[00:00:00] Speaker A: I started as the intern and worked myself up to CEO. I had a client that was running about 25 different ad campaigns, but we took all of those ad campaigns and went down to the granular level and turns out they were only profitable on seven of those campaigns. Having a fractional cfo, you're actually working with somebody that has some perspective on how other companies operating and how they're performing. And so our approach is to really give them a granular view of their revenue and of all their marketing and sales. And so when you were able to then take the dol dollars that were in those campaigns, redeploy them to the seven profitable campaigns, they went from a 10% margin to a 38% margin.
[00:00:40] Speaker B: Welcome to the Entrepreneurs Logbook podcast where we uncover the strategies and insights driving extra new business growth. Today we're joined by Rachel Phillips, founder and CEO of Philly Accountable, a cutting edge outsourced accounting firm that provides fractional CFO services and accounting services to e commerce and digital business owners. Rachel is actually an accomplished entrepreneur and attorney, is built Fully Accountable in one of the fastest growing companies in America, earning a Spot on the Inc 5000 for five years in consecutive since co founding the company in 2014, she's helped over 600 clients and has helped manage an impressive $7.2 billion in revenue while evaluating 5.8 billion in expenses for her clients.
Her unique background combining legal with entrepreneurship has made Fully Accountable a trusted partner for e commerce businesses, digital marketing agencies and SaaS companies looking to optim their financial health. Rachel, thank you so much for joining us on the show here.
[00:01:38] Speaker A: Oh gosh, Zach, thanks for having me. I'm looking forward to it.
[00:01:41] Speaker B: Great. So the way I always like to kick thing these conversation off is perhaps just to like introduce yourself, get a bit more context for anyone that might not be familiar with what you do here.
[00:01:51] Speaker A: Yeah, so I'm Rachel, like Zach said, the CEO of Fully Accountable.
Actually a bit of a unique story. I started as the intern with the one of the three founders, Fully Accountable, myself being one of them and worked myself up from intern first version up to CEO. Our company is think of us as an outsourced accounting and CFO department that does everything from your basic bookkeeping up through your ad hoc reporting for finance firms, for PE funding, maybe just even your boardroom, whatever hole you need to be filled in your accounting department, we'll customize a package for you so that we can fill it.
[00:02:32] Speaker B: Interesting. So. So you guys basically are like a full service, like everything like accounting, finance because you Mentioned like even fractional CFO and like I've worked like a few fractional cfo. Clinton. I'm seeing like this trend where there's like a lot more CFOs that are starting this fractional component. Do you see some like an advantage in being able to offer like a, a CFO based service as opposed to a company hiring like a full on like CFO within their organization?
[00:02:57] Speaker A: Yeah, absolutely. So two reasons. One, having a fractional CFO like in a service we do where we work very regularly with e commerce, digital SaaS, all things digital, you're actually working with somebody that has some perspective on how other companies similar to you are operating and how they're performing. So from a benchmarking KPI standpoint, they're armed with a lot of knowledge to help you pivot quickly and objectively.
The other piece right now is fractional is such a cost savings for companies where you can get the full value and benefit of a CFO at a fraction of the cost and they have all the tools and resources. So not only are you getting the person, but you're getting all of the things that they need to do the job as part of that service from them. And so for us in particular, you can get the bookkeeping, the quote unquote like grunt work that has to be done and, and keep your CFO in the strategy of where they can really help you, the owner, the sales, marketing, continue to grow the business, not stuck in the weeds of reconciling a bank account. And so you're getting the highest and best use of their time as well.
[00:04:06] Speaker B: Yeah. Cause like what I'm noticing is like when you work with like an accounting firm, oftentimes it's definitely going to be more ad demand. Just making sure that like bookkeeping, everything is like all good. But when you look at like a cfo, they, they bring more like the strategic expertise where they're actually trying to help you grow the business, forecast cash flow as opposed to just doing the books and like leaving at that here.
[00:04:28] Speaker A: So yeah, your CFO should not be reactive. They should always be proactive for you. And so that's exactly what we're seeing as well.
[00:04:36] Speaker B: I love that. And something just going back to like what you were saying because you guys have like a pretty like unique niche. Like you guys work like E Comm digital business and like SaaS when it comes to just these types of like companies when you have a like client that comes to you, maybe they're making decision based on like gut feeling or just Checking like that, the P and L, the bank account balance. How do you guys go about somewhat transforming that into more like a data driven decision making approach, if that makes sense?
