Originally posted on Technori on February 6, 2020

This former CFO knew AI could do his job better — so he built a company to do just that‍

• Small businesses that don’t have a CFO but still handle significant amounts of money often struggle to manage and forecast their finances effectively.

• Large certified public accountant (CPA) firms are increasingly looking to expand their services to include financial forecasting and modeling in order to stay ahead of their competition.

• Clockwork’s accounting software uses artificial intelligence (AI) to build a financial forecasting model unique to each of their clients. They also help CPAs offer more advanced financial forecasting services.

No one starts a business because they love grappling with the financial side of it. But understanding your money is key if you want to keep the lights on.

Clockwork CEO Fady Hawatmeh understands this better than anyone. He used to run a CFO consultancy firm where he saw firsthand how small companies struggled to plan for the future.

His clients mostly called on Fady to untangle financial knots. But Fady knew he could be doing more important things. “I’m like, why am I charging my clients several hundred dollars an hour to sit here on Excel when this could be automated?” he says.

That’s where the idea started for what became Clockwork. The software uses artificial intelligence (AI) to analyze each company’s unique data and creates a customized financial model. In addition to getting a clear vision of your current financial track, you can test out different scenarios risk-free. That means no more running up billable hours with a certified public accountant (CPA).  

Speaking of CPAs, they can benefit from Clockwork too. The software helps them offer services beyond the basics. It even works out cheaper because the AI does the grunt work. “We have CPA firms that are saving five hours a month per client over not having to deal with Excel,” Fady says.

Fady joined the podcast to explain why he wanted AI to do the worst part of his job for him, how Clockwork offers clients a safe space to work through their ‘what ifs’ and how CPAs can benefit from the software too.

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Interview Highlights — Fady Hawatmeh from Clockwork

CFOs know you don’t like dealing with money

I used to run my own CFO consultancy. The thing I was doing for every one of my clients was building financial projections, a financial model and cash flow forecasts. I’m like, where are you going to be in a month? Where are you going to be in a year? What does your five-year plan look like? They’re like, I have no idea. And if they had an idea, it was completely bullshit. They were like, we’re going to be the next Uber of blah."

"It doesn’t matter what business you’re in, you have to manage your cash flow and your finances. I knew there was a better way to do it. I’m sitting there with an Excel sheet updating financials at the end of every month. I’m like, why am I charging my clients several hundred dollars an hour to sit here on Excel when this could be automated? I looked in the market and the tools out there sucked.

A safe space to work through your ‘what ifs’

Clockwork’s backend AI will build your entire financial model based on your industry, how many people you employ, how much revenue you have, how long you’ve been around, seasonality and a few other things like that. It will build your five-year projections and your baseline forecast based on what you’ve been trending and all those other factors. And it will build your 52-week cash flow forecast.

You log on to Clockwork and everything’s populated for you: your numbers, your company, your chart of accounts. We’re pulling in transactional-level detail, so we know what runs your company. There’s no template that we’re shoving all your stuff into in the backend. It’s custom-built for every company.

When you’re set up, you get to play all your ‘what if?’ scenarios. One thing that drove me absolutely bonkers when I was running my consulting firm was when my clients would call me and say, what if we went into this market? What if we hired this person? What if we raised our prices? A million ‘what ifs?’

I’d build a model, it would take a couple of hours, and I’d send it back to them. They’d be like, that looks good, but what if we did this and this and this? I was like, I wish you’d told me that at the beginning. Then that would take another few hours.

With Clockwork, the business themselves can go in and add a new row: what if we did this, this, this? It gives a lot more control to the business owner.

CPAs can — and should — get in on the action

We’re partnering with CPA firms: that’s our go-to-market strategy. We have the Clockwork Champions Program where we focus on the top 100 regional CPA firms getting them to offer Clockwork for their clients.

When I was running my firm, I was stealing clients left and right from accounting firms. Accounting, bookkeeping and taxes and all that traditional stuff are all commodities nowadays. All these larger firms are scooping up younger, smaller firms because they need to add more services.

There was one firm specifically in Chicago. I stole 10 clients from them in a month. I went to them and said, why don’t you put me on retainer and offer financial modeling, financial forecasting and cash flow forecasting as a service and I’ll do the work for you. Then you guys can start charging your customers for it. I batted a thousand on every single one of those deals. Now with Clockwork, I’m going back to these firms and saying, how about a software that standardizes the entire process for you?

We have CPA firms that are saving five hours a month per client over not having to deal with Excel and updating the financials and all that kind of stuff. It changes the paradigm: now CPAs are serving as advisors to these small businesses. They walk them through their Clockwork account and they’re like, these are what these numbers mean. This is what we’re going to be doing next year, in two years, three years, four years. And the CPAs become irreplaceable.

Ignore your therapist: in business, projection is essential

Everyone’s like, haha, projections.

No. When you have that mentality, you’re probably not going to get funded. You’re probably not going to be closing those deals, so you’re not really doing anything. Say goodbye to your company because you’re not going anywhere.

Look at all these massive companies: their stock tanks if they miss forecast numbers by half a cent. I used to work for Boeing. We were building these billion-dollar financial models on Excel. You have companies like that being run from Excel. We were updating things from 20 different departments and 40 different people, and it spiderwebs out from there.

If it’s that hectic for a company with as many resources as Boeing — the biggest aerospace company in the world — your tiny little ‘the next Uber for blah’ is nowhere near the diligence that it needs to be.

* Check out the full podcast episode on iTunes and Spotify - and learn more about Clockwork here: Clockwork Overview