Tag: accountant profitability

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Should You Take Your Practice To The Cloud?

I’ve seen a lot of articles lately (and written more than a few myself) directed towards accounting professionals and “taking your practice online” or “taking your practice to the cloud”.  At this point, when a professional asks me the question “should I take my practice to the cloud”, my response generally comes in the form of two return questions.

The first is “what leads you to believe you have a choice?”

The second is “what makes you think you haven’t already?”

There are a few realities about doing business today that can’t be ignored and cloud computing is at the top of the list.  Professionals can recognize these realities and work with them or fight the changing tide and lose out to more relevant providers.

To address the question of choice, let’s consider the fact that many of today’s entrepreneurs and small business owners have been exposed to Internet services and online technologies for quite a long time.  Use of these services has become an ingrained element in daily life.  Not using online technologies seems “old school” to these folks and is often perceived to be due to some deficiency in the ability to understand or use new tools.  If professional service providers aren’t able to leverage online tools to provide the access, collaboration, and higher level of service which business owners demand, they won’t work with those business owners for very long.

In addressing the “what makes you think you aren’t already?” question, let’s consider the fact that almost all of the accounting software offered today has incorporated cloud-service or Internet-based functionality in some manner.  Even the tried and true desktop editions of QuickBooks financial software  have quite a lot of web service functionality designed in to the product.  Where credit card processing was once an offline (or telephonic) process, it’s now an instantaneous service delivered via the net.  Payroll?  Tax tables aren’t just downloaded to the software where you perform the processing and calculations.  Payroll is a service, delivered via Internet connectivity to Intuit’s payroll service bureaus (or ADP, Paychex, etc.).  Even banking is less traveling to the establishment and more Internet access and data exchange.   We don’t think twice about downloading transactions from the bank computers instead of working from the paper bank statement.

Internet/web/cloud service and functionality has become a pervasive element to almost every aspect of software and computerized business support systems, and it’s a pretty good bet that your firm is already using it. So, let’s not spend our time asking a silly question about whether or not it makes sense to “take the practice to the cloud”.  The obvious answer is yes.

Make Sense?

J

 

Original article: Should You Take Your Practice To The Cloud? You’re Still Asking?
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Cloud and Digital are Driving Change in Professional Practice

Accounting and Finance Professionals: Cloud and Digital are Driving Change in Professional Practice

Accountants and financial consultants working in public practice are experiencing a revolutionary change, evolving from documents and paper-based processes with after-the-fact reporting to real-time business management and providing services which support daily decision-making.  The underlying cause for this evolution in business accounting is the technology: cloud and collaborative computing models are enabling much closer and regular interaction between accounting professionals and the businesses they serve. Even more, technology is taking its proper place in automating once tedious activities, allowing professionals to focus on causes and results rather than on transactions.

What is the real impact this is having on the accounting profession?  It’s forcing a new focus and attention on change management within the practice, and is causing professionals to recognize the requirement for standardization of processes and development of controls which are the foundations for creating sustainability in a business.  The goal now is placing reliance on process rather than people, which establishes the basis for intelligent automation.  Standardization of processes does not require that the firm lose its personality.  Rather, the mission at hand is to imbue the organization with its unique flavor and approach and to use process automation to develop and support consistency in the functions performed.

While cloud computing models allow accounting and finance professionals to work closer with their business clients, it is important that the practice look at those client interactions and develop standards for processes supporting frequently performed functions.  These operations generally represent the activities within the firm which generate the highest levels of profitability due to the consistency in approach and repetition of tasks, and are the activities to apply intelligent automation to first.  Those activities or engagements which represent the “one-offs” are often the most costly for the firm to perform, and therefore may not be the most profitable of activities and are certainly the most challenging to support with any significant level of automation.  It is in this area where AI will find useful value in the practice, where a more informed answer than simple process automation is required.

The surprising finding when looking at many professional practices with more than one partner/professional involved is that these firms often fail to develop even the most basic of standard processes which apply throughout the firm.  Rather, each partner or professional has “their way” of handling things, which challenges the supporting personnel as they try to deal with multiple working methods. The result is a lack of consistency in the service delivery to the clientele and reduced productivity and profitability for the firm.