[00:05:03] Speaker A: Yeah, absolutely. So digital based businesses are really dialed in and good at metrics. So their roas, their roi, their campaigns, their ad spend. And so what we try to do is use that same type of language and approach when it comes to their financials.
When you think about a digital business, it is a little bit different than a regular mom and pop stand up shop because all these transactions are done online without a credit card being present.
And so they technically have higher refunds, they deal with a lot more chargebacks, and their merchant rates are far higher than what you would see at a POS system. And so our approach is to really give them a granular view of their revenue and, and of all their marketing and sales so that they can track back to identify where they're truly profitable. One of the examples I always tell people is I had a client, multiple clients, but one in particular a few years back that was running about 25 different ad campaigns.
And they were profitable, making good money, had about a 10% bottom line. But we took all of those ad campaigns and went down to the granular level on where they were making their money. And turns out they were only profitable on seven of those campaigns. Eighteen of them, they were upside down. And so when you were able to then take the dollars that were in those campaigns, redeploy them to the seven profitable campaigns, they went from a 10% margin to a 38% margin, which is nothing, you know, but that's hidden because if you're just looking at the line item marketing and advertising, they would look like they were making money just a little bit below market. But that granular level is what really helped take them to the next level.
[00:06:47] Speaker B: That's interesting because I mean like so many e commerce business owners, I mean they'll just, I mean I'm using E commerce like an example, but they'll try to find like any way to like increase their profit. Maybe it's just a B, testing the price, etc, but they're not thinking about okay, I mean we're always spending on marketing, we should be looking the granular like where we're spending that money, what is actually performing. And I feel like as a marketer that's probably your first job, know what's actually performing and double down on what's actually working. But perhaps there's just like this issue they're not able to figure out effectively where they should be putting their attention money capital here. So interesting and with like those like businesses because I find that interesting that instead of being like generalist, if you guys focus like strictly on like those types of companies, what would you say are like some of the unique challenges that you face when you start like working with those specific companies? Like whether it's, I mean I know you mentioned that they're really metric driven. Like they always like track their data. Is there anything that like they, I don't want to say suck at, that they struggle with? In a way.
[00:07:45] Speaker A: Yeah. For them the big thing is what you said earlier is that they've been running blind and subjectively and so the number of times we'll bring on a client and they'll say we did way better in May than we did in April because we have more money in the bank at the end of May than we did at the end of April. And then one of our CFOs will look and they'll be like, and you haven't paid your bills in 60 days. And so it's like you actually don't have any money at all or you're running really lean. E commerce and digital based businesses are typically run by very sales and product focused people and so they will drive very deep in generating top line revenue and or the best products regardless of the cost while in the market.
That's what we want. We want more sales and we want the best products.
From a bottom line perspective, our approach really is to get them to learn that bottom line is what pays you. So the larger your margin, the larger the asset that you're building and the more that you're going to get paid as the business owner.
[00:08:44] Speaker B: Yeah, because I mean on social media like I see so many like E commerce like business owners saying like hey, we just say like eight figures, seven figures, et cetera and like oftentimes they have like very thin margins when it comes to actually profit.
[00:08:57] Speaker A: Correct.
[00:08:58] Speaker B: But if they look at really at the granular, they look at like optimizing like their bottom line as, as opposed to like top line revenue just trying to get like more revenue into the door. Maybe you perhaps should focus on like optimizing the bottom line so when the top line comes in you're getting more from like all the efforts like capital you're putting in like the first place. So I'm assuming and with like those clients, because I know you mentioned that they're like really metric driven. Is it more so that they're not sure like how to like analyze like this data that they're getting or from.
[00:09:25] Speaker A: Our experience, what we typically see is if they continue to add dump more money, they will grow their sales. And there's this idea that it will pivot so they're paying more to make more later. And where we really work with them is that could be true in a lot of instances. If they have like a SaaS where you have a rebuild model where you can be upside down on your customer acquisition, but you need to have 4, 5, 6 turns of a customer, you can't have your churn at rebuild number two. And so those are areas where we can take in that say, you're right, our cost of acquisition can be double what the customer is worth to us when they first bill. But here's the map at how to get them to be profitable more quickly. And so those are ways that we can help them look at a more long term approach than the very in the moment, how do I make more sales? And so we're always using what we call an operational budget. It's a little bit different than what a lot of people think of. We call it a living document. So your budget doesn't need to be static anymore. And back in the olden days they would say you build your budget, if it's off, you just work harder to try and get there. You can't do that with digital based businesses with the way that ad spend changes daily. I mean, during the election advertising costs were so high you couldn't meet your metrics without scaling other ways. And so our goal is to continue to pivot and implement so that you can actually hit your goals or what you're projecting, not just throw in the towel and June and be like, well, we did the best we could, but we're just going to be off for the rest of the year.
