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[Podcast] Outsourced CFO / Fractional CFO Best Practices with Roger Spain at Warren Averett

Topic: Podcast

In this episode of the AI in Accounting podcast, you will meet Roger Spain, the Principal of the Consulting Division at Warren Averett, based in Birmingham, Alabama. Warren Averett serves clients in the public, private, nonprofit, and government sectors, assisting them with everything from audit compliance and tax planning to technology consulting and HR solutions.
Roger gives some great advice about picking a niche and focusing on the industries to which you can provide the most value:

[Podcast] Outsourced CFO / Fractional CFO Best Practices with Roger Spain at Warren Averett

“To best serve clients and add the most value … it is difficult to try to be all things to all people in all industries. … We want to be sure … that we’re adding the most value, and … it’s tougher to do that as a generalist across industries. … Every company’s evolving constantly or dying constantly, and so our evolution right now … is focused on … ‘Who do we need to serve in order to make sure that we’re providing the most value?’”

In addition to the importance of focusing on carving a niche for your practice, Roger stresses the importance of envisioning where your practice is headed in the future to start building out your team now:

“We seek to make sure that we focus on those areas where we can immediately provide the most value, and, at the same time, want to be forward-looking to make sure that we’re also focusing on building out the team [that is] consistent with where we want to be, not just where we are.”

Finally, Roger shares his thoughts on the future of outsourced, cloud-based accounting:

“When I introduce this concept [of AI in accounting] to clients, who have a large number of recurring transactions, the idea of not having Janice or Jim sit at a desk and … go through some manual process of paying invoices and recording them; the idea that a computer could just do that by feeding it through a scanner is foreign to them. … But I think that … we’re going to see in the coming two years that this becomes a much more regularly adopted approach to accounting processes in small, privately-held companies.”

Listen to the episode in full to learn more about the importance of:

  • Conducting needs assessments with your clients to determine their shortfalls and strengths,
  • Scoping out your client engagements properly to better serve them,
  • Not trying to be everything to everyone in every industry but instead specializing in one area of expertise where you can provide the most value, and
  • Being future-minded and focusing on building out the team that is consistent with where you want your practice to go in the long-term.
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All this and more is discussed in detail in this episode of the AI in Accounting podcast. To learn more about Roger Spain and contact him with any questions about client accounting services, you can check out his LinkedIn profile and visit his Warren Averett bio page directly.

 

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A lightly-edited transcript follows below:

Roger Spain:

We have found that those conversations and determining the needs and shortfalls and strengths of companies are really requisite in order to properly scope and serve a client's needs.

Speaker 2:

Welcome to the AI in Accounting podcast, which helps accounting, bookkeeping, and finance professionals prepare for the future of outsourced accounting, and accounting technology. Plus, you'll learn how to use artificial intelligence (AI), automation, and machine learning to scale your accounting practice. Now, here's your host, Joshua Feinberg of Vic.ai.

Joshua Feinberg:

Hi, it's Joshua Feinberg from the AI in Accounting podcast, and I'm being joined today by a very special guest. I have with me today Roger Spain, who is the Principal of the Consulting Division at Warren Averett in Birmingham, Alabama. Roger, thanks so much for joining me today.

Roger Spain:

Joshua, thanks for having me. I'm looking forward to it.

Journey to Outsourced Accounting

Joshua Feinberg:

Likewise. The first place I usually like to start with these interviews is to get a feel for how you got into public accounting. Was it something that you always dreamed of as a child? Was it something that happened in high school or college? How did you work your way to the position where you are today, heading up a consulting practice in a major accounting firm?

Roger Spain:

So, the very short version of it is that I am the son and younger brother of two engineers and was always interested in that sort of course of study and went to Auburn University to pursue that and figured out in my freshman year that it was not as much fun at the collegiate level as I thought it was going to be from coming out of high school and because of the fact that I was still fairly analytical and numbers-oriented wound up moving into accounting and from there went straight into public accounting and have worked now in public accounting my entire career—except for a three-year period where I worked as a commercial banker—and without boring any listeners, or you, my experience in public accounting has been quite varied over the years, and then because of my work as a commercial banker, as well, I joined Warren Averett to try to head up and help develop an outsourced CFO service offering. So, that's the short version of how I've come to be sitting on this podcast with you.

