMEs and small business owners by managing their finance functions and providing insightful yet actionable information. Tim is a qualified banker, has a rich entrepreneurial journey including founding businesses and uh, call centers in the Caribbean. Their combined experience leads to the creation of an innovative business model that integrates strategic financial planning with cutting edge technology. So in our conversation we'll explore the importance of assembling a full spectrum finance team and the dynamics of client relationships and internal team collaboration. We'll also dig into the four pillars of financial success that accelerator champions and hopefully gain some insights into the evolving landscape of fractional rules in finance. So I hope you find their journey inspiring, as I did, uh, as usual, links in the show notes. Enjoy. Welcome to the new F Word podcast where we cut the fluff on business finances and lift the lid on the new F Word, the fractional finance revolution. It's a game m changer for small businesses. Colin, I'm your host, Colin Hewitt, co founder of Float Cash Flow Management for Xero and QuickBooks. We believe that really understanding your business finances makes all the difference in the world and having a strategic partner like a fractional CFO is the key to unlocking that. So join us as we dive into personal stories and actionable insights from forward thinking finance leaders and seasoned entrepreneurs to discover why fractional finance leaders have become an irreplaceable part of small business leadership. Really good to have Michael, um, and Tim on the podcast today. Guys, why don't you introduce uh, yourselves. It's uh, it's an interesting one today doing two people together, two co founders. So really love to hear a bit about your story. And Michael, uh, do you want to jump in first?

Speaker B: Yeah, no, absolutely. So, um, well let's go back to the beginning. So Tim and I met when Tim actually recruited me onto his team, um, how many? Five, five, five, six years ago. Um, and um, very quickly into that tenure, I realized that I couldn't work with Tim anymore, uh, as a manager. So um, I changed the role I had and became a colleague of Tim. So looking after, uh, doing the same role as Tim essentially, um, just because I saw the lifestyle that Tim had and I thought, oh, I want to have a bit of that. To be able to work and have five kids at the same time must be uh, pretty good going. So that's how we met. Uh, we worked together in operational finance space. We ended up running the whole of London for the firm we used to work for, um, looking after 50, 60 clients. 50, uh, 60 team members, billing about two and a half million per annum, uh, over that period. So it was good, it was good fun. It changed what I was doing before and it gave me a real insight into how things work. So I come from an accounting background, so I think I'm going off on a tangent. But um, yeah, so working with Tim, discovered the operational finance space was there for about two and a half years. We worked really well together. But one of the things that really bugged us was seeing fractional CFOs kind of operating across the whole finance function, which never really delivered value for money for clients. So I think that was an issue that we spotted. And because we didn't operate in that market, we felt that for clients and for businesses that are really looking to grow, having a whole spectrum of finance professionals within the same company definitely makes a big difference for them. Because we believe that every company needs a cfo, but you don't need that CFO to be working within that organization doing your bookkeeping, doing your payroll, doing your VAT returns, even putting together things like management accounts and cash flow forecasts. We believe that a CFO should be directly involved in the strategy of a business and helping that business grow. And that delivers a lot better value for money for the clients. Because CFO fractional CFOs are relatively expensive, they're absolutely brilliant at what they do. But I think we have different people, financial controllers and senior bookkeepers that are more suited to doing the day to day stuff, the operational stuff and making sure that that kind of aligns. Because without that real information being drawn out from the business, the decisions a CFO makes are uh, uh, very hard to, you know, to make the best decisions.

Speaker A: Tim, do you want to jump in? What's it, what was it from, like from your side?

Speaker C: So I won't go over many of the things that Michael's just said, but I've done all sorts prior to getting into the finance space from um, growing and running businesses, consulting, um, right across to fitting glasses on people and, and selling, selling opticians to fit glasses. Um, so all sorts over the years been in the finance Space for the last ten years. Um, as Michael said, I was one of the early ones into that business, growing the London team. My dobby moment, um, to leave that business was when I sold my garden last year, which meant that I'd could uh, clear all my financial commitments. I had a build of my own to sort out and decided to join it with Michael. And we wanted to um, as Michael said, offer a full stack of everything from data entry up to strategy and fundraising so that we could offer some. We could rather than sell what was the one thing on our shelf. We had all the options that a business would need to grow their business.

