74. Simple Software that makes Financial Guidance in Consulting and Coaching a breeze [Fathom]

Simple Software that makes Financial Guidance in Consulting and Coaching a breeze [Fathom] [Everything Business Consulting Episode 74]

If you're a Business Consultant, Business Coach, or Advisor and want an easy way to great beautiful reports, guide you through the analysis process of a client and facilitate a high-level conversation - this is a must-listen.

Welcome to episode 74 of Everything Business Consulting, where get an insight into Fathom with James Erving - Head of Customer Success, APAC region.

Everything Business Consulting is brought to you by ConsultX, your complete Business Consulting Solution.

Visit www.consultx.com to find out more.

Transcript:

Julius: Today, I'm excited to interview James Irving, who is the Head of Customer Success at Fathom for the APAC region. Now, James, are you ready to help our listeners on their quest to becoming expert business consultants, coaches, and advisors?

James Irving: Absolutely really excited to be here, Julius. Thanks for having me on. 

Julius: Fantastic. Now I want to start by getting to know you a little bit. Can you tell us about your background, what you do now and how you got to this point? 

James Irving: Yeah, absolutely. So I'll start with Fathom. So I work at Fathom, which is an app that helps businesses to leverage their financial data and also helps advisors and consultants to deliver services to their clients more efficiently, and also, in a more engaging way that their clients can understand around the financial aspect. So currently I manage the Sales and Customer Support teams for the APAC region, I've been with Fathom for over four years now. Originally from the U. S., and started working for fathom in the U.S. and the Seattle office, actually.

And it was just a team of three of us over there, and we were kind of focusing on getting the business off the ground in the U.S. Found actually an Australian company, Australian based in Brisbane. So, in terms of how I kind of got to Fathom actually, you know, coming out of uni, I didn't originally plan on getting into the accounting and finance space, but I knew I wanted to work for a technology company and is really interested in software. And I was working for another software company in the legal space, and actually, a friend of mine was working for Fathom. He kind of recruited me to come over and I was resistant for a while, but once I saw the product, and met the team, it really clicked for me.

And, so it came on about four years ago and it's been an amazing run. I got the opportunity to come over to Australia in 2019, and then since then, we've significantly grown the team over here. We've got sales, and support, and account management team over 10 people now. We have over 35 people in the Brisbane office, and that includes product development, designers, engineers, marketing, all those types of functions as well.

Julius: Perfect. Now, James, you started to describe us exactly what is Fathom, did you have any more details you wanted to go into on that? 

James Irving: Yeah, happy to. So, I'll kind of start with the problem and then go from there. So the problem often for small and medium-sized businesses is they lack, you know, the time often, they lack the resources and a lot of times they lack the confidence to get insights from their financial data. And historically, you know, you'd use Excel, you'd dumped data out of your accounting system into Excel and, you know, fiddle around and try to try to do your analysis there. But that's quite manual, it's quite time-consuming, and it's very prone to error and it also requires a certain level of prior knowledge.

So Fathom helps businesses turn that accounting data that's sitting in their cloud-based system, into an asset, you know, rather than it just being something they have to do to be able to file their taxes each year, actually turning that into an asset that helps them make better-informed decisions, keep their investors up to date and plan for future possibilities as well.

So we're really trying to give, especially small businesses, the tools to track and understand their financial performance, create detailed forecasts and create engaging reports for their teams and their stakeholders, and all of this at kind of a fraction of the cost and effort to set up as traditional, enterprise, you know, ERP tools. So historically those tools just haven't been available to small businesses. You know, you had to use a clunky software that took a long time to implement and took a lot of expertise to use, and now you just don't have to do that. And so, you know, with the rise of cloud accounting, like Xero and QuickBooks Online, it really opens the door for Fathom, and others like us to offer these sort of analysis tools to small businesses.

Julius: You mentioned that it gives business owners the ability to understand the financial performance of their business, and that is absolutely critical if you want to see where you've been and make judgment on where you can go in the future. Now, you also gave a lot of reference to business owners being able to use this as a tool. Who exactly is fathom for?

