82 CAS Growth: Measuring Fractional CFO Service Value

💰 How to Measure & Justify Your Value as a CAS or CFO Advisor | CAS Minute

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📢 Ever wonder how some firms charge premium prices for CFO and CAS services? Many firms struggle to justify their pricing because they don’t have clear ways to measure their impact. In this episode, we break down:

✔️ How to track and prove the value of your advisory services

✔️ Key metrics beyond revenue & profitability that show your true impact

✔️ How decision-making speed and confidence factor into your pricing

✔️ Why measuring client engagement can predict long-term success

⏱️ Chapters

00:00 - Why Some Firms Charge More for CFO & CAS Services

00:30 - The Challenge of Measuring Invisible Value

01:12 - Typical Financial Metrics & Why They Aren’t Enough

02:00 - Decision Quality Score: Measuring Faster & Better Client Decisions

03:47 - Client Risk Mitigation Index: Proactively Preventing Financial Pitfalls

05:00 - Tying EBITDA Growth to Your Advisory Decisions

05:41 - Capital Allocation: Helping Clients Invest Smarter

06:26 - Client Engagement: A Leading Indicator of Value & Retention

07:28 - Why Qualitative Feedback Matters Just as Much as Financials

08:00 - Final Thoughts: Measuring Value to Build a More Profitable Firm

✅ Key Takeaways:

✔️ Clients should feel your impact in real-time, not just in financial reports.

✔️ Tracking decision-making speed can prove your strategic value.

✔️ Mitigating risk and improving forecasting are key value drivers.

✔️ Capital allocation is a core function of high-value CFO services.

✔️ Engaged clients = satisfied clients = long-term profitability.

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Full Send | Accounting & Data

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Transcript

[00:00:00] Do you ever think to yourself, man, how can that firm charge so much for the work that they do? It's one of those things that you often look across the landscape of CFO and CAS services and try to compare and contrast where you're at relative to what you see others charging. Maybe it's 300, 400. Upwards of $500 an hour for CFO level work, or maybe it's a pricing package that's 5, 7, 8, $10,000 a month.

[00:00:25] You look at that and you're like, how can you actually measure the value that's being [00:00:30] provided?

[00:00:30] Oftentimes, we're delivering. Invisible value. We're trying to justify our cost to our clients by saying, oh, well, we're gonna give you value in reporting and insights, but the real question is, are your clients making better decisions based on their relationship? In working with you today, we're gonna dive into what you can actually start to measure to determine whether or not you are providing the value that you think you are and or be able to measure that to be able to justify higher pricing in the future.

[00:00:59] We want to [00:01:00] be able to prove our impact. so we're gonna think a little bit differently about how do we actually measure this and then communicate it back to clients in a way that helps 'em understand how much value you are actually adding to their businesses.

[00:01:12] Here's the default thinking for most firms. We're gonna track revenue, we're gonna track profitability, we're gonna track margins, cost savings, very black and white numbers that we can look at and say, we made an impact here. And you could argue that some of the decision making that you helped with your client [00:01:30] added to some of those financial elements of your client's businesses.

[00:01:33] That said, most of the time the CFO isn't gonna be the biggest revenue driver of the business. But the decision making that the CFO supports could be,

[00:01:43] the big problem here is that a lot of these drivers that most firms look at, they're outcomes, they're not leading indicators of CFO impact.

[00:01:53] Most clients don't feel the value in real time unless it's tied to specific decision [00:02:00] making. So we need to be asking ourselves, if I stopped working with this client today, would they feel the impact? Would they feel the impact in one day, in one week, in one month, in three months? That will help you gauge whether or not you're actually adding value on a regular basis to the client to justify that higher pricing.

[00:02:18] Another question you could ask yourself is Is the financial performance of the business a result of our work with the client and the support and advice that we're providing? Or is it more market conditions related? [00:02:30] If you look at the market uptick from 2021 to 2024, you can pretty easily measure financial performance against macroeconomic conditions and say, well, maybe it really wasn't the advisor's support.

[00:02:43] It was just the business was gonna grow anyway. So we need to be able to more directly tie our work to the decision making and the value the client is receiving. So what are some ways that we can measure that?

[00:02:55] One of the ways that you can measure this with your clients is by tracking decision quality score. [00:03:00] Is the time that they're taking to make decisions quicker because you are a part of the picture, or has it really not changed at all? If your clients are making decisions more quickly and they have a higher confidence interval in making those decisions, you can immediately point to value being driven because ultimately they are pulling the future forward by making decisions more quickly.