Speaker A: And how do you guys split the, is it, you know, is somebody the CEO, somebody the cfo? How do you tend to split the roles and responsibilities?

Speaker C: Michael tends to do most of the work, I tend to do most of the drinking. So I'm great at coffee and less great at beer and wine. But that's how it tends to split. Michael's an accountant, I just look like one. So between us we cover most of the bases.

Speaker B: I think that's it. And I think having a co founder makes uh, it a lot easier. You've got someone to bounce things off, you've got someone to discuss strategy with, marketing, all that kind of stuff. So it definitely helps. And I think we, we, we're both pretty good at doing most things so we both pitch in where, where needed. But um, as Tim was saying, he's uh, he's got five old older kids whereas I've got ah, a nine year old who I look after by myself. So uh, Tim does all the evening networking, allows me to pick up my son from school and kind of do all the stuff ferrying him around so that it works, it works really well in, in, in that regard. And yeah, we're, we're, I think we're pretty similar. But bring. Tim's got a lot more experience of the business world.

Speaker A: So it, I mean sounds, sounds like pretty uh, good. You've got a pretty good deal, Tim. Um, but um, I'd love to hear uh, so it sounds like you're bringing. The concept is bringing the full finance function which is obviously great because everybody knows in CFO world you don't want to be paying your CFO to be doing bookkeeping or menial tasks, even sort of, even basic reporting that somebody, a financial operations person could do. So that makes so much sense to me, um, that you're really using the CFO to bring the strategy side of things at the highest level. Um, but what, what Else, how else do you communicate to a business when they're thinking, you know, do we just want to do, want to work with you? Are you more expensive than a traditional fractional CFO would be? How do you pitch it when you're out there speaking to businesses?

Speaker C: So, first of all, it's about understanding what the business needs and understanding the business and how the current finance supports that business or doesn't in most cases, because by the time they're talking to us, there's usually something that's an issue in the business that they recognise and need sorting. So it's getting, um, under the skin of it and coming up with a solution. I'm open minded as to how that solution will look because I've got most of the tools to help. So that's really understand what they need explaining to them. One of the challenges for the finance world is that most, uh, people understand or misunderstand a finance director. Lots of them misunderstand the bookkeeper. They don't understand many businesses. The financial controller in the middle, the person who can run a finance team and can prepare management accounts, prepare the forecasts. So most businesses think that either that bookkeeper can do everything and then wonder why they're not getting the management reports that they needed as they've grown, or they think that, uh, the finance director can do everything and then wonder why it's costing so much money. So actually, if you get the right people doing the right jobs, you're actually really helping, helping them. So it's understanding that, setting out that, uh, that pyramid so that they can, uh, kind of get the best bang for their buck.

Speaker A: And are you guys both, are you still working with clients? Are you more now working on the business rather than, than client facing?

Speaker B: Well, we're both working on the business rather than client facing, but I think one of the benefits of our experience in our network is we're, uh, we're able to connect businesses with other businesses or other individuals as and when they need. So that's something that we do. So we still like to be very involved with the clients, to be able to be that trusted confidant and help them with other things within their business that they may not be getting from, from the team. So the team can really focus on, on delivering the strategy and the operational excellence makes sense.

Speaker A: Um, and, you know, in terms of, what's. How many people are you, are you employing right now? What stage is the business at and where do you see it going ultimately? Do you, are you happy with the sizes? It's Going to stay or is there big, you know, growth plans?