James Irving: Yeah, it's a good question. So, you know, Fathom is available to a very broad range of users. So, there's kind of three key areas that our customers typically fall into. One is that small business to medium-sized business that's looking to get more insight from their financial data, and typically, you know, it's a business in any industry really. We see a lot of businesses in the sort of 500 K to 10 million in revenue range, quite a broad range, and we do see businesses outside of that, but that's quite common size in there. You know, they're typically using QuickBooks or Xero, and oftentimes it's the business owner who's actually the main user there. And then in a larger business, kind of a mid-sized business, it might be a CFO or a controller or an in-house accountant, who's using Fathom. 

The second main type of customer that we see as the advisor or the consultant. So this is probably more relevant for your audience and, you know, that is a broad range. So it could be accounting firms, bookkeeping practices, contract CFOs, outsourced IT, cloud-backed office types of businesses, as well as business coaches. And so that's kind of the range of advisors and they're using Fathom with their small business clients.

And then the last group, which is kind of a smaller group, but an interesting group is the franchise space. So we see actually a good number of customers for us are in that franchise or multi-location type business. And they're looking to get a kind of a top-down look at all of their locations, their entities, and be able to compare performance and consolidate performance across all of those financial entities.

Julius: Thanks James, well that really covers off all of the different clients that you have, and for the listeners of this podcast, they'll certainly view it from the aspect of a consultant, a coach, or advisor, which Fathom obviously is very good at catering to. Now, the next question I want to ask you about Fathom is why was it created?

James Irving: Yeah, it's a great question. I can kind of tell a little bit of the story, the Genesis story of Fathom, and then kind of talk a bit about our why now, which has developed over time as well, kind of our purpose for doing what we do. But I think the story is interesting. So basically, our founders, three guys here from Brisbane they all have a software development background, so they were actually working for a mid-sized, mid to large accounting firm. And they were actually building data visualization tools, kind of like this, and through that, they really saw the value that these accountants were getting from having a tool that was visual, that they could communicate the financial performance back to their clients with, rather than just sitting them down with the profit and loss and, you know, seeing the client's eyes glaze over. 

They were able to actually put something that was quite engaging in front of a client and tell a story to the client that helped them to understand their business better. So they really saw the value of that, and then kind of the big catalyst was seeing Xero come out and, you know, as a cloud accounting software and launched their integrations, their app store. And so the guys really saw an opportunity there to take what was previously done on desktop by importing an Excel file into this kind of data visualization software, and actually be able to build an application that integrated with Xero, kind of constant sync with those financials. And so they incorporated the company in 2010 and launched about two years later after building the product in their garage. 

So it was kind of a classic tech startup story in that sense. But, you know, over time that's really evolved into a number of different customer types. I think the vision initially was, you know, that accountants would use it with their clients, and now it's such a broad range of customers for us. And so we've really settled on the purpose of being able to support all of the people who stand behind the small business, you know, and give them clarity and confidence in their approach to financial decision-making. So that's really what we do now and our mission for carrying on Fathom.

Julius: James, I can absolutely attest to the power of taking a financial statement, something that's just a whole lot of numbers on lines and giving a visual representation of that to a business owner, so fathom is a tool that I have personally used with clients of my own and when they can visually see where their money is going and what is performing well, and what is not. It is just incredibly enlightening and helpful for them. Now, what other ways can Fathom help a business consultant or advisor, and to help their clients? 

James Irving: Yeah. Well, thanks for that, Julius. Yeah, I think, you know, getting more specific, I think when we look at how advisors and the value that they really get from Fathom is often being able to spark more meaningful conversations with their clients. You know, consultants and advisors need their client to be engaged in the service they're providing, and Fathom can really help that by piquing the client's interest on things they may not have noticed before. And, also providing, you know, a tool that just really helps to center their conversations around. And so it also helps them to differentiate themselves from competitors. So we see a lot of advisors using Fathom as kind of a competitive edge in their marketing and using it as a way to acquire clients. You know, we think it can really increase the perceived value of the service that they're delivering.

You know, the service that a consultant might be delivering to a client is the conversations they're having, but it's also the results, right? And it's the deliverable that they're giving to the client and Fathom can give a consultant a really tangible deliverable to hand a client each month or quarter. You know, that's branded to the consultant's business, you know, has their logo on, and, it's a really professional deliverable that the client's going to receive and kind of expect ongoing so that can really help to increase the perceived value and allow consultants and advisors to charge more. And also make them more efficient in creating their reports and dashboards. 