Joshua Feinberg:

That's been an interesting pattern I've observed over the last couple of months, as well. We're talking with a number of leaders, like yourself, starting out in public accounting, going into private industry. Some people stay in private industry longer, and then come back into public accounting and really make them super well prepared to have the versatility, and the depth of career experience to be able to be super helpful for small-and-medium-sized businesses.

Roger Spain:

Yeah, and I was excited to get out of the fee-for-service field for a little while just because everyone jokes—but only half-joking; we're half-serious, as well—about the drudgery of keeping up with time, and six-or-10-minute increments. So, doing something else for a short period was very fun and exciting in many areas. But then when circumstances caused me to move and look to do something different, I found that, well, going back into public accounting in this role, as an outsourced CFO service provider, had great appeal, as well.

Advice for Outsourced Accounting Practices

Joshua Feinberg:

Excellent. So, the first big topic I wanted to talk with you today is what advice would you give to someone that is just starting an outsourced CFO practice? Maybe it's somebody you went to school with; maybe it's a friend or family member; maybe it's someone you meet at a conference, or in the context we're at right now, maybe it's a virtual coffee. Roger, by all means, it seems like you built a really successful outsourced CFO practice. What should someone be thinking about in the first couple of years to be able to have success in that space?

Roger Spain:

Yeah. One thing we have found is that the needs of every client are quite different. I refer to it as the accounting work that is done within a company being along a “spectrum”, from the most basic being the clerical level type of work that has to be done, up to the most sophisticated, which is strategic and analytical work that is reserved for CFOs, and CEOs, and advising CEOs, and that level of work, and clients have needs all along that continuum, all along that spectrum of accounting functionality within a company, and we have found that it's important to meet clients where they are along that accounting spectrum or continuum so that wherever they have a void, we need to be prepared to step in and fill that and pick up or leave off wherever their situation dictates.

Joshua Feinberg:

So, a lot of it is understanding, having a really deep, exploratory conversation to know where they are, their level of self-awareness, where they think they need to be, and then figuring out how you can customize your offering around that?

Roger Spain:

Joshua, that's exactly right. In fact, to this point, we have not yet required that new clients go through a “needs assessment” sort of engagement at the outset of our relationship with them, but we're coming ever closer to making that a requirement of relationships that we enter with clients—or even potential clients—because we found that those conversations and determining the needs and shortfalls and strengths of companies are really requisite in order to properly scope and serve a client's needs.

Joshua Feinberg:

So, then when you come across a company that has a very cookie-cutter, “Pick Option, A, B or C” for outsourced accounting, that's probably not the fit for the kind of companies you want to be working with, then, right?

Roger Spain:

Yeah. We have found that's really not where we want to concentrate our efforts. Unfortunately, it would be great if that were the case. If we were making widgets—gosh, that would be great, but unfortunately, that's not the case.

Joshua Feinberg:

I think what I see a lot of outsourced CFO kind of practice leaders figuring out is where they can add the most value: the size of the company where they can add the most value, the industries where they can add the most value. In the times that we're in right now, finding a lot more companies are more open to working with firms that may be outside of the region, whereas in the past, where face-time was more critical, probably concentrated a little more on that, but, like, if you think about a technology company that would always have a product manager, public accounting firms that have these CAS practices, the outsourced CFO practices need to be thinking a lot about who their target audience is, where they do best, what the product and services mix looks like. Are those things you think a lot about?

Roger Spain:

Joshua, very much so. In fact, I would say—and I think this is going to be a comment and response that is probably near and dear to your heart, given what you and your group do—we are finding that yes, in order to best serve clients and add the most value, that it is difficult to try to be all things to all people in all industries, and that's something, quite frankly, we are struggling with, and where to focus as we move forward because we want to be sure, as you mentioned, that we're adding the most value, and, in order to do that, it's tougher to do that as a generalist across industries and across sizes of companies. So, we are in the process. Every company's evolving constantly or dying constantly, and so our evolution right now, a piece of that is focused on just, “Who do we need to serve in order to make sure that we're providing the most value?”