Speaker C: So all of our people work, work fractionally. Uh, one of the things that we do different to some of the organizations is that we allow people to keep their own clients and to carry on building their own clients. It's important to us that we're entirely flexible. So sometimes that means that the person we want hasn't got the time availability. But from our team perspective at least, we're just an extra resource for them to draw on if they need either clients or our, uh, network or other people in the team. So we've got a team of 22, 24. If the two that I spoke with this morning, CFOs come on board. So we've got something, uh, for most

Speaker B: businesses, it's also a bit different for the CFOs as well. So being out there alone and working fractionally can be quite lonely because you don't have a team to rely on. You don't have other people you can call upon when you need that. So it's almost like a community that we're building as well. And to be honest, with a lot of the CFOs that I've spoken to, a lot of them love, um, the idea of just staying within that strategic space. They don't want to go back and do all the things they did maybe 20, 25 years ago, the bookkeeping, the kind of data entry, the producing the management accounts. They're very happy sticking in that strategic space. And I think that's what, what appeals to, to, to Most of the CFOs that come on board of us is the fact that we can offer, offer them that. And yeah, uh, it definitely builds that team environment and that camaraderie within as well.

Speaker A: You talked about, uh, four pillars. You know, when you're taking, when you're talking to a business, you talk about taking them through, you know, four pillars of success. That looks like a really great model. What would you want to give us the kind of headlines of that?

Speaker B: Yeah, absolutely. So I guess that's kind of, that almost fits into the different roles that we have within our team. So the first pillar is, is, is the strategy. And that's where the CFO comes on board. And that's looking at expanding, that's looking at raising funds with, uh, equity or debt and kind of getting to the crux of what they want to do with, with their business and understanding that, because I think it's, it, it's a minefield and you can look at various different things and you get pushed down one route or another route and you think that oh my, we need to raise and we need to do this. But having that strategic voice there kind of helps and enables people to really understand what they're trying to do and what they need to do to get to there. The other part of that is the operational stuff and that's where our financial controllers and management accountants come in. And that's very much looking at the data within the business and getting that data to a point where it can be understood and used by a cfo. So that's the management accounting, the cash flow, making sure that all the processes and procedures are in place to make sure that they're protected and ah, also

Speaker C: the technology because there's a lot of apps out there and there's a lot of talk about AI and businesses want to embrace uh, as much as they can of the tech. So definitely there's a lot of work going on around bringing the processes and the systems, supporting those processes up to date. And so that's why another advantage to a team approach is because you've got different people with different expertise and experiences who you can draw on within the team.

Speaker B: That's definitely part of the operational side of things. So the financial controllers and management accountants and then there's the day to day stuff and that's kind of the bookkeeping, the role, uh, raising invoices at Credit Control, making sure you're getting paid on time, making sure you're paying your suppliers as, as late as possible to kind of manage that cash flow. Because that's the, the lifeblood of any business that's growing is, is their cash flow and being able to manage that. So that's kind of the three pillars that we do. And then the fourth pillar is very much around the compliance and that's using our network of um, accountants that do the year end stuff. Because that's not something that we want to get involved in, that's something that we manage for the clients. So we'll deal with the accountants so they don't have to, whether that's you know, your end of year corporation tax, even your self assessment, whether it's R and D tax credits or anything like that, that's the relationships we manage. And we've got a network of, of accountants who, who we work with, different accountants, different kind of specialities that we help our uh, clients, um, to tick off that compliance piece as well. So if they, if they don't want to, they don't have to speak to, to their accountants. They can Just leave it to us and our, and our teams to be able to manage all those relationships.

Speaker A: Makes sense. Um, and, and let's talk about technology. Obviously that's where, you know, in a world where things are changing fast, like the likes of, you know, cloud accounting makes everything, you know, what you do a lot easier to kind of bring that and hand over. What other tools are you using? Uh, is there anything that you're excited about or is helping that, that you didn't anticipate?