So we did some surveys with our customers and found that a lot of the firms that are using it are saving an average of 14 hours for reporting period. And we also found that you know, it takes, people roughly an average of nine hours to create a forecast for their clients, and Fathom can really reduce that time to actually put a forecast in front of a client. So all of that together, and then being able to sort of structure their service delivery around Fathom as the deliverable that the client can expect every month or quarter, it's the way that they see the advice coming from their advisor.

Julius: One of the most valuable tools that I've found in Fathom, and I believe all of the tools are valuable, but one of the ones that has helped me to really help my clients is the cash flow analysis. This is a graphical representation of cash flowing into the business and cash going out of a business over a period of time because that is so often misunderstood by business owners. 

You know, they see that they've got a profit and loss and that says they're making money, and they know they've got a lot of money coming into their bank account every month and going out every month, they're constantly having bills to pay and they just can't figure out, you know, why there's not that much leftover or where the money went. So that tool in itself is probably the one that is really been a game-changer for me. Now, how else can Fathom help business owners to succeed beyond just that single tool? 

James Irving: Yeah, well, I completely agree Julius, that tool is very helpful and that's kind of, I would say it's the most recognizable tool in Fathom. It's very commonly used and really helps to tell the story of the cash flow in the business, so glad you've had that experience. I think other ways that can help business owners to succeed at a high level, it can really give them the clarity and confidence to make decisions. Especially if a business owner doesn't come from a financial background, you know, as you said, looking at the profit and loss and the balance sheet, it gives them only partial information, partial understanding of their business. And so, you know, Fathom can help provide that financial storyline that helps them to understand their business better. 

And some other tangible benefits, you know, they can create a three-way cashflow forecast if they need to create one for the bank, so if they're looking for financing, Fathom provides a great way for them to create an up to three-year cashflow forecast that they can use. And, also, you know, providing professional-looking investor board pack reporting if they do have external stakeholders they need to report to, it's a great way to create a professional-looking report that way as well.

Julius: We have a saying here, James, that we share with our network is that it's really the job, one of the jobs, of the consultant, is to bring clarity to a business that they're working with so that they can make good decisions. So Fathom obviously is one of the tools that is aligned perfectly with that. We have people that come to us and join ConsultX from all different backgrounds, with different levels of financial experience, to use a Fathom is there any prerequisite or any expected level of knowledge that someone would need to have? 

James Irving: That's a great question, and I think we have a broad range of financial backgrounds using Fathom. So, you know, you don't need to be a McKinsey consultant to use Fathom, you don't need to have big four accounting experience or something like that. There's a lot of educational aspects within the tool, so for example, when you look at a key performance indicator, like financial ratio, like gross profit margin, for example. In the tool, it's going to have an explanation right there of what that metric means, how it's calculated, so there's actually a lot of education within the tool itself.

So you can come to Fathom with a very basic understanding of accounting and finance and actually come away from it with much more of a deep understanding of that side of things. So, I don't think you have to be a specialist. I think it's helpful to have some of the basics down in terms of being able to understand the purpose of a profit and loss, and a balance sheet that would be a great foundation to have. But beyond that, you know, all that can be learned by using the tool.

Julius: One thing that I would add to that as well as there are so many templates within Fathom that really guide you to creating these reports and analyzing a business, no matter what your level is. However, if you are advanced, then you also have the ability to dive deeper and get a little bit more complex if your client needs that of you. And if you are comfortable doing that, but it's certainly not something that you absolutely need to. And the next question I would like to oppose to you, James is, do you have any success stories where Fathom has helped its users or the end clients? 

James Irving: Yeah, absolutely. We've got some great ones. You know, one, that jumped to mind was a bookkeeping firm in the U.S., called System Six Bookkeeping and Analysis. And they actually have quite a unique setup, they do bookkeeping for small businesses, but they also have kind of a strategic advisory service along with that. So they've really differentiated themselves from other bookkeeping practices. You know, they wanted a reporting system that our clients could actually understand, and they also needed it to be scalable because they had big growth goals in mind. They wanted to scale their business quite quickly, so they needed something that was going to grow with, and not cost them too much time. 