Joshua Feinberg:

Does that also drive what you look to do with the recruiting? Or is it just looking around and seeing among your team members, like, "Oh, that's really interesting: three of us have banking experience; two people worked in manufacturing; four people worked in biotech,” or something like that? Are you looking for those commonalities? Or is it more that you're thinking about your go-to-market model, and then staffing based on the focuses that you want to have in your practice?

Roger Spain:

It's more the latter, and the way you described it. I would say, as we look at where we are today, and the companies we serve, and these industries we serve, along with the expertise we have in our existing staff base, we seek to make sure that we focus on those areas where we can immediately provide the most value, and, at the same time, want to be forward-looking to make sure that we're also focusing on building out the team, as you say. As we look at hiring alternatives for the future, we want to be sure we're building out the team consistent with where we want to be, not just where we are. So, it's both.

Getting Your Outsourced Accounting Practice Back on Track

Joshua Feinberg:

That makes a ton of sense. So, now, think about someone who has had a outsourced CFO practice, or CAS practice, and maybe they're five or 10 years into this. This year has been extraordinarily challenging for many, and this particular person may be feeling a sense of burnout or frustration, and they're trying to figure out what they need to do to reset and get back on track. What advice would you give to a colleague who's in that situation?

Roger Spain:

Yeah. To some degree, we're all in that situation. It's just whether it's more at the individual level, perhaps, and the need for this resetting feels more acute to an individual because their circumstances are more acute, or if it's just a firm like ours, that is seeking to figure out what everything might look like on the other side of this whole pandemic. So, if I were wise, I would give you some great and sage advice, but I don't think I have the wisdom for that. I can tell you our outlook on it is to do the best we can today and just be sure that we're poised to meet with people when that's appropriate again in a more personal fashion, and we're trying to make sure—in tennis terms—maybe that we “hold serve” right now and try to be more aggressive, perhaps, as we come out of this. I hope that's the right strategy, but that's a bit of how we view it.

Joshua Feinberg:

Yeah, and then when you mentioned tennis, and I think of sports, missing all of that, all the matches, and all the games that we're going to have to catch up for in coming years, and it’s amazing.

Roger Spain:

Joshua, maybe that's a great analogy. Maybe I accidentally used a great analogy. Hope that's the case that yeah, we'll all be making up for some lost volume.

Joshua Feinberg:

It was interesting to watch the playoffs, and the World Series this year, and eventually, they had live fans in small numbers for the World Series, but it was sad through most of the season to watch cardboard cutouts in the stands.

Roger Spain:

Right.

Joshua Feinberg:

That's not sustainable. They have enormous payrolls to be able to contend with, but yeah, it's good.

Roger Spain:

Yeah, yeah, you talk about it. I'm just looking for the other side of this whole thing. It's got to be live entertainment, whether it's sports, or music, or whatever the live entertainment is. Theater. Anyway, I feel for those guys.

Mistakes in Outsourced Accounting

Joshua Feinberg:

Yeah. So, the next area I wanted to get your thoughts on is when you're onboarding a new client, are there any common trends with, like, a big mistake that you see being made across the board—regardless of whether you're taking over a client that was handling accounting, bookkeeping, financing internally or working with another accounting firm? Is there one big mistake that you see being made that seems to be the most urgent to address right out of the gate?