Speaker C: Well, we're spending a fair amount of time because people are asking us and the banks are asking us to talk about AI and how that's being used in finance. And I don't think it is particularly yet. Uh, stuff is being badged as AI because potentially it'll make it sound more sexy, uh, more current. But it's not really, it's not really using AI, but that's the way uh, I think it will go. There will definitely be particularly around the analysis of data within businesses. I think that will become important. But from every aspect of the process, um, of getting, um, invoices out, getting supplier invoices in, getting that into the system, put in the right place so that then the reporting can give you the information for you to make decisions. All of that has become much more automated over the last, um, certainly five years. And cloud accounting has definitely been an improvement in that. I mean, I said a couple years ago, and I'm definitely not somebody to be listened to typically because I didn't think that switch cards would ever work 30 years ago, who doesn't want to use a check. So definitely not to be listened to. But, um, in terms of the bookkeeping, I think that over the next few years. Now a couple years ago I said five years, so that leaves me about three years left, much of a bookkeeping role will disappear because technology will be able to import stuff in, place it in the right place consistently. Well, so some businesses, that's already happened by the way, but there's some businesses where it's not so easy to capture the data to raise an invoice to do that. But E commerce businesses for instance, lots of that has already happened. But yeah, across the whole process to getting information out, using it and analyzing it, to fundraising, all of those things, um, there's much more technology there, but staying abreast of whatever, you know, even within a very narrow field for one person to do that, they can spend all their time on it. So that's why it's not really feasible. You need to have a team of different people with different experiences who can input as to why this particular app is going to be better than this one for that need. And this is why?

Speaker A: Yeah, yeah, absolutely. And um, Michael, you talk about uh, on the website you talk about day to day financial excellence, those different areas that you're trying to support. What, what does that, what does that look like? Um, I'm fascinated to know what does that mean exactly? Day to day financial excellence.

Speaker B: So I think that's very much about looking at the business and looking at it with fresh eyes and kind of looking at the processes they've got in place and making sure that those processes are optimized m for what they're doing. So one of the things that we pride ourselves on is that we're systems agnostic so we don't go in and say right, you need to use this, you need to be on Xero, you need to be on QuickBooks. We look at what's best for the business, look at what they're doing already and just optimize it. So it's about making tweaks using the experience of uh, our, of our team, um, providing them with templates and kind of that support so they can go in and do the best job possible in the quickest time possible as well.

Speaker A: Are there many businesses that are not using QuickBooks or Xero that you're supporting? Like do you see many that are using. Looking at NetSuite or uh, clients IQ or iplicit, you know, do you see the market kind of playing out at the moment? Is Xero good enough for most businesses or do you have to have you had to move people over?

Speaker C: It's usually size and complexity so definitely. And um, Xero has been growing and um, developing itself because definitely when it came in it was very small startups and growing, growing businesses. It's developed its own capabilities over the last five years to kind of be probably reach a headroom of 10 million as a typical business. Where it might start creeping obviously depends on how much analysis, where the sales are going and how many product lines you've got, how many divisions you've got, what currency uh, is being used. But yeah, no it's absolutely developed in terms of yes, netsuite is a player. Sage is still there construction, particularly accountants like Sage, um, or lots of accountants like Sage, the older ones, um, because um, it's an accountant system. But there has to be an adaptation because entrepreneurs typically like the visibility and flexibility of Xero. QuickBooks is definitely in there as well.

Speaker A: Yeah, I'd say yeah, it's a fascinating space and with the advent of companies like Translucent, I don't know if you've come across that like multi entity company reporting solutions, uh, like Mayday is another one. Uh, they do these kind of multi entity uh, do they allow people to um, run on smaller um, platforms like zero, um then maybe giving them more time before they have to make the jump to something much more expensive and larger.

Speaker C: And I think that the, I think that the, the integration obviously the ERP systems for bigger businesses I think will start to come down for smaller businesses because I think my experience of unless businesses are really growing quickly, the traditional KPIs and the management pack will quickly get boring. Whereas if you can integrate your CRM M systems, your payroll systems, your pointless EPOs, your point of sale systems across into it, suddenly you can get information much more quickly and uh, it can be properly used for decision making.

Speaker A: You talked about that sort of 10 million mark I get, I think that's really interesting because that's also a figure that we've heard that companies start to think about bringing in a full time cfo. Do you find that people typically had a stage where they decide I'm bringing somebody in or it's time for us or the board have asked us to bring in somebody full time and we're going to bring this whole finance function in house. Is that something you see?