So Fathom really ended up being that tool for them, and I actually got a few quotes here. I'll just read off. One of the things we love about Fathom is it makes us look like data reporting heroes, the report structure, the way it's all laid out, it would take us hours to do that for each and every client. Fathom takes complicated financial data and creates a visual reporting experience that's meaningful and easy to understand for business owners. So really, really great feedback there, and I've actually met Jeremy he lives in Seattle and runs his practice there and it's a great, great business. 

Another one is a firm, accounting firm in the UK called Shorts, they needed to deliver more engaging and frequent reporting to their clients. So they were, I believe they were doing, you know, annual reporting really for their clients and they wanted it to be monthly, and they also wanted their clients to look at the reports that they were sending. So they needed something that was going to be engaging. They found Fathom and saw the value immediately, and I've got some quotes here from them as well. They said Fathom is probably the easiest piece of software we've ever introduced, its integration with our accounting software is so much more reliable than anything we've used before, and we can do analysis, forecasting, reporting, and benchmarking at the click of a button.

 They now do monthly reports to, I believe a group of their clients, I believe it's about 80 clients for them, and they say that they save an hour and a half per client per month. So for those 80 clients, that's five days of time for them each month that they're saving by using Fathom as well. And they've also found some other benefits, like, you know, sending branded reports to their clients, their name has stuck more for their clients, been more top of mind. And so they find that they're getting more referral leads as well from their clients or that are coming through the clients rather.

Julius: I just want to zoom in on something you said, moving from an accountant, doing yearly or annual reporting, going down to that monthly level. Well, that simply gives a business owner and the advisor that granular information that they need to steer the business. They don't need to wait till the year has ended and then reports have been created, you know, 2, 3, 4, 5, 6 months after the year has ended. That gives you the ability to a matter of days or a couple of weeks after a month as ended, you know exactly how the business performed in the previous month and you can steer it going forward. And even going beyond that, if a client accounts are kept up to date in their accounting package, well, Fathom works in real-time, so really you have the ability with the click of a mouse.

And it's particularly in this day and age if you're working remotely, or if you're working from home, you can go and check up on your client to see how they're performing at any stage throughout the month if they're keeping up to date with their accounts. So that's something that I personally think is very, very valuable. And as I said, I have used this personally, and I have found it to be one of the most valuable kind of communication tools between myself and my clients. You know, all of a sudden it's on a different level of explaining how the business is performing before, I would still go through and analyze a profit and loss and the balance sheet and the cash flow statement.

But the visual aspect and then their spinoff reports, the KPI monitoring, and you know, like I talked about before the cash flow analysis, that's just really, for want of a better word, it just fattens it out and gives you something really tangible to discuss and guide the direction of a business, you know, every month, not every year. So I find that very useful.

James Irving: That's a great point. I mean, it's kind of amazing actually, that the standard is, you know, annual reporting. When you think about it, you know, what are you really going to do with that? It's so far looking in the past that, you know, you haven't seen all the little things that have happened in between. So monthly, quarterly insights really tightens that feedback loop for a business and helps them make more iterative changes throughout the year to improve and avoid problems as well. 

Julius: So I've had great experience using Fathom as I keep telling everyone, but James, can you tell us, you know, what the latest updates are with Fathom and where we're going in the future?

James Irving: Yeah, definitely, the biggest thing for us in the past year has been releasing our forecasting tool. So that allows you to create a three-way cashflow forecast in Fathom, it's an extremely robust tool and took us quite a while to build. So it's really increased the overall functionality in the tool and what Fathom can do for advisers and businesses. So that's been the main thing and we're working on, you know, rolling out improvements to that after the initial release. 

Other things that are coming, one of the big things is, we're working on a Google Sheets integration, so we'd like to allow users to bring in outside data. So we already allow users to bring in what we call non-financial data, so that could be any data really from outside of the accounting system, but with the Google sheets integration will allow is a kind of an automatic sync with that instead of a manual import. So we're, we're pretty excited about that. 

Some other things we're working on our budgets at the divisional level within Fathom, so you can bring in, divisions, departments, tracking categories, classes that kind of layer below the overall company financials. And currently, we just allow one budget for the company, but you'll be able to bring in multiple budgets and track sort of departmental budgets within a business, which is pretty exciting. But other than that, really just continuing to improve the tools that we have. Oh, we're always taking feedback from users and trying to add in the things that that people want. 

Julius: Just to clarify what is a three-way forecast? 

