What are Outsourced Controller and CFO Services?
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Byron: Welcome to The PKF Texas Entrepreneur’s Playbook. My name is Byron Hebert. I'm the Chief Growth Officer here at PKF Texas, and today I want to introduce you to two of the faces of PKF Texas, Matt Goldston and Sam Razmandi.
We're going to talk to you today about one of the services PKF offers: our Outsourced Controller and CFO Program in the Entrepreneurial Advisory Service Department. Both these guys are experts in this area, and so I'm really excited to introduce them to you. Let's start with Matt.
Matt, why would a company outsource their controller or CFO function?
Matt: Traditionally clients find themselves in transition, either transition based on a CFO leaving and having an immediate need, or having some longer-term views and needing to access capital or debt or focus forward on the accounting function.
Byron: So, have you ever stepped into a project like that in an interim basis, and then have the company keep you on because they like the service you're offering and kind of like that option?
Matt: Absolutely. And in every instance, that's been the case.
Byron: Is that right? What is a fractional CFO?
Matt: It's a consultant that engages with a business on a part-time or full-time basis, but it's in a fractional role, meaning that they are not traditionally onsite full-time.
Byron: Okay, so you may be out there two days a week, three days a week, three days a month, whatever they need. It is very flexible it sounds like.
Matt: Absolutely, some engagements are sunup to sundown, as long as is needed.
Byron: Good, great. So, Sam, tell us, what sets PKF Texas apart from this while offering this service?
Sam: Well, Byron, I would have to say our client service and our experience. Here at PKF, as you know, our department is 12, 13 people now and growing, and we have a full dedicated team here at PKF. We do not borrow from the tax and audit department during busy season, we don't go hire contractors when we win a project. We have full-time employees that do this on a day-in and day-out basis. We take client service very seriously. We're not going to email a generic email box, and whoever is available picks it up. You have a point of contact that grows with you and really learns your business.
Byron: Does consulting ever come into this or is it all numbers and doing the financial statements?
Sam: No, absolutely. I think as we grow, consulting becomes the main part of this. We like to think of the accounting assistants and controller service as intro points, but if we do our job well, we really do mainstream that and we really train the internal staff to work well with internal staff. But we really tailor our services to meet the client needs and the clients’ culture. We like to see ourselves part of the team, but more importantly, we like the client to see us as part of their team. So, if that means a client has a culture that is on sites, maybe a construction or manufacturing plant, something like that, we will be on site. We will do our best, that's how the engagements go.
The client is maybe a sales-oriented industry where they are always hitting and running; we go where the client goes or we can do the work remotely. But the face-to-face interaction is very important. So, whether we do this remotely or onsite, we always make sure that we have good face-to-face interaction, whether it's lunches, meeting someone out, and we really make sure clients understand what we're doing, understand the financial statements, and that we are available for questions. And that's what usually leads from just the generic Controller Services or CFO services, or changes from a Controller Service to consulting or CFO service would be a better way to put it.
Byron: Do you find that the owners like having you there to talk to, and if so, why not talk to someone else in the business?
Sam: Oh, absolutely. I always joke around that we start out as accountants and as that stuff gets cleaned up and mainstreamed—we're not there to do any work that doesn't bring value to our clients. And our goal is to always, you know, automate and get the accounting going as smoothly as possible. And clients like, well, you know, once you do that, won't you not have a job anymore? Like, if that's the case, we're okay with that. But we know if we do a good job, and we bring value, you're going to want us around for the next project, or like you said, the client will just start calling us weekly.
I mean, we have clients we see weekly,
“Hey Sam, can you come on site? We’re talking about if you want to buy a piece of equipment, can we run some numbers here.”
“Sam, we're looking at a new transaction. Can you tell us what that looks like? Can you come look at these numbers with us?”
I mean, we meet with sales guys, talking about sales process and pipelines, things like that. So, our services do really expand as we get to know the company, as the business owners and key people get to know us.
Byron: So, you don't just stick with the accounting team; you're dealing with operations, sales—you truly become part of the team?
Sam: Absolutely. That's what we strive for; we don't push for it. I think it's very important that it happens naturally, just because it takes a while to get to that point. We can't go into a client, and right after the first month be able to do all that. We'll never know the business as well as someone who started it and has been doing it for 25 years, but as we grow, I think we start being able to bring value into that and clients appreciate that, and notice that, and start asking us to do those type of things.
Byron: Matt, tell us what size company benefits from this type of service, and maybe, what industries have you worked in?
Matt: Sure. Yeah, I would say that it's middle market oriented. We can definitely do smaller business. We can also do some upper middle market, but revenue range from 10 million to a billion dollars. It's a wide swath of client opportunities. And we're really industry agnostic. We see a lot of industrials here, a lot of construction, but still in logistics and handling professional service providers. We see it all.
Byron: Manufacturing, distribution, construction, large professional service firms, kind of all in the middle market area?
Sam: Tends to be whenever more complex industry, the more they would need us, because that's where accounting becomes more important, and numbers become more timely. And we're able to provide not only our skill set, but also capacity in some circumstances as well.
Byron: So, let me ask both of you: how long do these engagements typically last? Would you say you get started on the project—maybe it's project based, maybe it's a long-term—but tell me what's been your experience?
Matt: As I mentioned earlier, I don't know, I haven't had one end yet. As we engage and as we work with a client, we really gain trust in our approach, and engaging with the client is to meet their needs, but also look for value acceleration and help them grow their business, help them become strategic in mindset and then accomplish their goals, both short-term and long-term. And once you establish that type of relationship, it's a committed and involved process. Once you have that trust relationship, you can work for a long time together to achieve those objectives.
Sam: Absolutely, I agree with Matt. We have a lot of instances where maybe a project starts with a certain scope, but as that scope ends and were able to show value, the client always wants to keep us around. And not only that, not just to keep us around just to say hello, but they also want to start looking at other things.
“Hey, can you guys look at my web process? Maybe my inventory process?”
“Hey, we're doing a system transition, can you help us analyze a new system for us, new accounting software and help us implement it?”
So, things like that. So, even maybe the scope ends, and they don't need us for something immediately, but a month down the road, two months down the road, they come back. As you build relationships and as people in the business get to know us—controllers, CFOs, business owners, sales guys—I have people that reach out to me directly wanting help with this and help with that. And that's how I know we’ve done a good job—when those opportunities keep coming around.
Matt: Even partnering with private equity and partnering with family offices and those type of multi-generational entities, we can layer in well with either one of those types.
Byron: Have you ever been called into restructuring an accounting Department?
Sam: Absolutely. I sit on the board of Turner Management Association, as you know. Those are engagements we get involved in. Those can be bigger projects and sometimes are liquidations, and sometimes it is just revamping an accounting department, whether the CFO is retiring, or their needs are changing, or private equity group isn't happy with the performance and the management committee. And as these companies grow, needs change. So that is, I would say, I feel like between Matt and I, we at least have our foot in one or two of those projects at all times. Restructuring different degrees, maybe some are just looking to revamp the accounting department, maybe at some are looking to revamp the entire financial team, but absolutely.
Byron: Matt, Sam, thank you so much for joining us today and for your insight into this. I really appreciate it. For more about this topic, please visit www.PKFTexas.com/OutsourcedCFO. This has been another thought leadership program brought to you by PKF Texas – The Entrepreneur’s Playbook. Please tune in next week for another PKF Texas Entrepreneur’s Playbook story.