[00:11:01] Speaker B: Yeah, it's like oftentimes because I found that interesting, the point that you mentioned with like, like sas, because you have like the rebuild model some clients like might churn like from like a marketing perspective, they might not be looking at like the operational side. Thanks Fulfillment. They're just thinking more. So I mean, not fulfillment. I mean it's assassin way. But they're looking at. Okay. I mean the LTV is maybe like $2,000, let's say.
[00:11:24] Speaker A: Yep.
[00:11:25] Speaker B: But that client needs to save for multiple months for us to even reach ltv for us to be in like profit, for example. And they just look at the front end sometimes, but they're not thinking about the back end. Now we have to make all these Optimization to make sure that we even reach that LTV and we are actually profitable when we acquire the customers later on here. So that's interesting. And I guess it comes back to like even like CFO because there's like that strategic component that is CFO and is able to build out like an approach like look at everything, look at the cash flow metrics and everything like that. And as mentioned earlier, it's definitely becoming like much more popular. Where I'm feeling that a lot of people that were working like accounting firm are probably preferring to have like a CFO component into that because it's. They want someone in like their finances. Like when they're handling their finances, they don't want someone to just handle the books. They want someone that wants to grow with them that is like here to be with their partner in crime in a way. And when it comes to like that relationship from like a day to day perspective, is there a certain point that you feel a business should consider bringing on like a fractional CFO within their team? Because a lot of people, they start off, they might not be at that point to actually get a fractal CFO there.
[00:12:37] Speaker A: Yeah, I completely agree with you. A brand new business doesn't need a CFO quite yet. It's fun to have. And I think what used to happen is that you would bring a CFO on before you would bring on a bookkeeper or an accountant and then you would expect them to do everything.
What I usually tell people is the, the jump from 1 million to 2 million is a significant jump. But when you start hitting the three and a half to five million dollar and you have regular payables that are coming in on terms, you have receivables that are going out that are on terms, maybe you're taking debt or maybe you're trying to initiate a new ARM or division of your business. Those are areas that you should be using a cfo, that is where they will be the most powerful for you.
They can build you a 13 week rolling cash flow that should be plus or minus, honestly a couple dollars that will help you to know when you have available cash to hit a little bit more growth and scale. And then also in times where you need to pull back a little bit, where there is a reality that sometimes you can scale back and be more profitable. Specifically like I said in the rebill area, right, Maybe you aren't spending as much, but you're going to accumulate a little bit more cash on your rebills and so they can be really powerful in those cycles with you, especially when you're working on things like Q4 is a tough quarter for E commerce companies. They do have the highest sales, but they have the highest refunds because buyer happy. And then the finances hit with Christmas and the holidays and if they aren't getting a discount, they're more likely to refund. And so those are all the types of trends that they're going to help you with navigate based on looking week by week, quarter by quarter, seasonality and what you're trying to accomplish with your business.
[00:14:22] Speaker B: Yeah, and like, I mean when you're a business owner, like one of the things you want to be able to do is focus on working on the business as opposed like in the business. And if you end up just doing like all the accounting going on in like the bank statements, trying to like plan your financial, you're taking away time that could be better spent in actually trying to like grow the business. So I feel like, yeah, as you mentioned, like once you get to that certain point, like 3,4 million, et cetera, getting like a CFO is definitely a very smart play, whether it's a fractional or like fully like on board. But I definitely would think that fractals probably the model, especially if you work an accounting firm, it's much more cash flow efficient here. But no, I love that. And one thing that a bit like somewhat sidetracked here that I always like to ask any guests that come on the show because you've been at the company for like a decade, if I'm not mistaken, since like 2014. And you, you've climbed the ranks since like the bottom with the internship side of things that you mentioned beginning on, I guess I'd be curious like how did you go about somewhat helping to like grow the company, get like awareness? I mean I did look at like your LinkedIn. You built a pretty like sizable like following just from that. And because I know a lot of clients that they do for actual cfo, they do accounting. It seems to be like a lot like, like referrals, like word to mouth. But everyone, everyone is definitely different there.