James Irving: Absolutely, yeah. So a three-way forecast, there's a number of different ways that you can, you know, forecast within the financials. But a three-way forecast is distinct in that because it constantly has the profit and loss, the balance sheet, and the cash flow statement connected. So when you update the profit and loss to say project your revenue out for the next year at a certain growth rate or, you know, project a, maybe you want to buy a new office. So you're going to have, you know, cash going out and an asset, you know, increasing on the balance sheet, everything stays in sync between those three financial statements. 

So you can always see the impact of any change across the financials. So you're going to see how the revenue projection hits your cash flow or your cash on hand, on your balance sheet. You're going to see how that, asset purchase or office purchase, hits your balance sheet and cash flow as well. So everything stays connected. 

Julius: I'll just give you a couple of other real-world examples that I've personally used. And that is that recently one of my clients, they had a child well, they're having a child and they wanted to project out, do their budget and see if they could afford to have the wife not working for a long period of time.

So it was a fairly easy calculation, but then what we're looking at the numbers in this forecast, it was really obvious that the cash flow of the business went up and down every single month. And that was due to the sales tax, that they were paying they're paying it every second month. So this was a business that was in a high growth phase and they wanted to invest a lot of money in growing their levels of stock. So from that, we introduced that every second month is not a good month to be investing in stock, they'd have to invest in stock in every other month to keep their cash flow at a good level. So on a level that I've personally used it, that's what I found the cash flow very good for. 

James Irving: That's a great example. 

Julius: Absolutely. Now to close this interview, James, are you able to give our listeners a couple of gold nuggets of advice that will help them as business advisors, consultants, or coaches? 

James Irving: I will definitely try. So I'm, you know, not a consultant by background. So I can't speak from my own experience in that way, but I can speak from the experience of talking with a lot of advisors and helping them on their journey with Fathom and kind of understanding their challenges. And so a couple of things that I've really noticed that a lot of advisors and consultants, especially if they're transitioning from a different background, it can be really intimidating to lead their clients. So I would say, you know, don't be afraid to lead your clients, that's a really important one. Your clients want advice, they want help, and they want that close relationship a lot of the time, so don't be afraid to lead them. And, you know, depending on which client, maybe not all of them want that relationship, but the ones that do, you know, lead them through it. 

And the other piece is to ask killer questions. You know, I think the quality of answers you get from clients and the depth of the relationship that you have with them can really be improved by asking insightful questions. You know, questions that might shine a light on an area of their business or the way they do things that they don't really want to look at, or they haven't really looked at in a while. And so asking those really insightful deep questions can change their perspective. And that's where the real change happens I think, where they can see it for themselves rather than just being told to do something. 

Julius: When it comes to guiding your business, James or leading a business owner that you're involved within and you're engaged with, I find that the Fathom tool, the goal seek, goal seeker I think, that is just super valuable because you can look to see where the business is now and you can set a goal of where you would like a particular metric to be in the future. Be it gross profit or net profit or anything basically, and you can figure out a way to get there and use that as a software come personal tool that kind of backs up what you're saying as a coach or a consultant. And you've got something else, something that's crunched the numbers and telling you, yes, this is possible and this is how you could do it. 

James Irving: A hundred percent, I think that's a really powerful tool. It's a very simple one, but it really, really helps to see what's possible and how to make improvements in the business.

Julius: Now, Fathom is so valuable that we've actually integrated it into the ConsultX system. So all of our members and users that do join us, actually get access to use Fathom with their clients. So James and I, we worked together to set that up, about a year ago. So that's a very useful thing if someone is wanting to become a consultant or a coach with us, but if there's other people that just want to connect with Fathom James, where would they do that?

James Irving: Yeah, well, you know, hopefully, they connect with ConsultX and they use Fathom through your network as well, Julius. But if anyone is interested in learning more about Fathom, our website is the best place to do that. www.fathomhq.com, check it out for more information and we also have a free trial that you can have a look at there and actually try the tool out for yourself. 

Julius: Well, thank you very much for that, James. It was a very interesting and insightful interview into how technology is really shifting the way that we can work as a consultant or a coach and how that can benefit the end-user. That is our clients and make their lives better because after all, that is what our goal is when we're working with these companies. 

James Irving: Absolutely. Thanks so much, Julius for having me on, really appreciate it.