Speaker C: Well I definitely think that we get outgrown at some point. It would be kind of arrogant to suggest that a business will always need us because at ah, some point they just need more hours than we're the best way to pay. Having said that traditionally people have always looked up um, their FTEs in, in digit, in digits of 1. I need to go from 0 to 1, I need to go from 1 to 2. Whereas actually we found for instance on some of the um, work that we've done on a project basis going to 1.2, going to 1.4 is a better solution even as they grow. So you know M, we've got plenty of clients at 40, 50 million where they've still use us, uh, still need some fractional support guys just to close

Speaker A: off I think um, how do you like as things are changing so fast, how do you continue to educate yourself and stay up to date with everything that's going on? Is it, do you know, do you go to events or uh, are you reading blogs or is there, is it coming through your own network? You know what, what's the strategy for keeping Accelera on the cutting edge?

Speaker B: I think it's all of that. I think it's, it's going to the events, going and understanding what's going on within the market, being educated by our own, by our own CFOs. We're bringing in people, um, all the time, different experiences. And I think that kind of getting people together and discussing things, um, be that with, with our teams or with our partners, it's always that kind of continual learning. And I think that's the thing about the industry. I think maybe for what, 20, 30, 40 years, the accounting industry didn't really change and now you're seeing this kind of real ramping up of change and there's things that are happening all the time with AI, with the learning, with everything that's involved in that. So it's really interesting times. But yeah, I think from our perspective, just being out there, keeping our ear to the ground, doing our research, um, and making sure that we can keep abreast of everything is vitally important for us as we continue to grow.

Speaker A: And final question, if you were speaking to somebody who was considering moving from a full time CFO role into a fractional role, what would be your top couple of pieces of advice for them? Um, you can both go on that one.

Speaker B: So I would say, ah, for a fractional cfo, for a CFO wanting to become fractional, I think it's imperative to be working with the right clients to make sure that that client has the right mindset and has a growth mindset and is looking to grow. Because if they're very closed off and they want to do things the way they've always done things, then it's very hard to make an impact as a fractional CFO within that. So that's kind of tip number one. Tip number two would probably be make sure the team that you're working with is really good. Make sure the information you're getting is a high level, um, because it's very hard to make the strategic decisions and make the right strategic decisions if the data you're getting, if the kind of, what you're working with isn't brilliant. So I'd say that I think if

Speaker C: you're going to make the leap as a CFO or anybody into a portfolio career, you've got to understand that it may take time. So if you need to pay your mortgage or you need to pay your school fees or whatever that is draining on you and you need to be working to do that, you've got to have enough, um, either savings or an ability to survive, uh, without necessarily Being full up because building a portfolio career can take time. It's like buses. Two guys I spoke to this morning, I don't know, I know something, we've got an opportunity for both of them, but I don't know for sure that that's coming in. But equally tomorrow I'll get a call from somebody and, you know, something completely new will come up. So, so. But you've just got to have the kind of financial resilience before you take it on. You've also got to realize that it's a different type of role. You're not in there every day. You've got some different challenges and some different skills to learn. You're only in, by definition, part time. So that means you might only be there. You're not there 80% of the time. So how are you going to stay relevant and understand what's going on?

Speaker A: Well, look, guys, it's really exciting to hear what you're building. Really wish you all the best with Accelera. We'll put some links in the show, notes as to where people can find you and if CFOs are looking, um, or businesses are wanting to get in touch, they can do so that way. So, yeah, we will watch the journey. And thanks so much for coming on the podcast. Thanks for tuning in to another episode of the new F Word. I hope you enjoyed it. Remember, expert financial advice shouldn't be limited to those with just big budgets. You can access the same level of advice for a fraction of the costs thanks to this fractional revolution. I believe that every growing business needs to know how much a game changer this can be. So if you love the episode, please consider subscribing to the show. It'll help us keep doing what we're passionate about. And feel free to share this episode with others who might find it useful. Finally, we'd love to hear your thoughts. Feel free to connect with us on LinkedIn. See you in the next one.