Roger Spain:

I would say, from our perspective, the most common mistake I have seen either our firm make, or where we followed other firms is what I referred to a few minutes ago, which is that whole effort to address a needs assessment at the outset of a relationship. We have found that, in cases where we have not put an appropriate focus on that upfront needs assessment, that it's more likely that we will mis-scope the work that the client needs, and no one wins when that is the case. So, that effort up front, we have found to be so critical and getting relationships off to the right footing and making sure the work is done, and the appropriate work is done and in a timely manner by engaging in those “needs assessment” types of efforts at the front end of a relationship. In terms of actual, on-the-ground accounting mistakes that we see, where we may get brought in, often what brings us in is the loss of the key accounting person, and that's HR, and so if a company has tried to do things internally—particularly, small companies—become reliant on a couple of key employees, and if they lose one of those—gosh, it's critical, and so that's one of the things that we're trying to make sure we present as part of the advantage of outsourcing. A big piece of their accounting functionality is that you take off of the table that reliance on one person, and you shift that to reliance on a firm, which is a little easier for a plug-and-play type of performance and accounting, and then it does take a lot of, I'll say, “headache” off of management's plate if they know that, “Gosh, I've got that outsourced, and that group is just going to take care of it,” rather than worrying about relying on a key person or two.

Joshua Feinberg:

I imagine, too, that problem has accelerated in being able to have to deal with during the pandemic. If you take someone that was, like, a finance manager, or controller, or CFO, and they'd been with the company 15, 20 years, an incredible amount of institutional knowledge walks out the door: much harder to recruit, much harder to train, much harder to get someone onboard. And do they really want to go through all of that again?

Roger Spain:

Yeah, that's exactly right, and many times, some of the easiest folks to grab just to fill a quick need might be someone who's a little bit older, who might be looking for maybe one more trick in their book, and those people are more reluctant. So, that pool of candidate is now kind of removed themselves from the candidate pool because they're worried about their health. I mean, if it's a 60-year-old person, who is fully capable and would like to work for a few more years, I may say, "You know what? I just don't want to if I can't do it remotely," and it's hard to get started in a new environment remotely. So, yeah. It presents difficulties in this age.

Joshua Feinberg:

What I've heard from a number of outsourced CFO practice leaders—and a little different than just outsourced accounting or CAS practice—is there seems to also be a certain element where banks and investors that are involved are demanding a certain level of sophistication with reporting, and systems, and processes, and the cost to fill that position for many companies. It's a small talent pool to start with—especially if they want someone who has industry experience—and it seems that they’re becoming cost-prohibitive, which sways in the direction of outsourcing.

Roger Spain:

Yeah. That's a good point, Joshua, and we're finding the same thing, and I'll just use made-up and very round numbers. If a fully-loaded, well-qualified person with good talent for a company that might need a little bit of sophistication, if that fully-loaded-with-all-benefits person may cost between $150K and $200K or more, for often half of that, you get access to the same talent level but on a fractional basis, which is really all they need is fractional access. So, we're finding that, yeah, in many cases, we are able to provide a more economical version of what they really need, which is not full-time. They just need access to full skills.

Joshua Feinberg:

Yeah, and I imagine, too, that there's a certain amount of level balancing, where they need a small piece of a true CFO, then they need significantly more time from, like, an accounting manager, and they need a lot of time, perhaps, from someone at more of a clerical level.

Roger Spain:

Yeah. That's exactly right. Yeah, and that's how we're trying to make sure that we structure. I got back to that whole continuum of accounting functionality that we structure the team for each client specific to their needs because some may have fantastic clerical help, some may even have—and I have some of this—they have good clerical folks internally. They even have a CPA who's a good controller internally, but that person wasn't comfortable doing the decision-making, and the strategic advising that was necessary to help the ownership and upper management of the company. So, that's the void we fill there. We don't necessarily make decisions, but we present alternatives after we've done strategic analysis, and we help organize the controller, and what it is that she does. Again, we meet clients where they are.

Future of Outsourced Accounting

Joshua Feinberg:

Cool. The final area I want to ask you about today, Roger, is to get your thoughts on what's going on right now in the accounting industry, where we're going to look back 12 months from now, 18 months from now, 24 months from now, and say, like, "That was the inflection point. That's what changed the whole course of what it meant to have an outsourced CFO practice." Do you see anything like that?