[00:03:20] And it could come via just a simple benchmark survey to ask your clients, do you feel like you're making decisions more quickly? And if the answer is yes, and they feel like it is, even if the numbers aren't quite there, [00:03:30] you're having an impact because they feel more confidence in the decisions that they're making.

[00:03:33] So if you can implement some sort of rigor around asking your clients, what confidence do they feel? What time does it take in order to make decisions in their business? You can start to get feedback on whether or not you're actually supporting that part of their decision making process.

[00:03:47] Another thing that you can be measuring when evaluating your client's success is a client risk mitigation index. So what we're looking at here is did you minimize the risk in the business?

[00:03:58] And help prevent financial [00:04:00] challenges or disaster before they happen. Maybe this came through a monthly re-forecasting exercise to where you anticipated a cash shortfall and you assisted the client in reallocating how their cash is being spent over the course of the next few weeks in order to avoid a potentially really catastrophic or challenging scenario.

[00:04:19] You can look at this through the lens of forecast accuracy. You can look at it through financial agility. How are department heads able to make more quick decisions based on the information that they're being [00:04:30] given? So, kind of similar to a decision quality score, we wanna understand how are we mitigating risk by allowing the, the client to make better decisions If you do wanna look at financial metrics like ebitda, profitability, revenue growth, we want to be able to tie that back to some sort of action that you took as the advisor, as the CFO sitting in a seat guiding your client on their journey. We wanna say the client increased their EBITDA by 8% because of a pricing strategy that we recommended three [00:05:00] months ago.

[00:05:00] If you're able to tie that, that outcome to the decision making that you supported, you now have the ability to then tie back to the value that you're providing, and ultimately, you want to be providing this value so that the pricing that you have in place, ideally premium pricing, because of the value you're adding is justified.

[00:05:18] another way that we can look at efficacy of your CFO service and measure it is based on capital allocation. If you're supporting your clients' investments on how they're taking their cash and [00:05:30] using it to grow their revenue, to reduce their costs. To improve their outcomes. You want to be able to say, we made a decision to allocate cash here versus here and here was the impact here.

[00:05:41] Was the trade off that occurred that allowed you to reach this goal?

[00:05:45] And ideally we're, we're taking that capital, we're moving it from. A lower ROI initiative to a higher ROI initiative. That's the seed of the CFO is providing strategy on how do we actually allocate capital to grow the business. So if you can, again, tie that back to the [00:06:00] outcome, we're looking at not only the outcome that was achieved, but the value that was received along the way because the client may not have arrived at the same decision had you not been in that seat.

[00:06:09] One more way that you can measure the efficacy of your high level advisory CFO Service and garner a premium price in the market is by looking at client engagements. Are your clients actually engaging with you? Are they asking you questions? Are they asking you for more? Are they continually trying to.

[00:06:26] Pick your brain and get insights on how to [00:06:30] evolve their business. If so, that is a good indicator that every time that you have a chance to interact with them, you are providing value to the extent that those interactions decrease and you're not actually getting that engagement, and maybe you're a little bit more compliance oriented or more focused on the reporting rather than the results, you're probably gonna be at risk for some higher degree of churn in that bucket of services.

[00:06:52] So if we can start to to look at measuring that feedback that we're getting from clients, whether that's on call in a live meeting with them, or [00:07:00] feedback via a survey gathering, that information will help you understand where you can push and pull those services and where the actual value lies and what you're providing.

[00:07:08] We really just want to be able to measure value, and it can be really qualitative at times. It can feel invisible. It can feel really difficult to measure what did we actually do for this client to help them be successful? And sometimes they're maybe not as successful as we want them to. And so how can we, even in those moments of challenges for clients, make them feel.

[00:07:28] As if they're receiving value [00:07:30] from the price they're paying for your service. That's gonna be one of those things that the more that you measure, the more that you're able to take information on, the better you can communicate that back to your clients and feed it back into your sales process to communicate to new prospects as you bring more clients on board.

[00:07:45] At the end of the day, we just want to be measuring this in order to help our clients be more successful, understand how we can build more profitable practices, and.

[00:07:54] be more supportive of our clients as they continue to grow and evolve in the future. I hope that's a helpful framework on [00:08:00] how to think through gathering information and data on measuring your success as a CFO, as an advisor, as a CAS practitioner. Thanks for listening more next time.