[00:15:40] Speaker A: Sure. Well, we work with digital businesses so I hope it doesn't come as any shock. We grow our business all through SEO, PPC, LinkedIn.
I try to be very intentional with the people that I work with, both on our team and clients that we bring in. And because we're intentional and we're purposeful with what we do, we can be very clear with our messaging and we can be very direct to the demographic that we're looking to bring on, and because of that, we're attracting the type of clients that we want. Like I said earlier, I feel it's the most respectful thing that I could say to somebody that comes to me that's making a hundred thousand dollars a month and tell them you aren't ready for a cfo. But let's get you set up with a really good controller package so that your finances are managed. And in about a year, let's then go back and take a look to see if a CFO is appropriate for you. I think that people that try and sell the package and then know that it's only going to last for a couple months because somebody's overpaying for it. It's just not kind. We won't do that to our clients. We're going to be clear with what we think you need. We're going to help you accomplish filling the gaps, and then our goal is to grow with you. So hopefully over time you'll add more services and including that CFO piece.
[00:16:53] Speaker B: Yeah, and I, I totally respect, like, I feel we, we take some of similar approach. And I feel like in a way it's like bad karma. Like, if you end up doing that, you're. You're doing a direct disservice to, like, the people that you would be working with. And if you do that, they might not even be able to get to that point where they need a cfo because they'll be put in the hold by just investing too much and like, their finances when they're not even at a good spot to be able to, like, do so. And so, yeah, again, like, transparency with the clients, it feels like a really big one and you're doing them like a really good service by just giving them the opportunity to be really transparent with them. So, like, hey, you might not be at that stage. I think if you do this, we talk back in like a year, you'll definitely be like a much better position. And yeah, a lot of people will just try to get the sale. They try to get like that front end, but you get concept churn because the service might not be good, might not be able to afford anymore. And I feel that's. That's definitely something that a lot of people have to be watch out for and work on there totally of that. And I guess just for like, parting thoughts here, Rachel, if you were to give maybe one or two pointer to, like, any business owner that is looking to perhaps take control of, like, their finances, they might not have an accounting team on their company they might not have fractional CF1. They just want to make sure that they have everything organized. But they're on path to be able to later perhaps get a fractional CF1 and look ahead to grow there.
[00:18:13] Speaker A: My first one would be very simple but use QuickBooks or a general ledger system. Don't run your business out of Excel sheets. Excel can do really powerful things when you're looking to build KPI dashboards. But when it comes to really getting all of the data in a Place, QuickBooks Online, Xero, the new NetSuite Online all do a great job of being enough user friendly. But use a true general ledger software that was built for accountants to do the work. It will make when you later hire an accountant far easier for them to do the work than being in an Excel or some very niche product that doesn't work in a general ledger system like one of those.
And the other one that I would do is don't look at accounting as a feature fixed expense for you when it is time and when you find yourself really investing good time and resources into trying to reconcile when you could go be generating more sales or creating a better product, make the jump to having an somebody who does this for a living do it for you. And that's always the pivot point that I have for people. If your business has grown where you're having to spend 5 to 10 hours a week on your accounting, that's 10% of your or that's 10 hours of your 40 hour week, 25% of your time that is being taken away from you building your business, that's time to go invest in somebody to do it for you.
[00:19:39] Speaker B: Yeah, that, that becomes quite a lot. If you're spending 10 hours per week on your accounting, it becomes a lot clearer that you need a controller or you might need just a bookkeeper to make sure everything is organized there. So no, I love that. Thank you so much for joining us here Rachel. And if for anyone that wants to like find you, I know you're pretty active on like LinkedIn, but is there anywhere else people should look at to find you on anything like that?
[00:20:01] Speaker A: Yep. So like you said, LinkedIn, you can always reach me by
[email protected] Our website has a ton of great free resources for you, including reporting templates. The one place I always encourage people to go to is our CFO toolkit. It will get all of the reports and tools that our CFOs use for you to be able to use in your business. Without having a cfo. So if I was going to direct you to one place, it would be go get our toolkit.
[00:20:26] Speaker B: Perfect. I'm going to make sure team adds that to the show notes. People can find that. We'll put your link in the website here. Thank you so much again for your time here, Rachel. And thank you again for joining us on the show here today.
[00:20:36] Speaker A: Thanks. Yeah, it's been wonderful.