Roger Spain:

And this is probably an answer that’s near and dear to your heart because to me, small companies are not early adopters, as it relates to things that require substantial investment in technology, or equipment, or machines, or computers, and I include artificial intelligence in that. Many times, the developers and the leaders are the bigger companies that have more resources that they can devote to developing these newer efforts. I think that we're going to see what I'm going to refer to as “small, privately-held companies” over the next two years. I think we're going to see a much broader and deeper adoption of the tools that we're seeing that are being developed within the bigger companies these days—particularly, those that relate to AI. We already see some interest among small, privately-held companies in pursuing this, but we're not seeing broad and full adoption, like, to the level that I think we will in the coming two years.

Joshua Feinberg:

Yeah. It's really interesting to hear that, as well, because I see that in the past five, 10 years or so, the accounting firm has become a lot more influential in how their clients go about adopting technology. If you think about 15, 20 years ago, this was exclusively the domain of VARs, and IT consulting firms, and integrators, and managed service providers, and now you see increasingly that someone like yourself, that's leading this kind of practice, not only has to be very tech-savvy, but in many cases, their clients are just as dependent on either someone in your role, or a peer within your firm in a similar practice to be giving them advice on the intersection of accounting, finance, and technology adoption.

Roger Spain:

Yeah. A great example is while, admittedly, I would not know how to tell a computer how to read an invoice, and then record the invoice ultimately into the accounts payable and general ledger systems, I know that there are those who are smarter than I that can actually do that sort of thing, and when I introduce this concept to clients, who have a large number of recurring transactions, the idea of not having Janice or Jim sit at a desk and punch and go through some manual process of paying invoices and recording them, the idea that a computer could just do that by feeding it through a scanner is foreign to them, and that's amazing to me, that I'm the one delivering this great news. I'm happy to do it. But I think that, to both of our points, we're going to see in the coming two years that this becomes a much more regularly adopted approach to accounting processes in small, privately-held companies.

Joshua Feinberg:

Yeah. I mean, if you just think about on the personal side, how strange of a concept it was five years ago to be able to issue voice commands to your phone. "Hey, Siri, what time is it?" "Hey, Google, how do I get here?" And we're very close to the point where nobody's going to consider it a novelty act anymore; it's just going to be considered normal, and so much of technology adoption starts on the consumer side and ends up filtering over into businesses.

Roger Spain:

Guys who you have tripped over the 50-year barrier, like I have, often point to when the fax machine came out. No one could believe that you could scribble on a piece of paper and send that note to someone else in another city, and they would get it within a minute, and so—gosh, we've advanced beyond that! And I think we've learned that it changes with us for good.

Joshua Feinberg:

Change is hard. Transformation that involves people, that's definitely one of the more challenging parts of growing a practice. Roger, I really appreciate you taking the time to join me on the podcast today. If someone wants to get in touch with you or wants to learn more about you, or your practice, are you active on social media? Is there a good website you recommend that they look you up at?

Roger Spain:

Yeah. Probably the best way, Joshua, is just to look for Warren Averett online, or Roger Spain is my name—Spain, like the country. So, if anyone were to Google “Roger Spain Warren Averett”, I'm pretty sure they would hit on me pretty quickly, and I'd love to talk to anybody. If you and I have discussed anything that is of interest to anyone, I'd be glad to have a kind of follow-up conversation.

Joshua Feinberg:

Great. Yeah, and I'll make sure that we link to your website and link to your LinkedIn profile, as well, when we publish the show notes for this. This has been terrific. Again, I really appreciate you taking the time to talk with me today and share your wisdom on what you see for those that are new to building a practice like this, those who are experienced to building a practice like this, the critical importance of needs assessments and scoping out engagements properly, and the increasing role of technology and making all this work together.

Roger Spain:

Joshua, thank you for your time, and thanks for having me. I'm sorry I didn't say anything that was wise, but they were my best thoughts, anyway.

Joshua Feinberg:

It was awesome. It was super, super helpful. Thanks, Roger.

Speaker 2:

Thanks for listening to this episode of the AI in Accounting podcast. To subscribe and leave a review, check us out at blog.Vic.ai, or wherever you like to consume podcast episodes, including Apple Podcasts, Google Podcasts, and YouTube.

 

What's your favorite outsourced accounting tip? And what did you find most valuable from Roger Spain's podcast interview? Let us know in the Comments section below.

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