The thing that these firms are failing to recognize – the light bulb over their heads that just isn’t lighting up – is that cloud computing and collaborative working models aren’t designed just to enable and facilitate a closer working relationship with clients.  They’re also able to be applied inside the professional practice, enabling a more productive and efficient workflow which addresses the strengths and capabilities of the entire organization. And it doesn’t stop there.  Businesses are relying upon their accounting professionals to provide guidance and develop controls and standards to support the client transformation from paper-based to digital operations, and embracing the entire realm of data and interactions associating with the business. Digital transformation in a client business demands transformation in those firms who serve it.

As professionals learn to go deeper in client operations they would do well to look internally, too, exploring how increased attention to process automation and consideration for the firm’s own “digital transformation” might lead to great profitability through market differentiation and improved performance.

Make Sense?

J

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Taking Action to Expand Overtime Protections | whitehouse.gov

The Department of Labor is finalizing a rule to update overtime protections for workers. “In total, the new rule is expected to extend overtime protections to 4.2 million more Americans who are not currently eligible under federal law, and it is expected to boost wages for workers by $12 billion over the next 10 years.”

Source: Taking Action to Expand Overtime Protections | whitehouse.gov

This is a difficult subject for everyone involved – workers and business owners alike. Increases in minimum wage, increases in employee health care costs, and adjustments to wage and hour regulations all serve complicate and cost businesses more.  Fair payment for time worked, a living wage, and protections for workers from employer abuse are things that are expected – deservedly so – by employees.   Definitions vary, as do circumstances, so a one-size rule never really fits all and someone, somewhere, feels the burn.

A USA Today article on the subject describes Labor Secretary Thomas Perez as saying “the salary threshold was originally intended to exempt high-paid executives but instead has denied overtime to low-level retail supervisors and entry-level office workers who often toil 50 to 70 hours a week.”

On the other hand Dan Bosch, head of regulatory policy for the National Federation of Independent Business, was described as saying that “many small businesses can’t absorb the added cost and will instruct employees to work no more than 40 hours a week, bringing on part-time workers to pick up the slack”.  From Trey Kovacs, policy analyst with the Competitive Enterprise Institute: “The Obama rule puts a huge cost and regulatory burden on employers, who will face pressure to cut back on benefits and full-time employees”.

A bill was introduced on Thursday by Republican congressional leadership hoping to block the proposed overtime rule. The proposed legislation, Protecting Workplace Advancement and Opportunity Act, is intended to ensure that the Department of Labor takes a “balanced and responsible approach to updating federal overtime rules.” Sponsors of the legislation include members of the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Education and the Workforce.

Part of the bill’s consideration may be the burden of record keeping and information management that just keeps growing ever larger.  The current DOL changes, for example, now suggest that businesses must keep time and attendance records in detail for their salaried employees who might qualify for overtime compensation.  Getting employees to keep time cards or complete timesheets  may not be an easy thing to do, yet punching a timeclock and tracking their hours may become their new normal.  Some employers, on the other hand, will elect to simply raise workers’ base pay to the new threshold, avoiding paying the overtime and skirting the need to keep detailed time records.

logo-we-heart-employees

The extension of overtime protection to another 4.2 million Americans, and boosting wages by $12 billion over the next 10 years is the expectation for the new rule’s impact, although opponents suggest that employment (and employers) will suffer, reducing their workforces while absorbing costly HR management processes just in order to comply.

The rule is likely to touch nearly every sector of the U.S. economy, with the most notable adjustments occurring with nonprofits, retailers and hospitality (hotel and restaurants), as these are the industries generally having management-level workers whose salaries are at or below the new threshold.  Whether the outcomes of the rule will be as expected remains to be seen, but it is certain that many businesses must now put in place software, systems and processes which will help not just help them comply with new wage and hour rules, but deliver enough intelligence to support better personnel management, employee scheduling and labor cost containment.

jmbunnyfeetMake Sense?

J

 

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Skinny Isn’t Just for Jeans: Lean Business and the Service Sector

Skinny Isn’t Just for Jeans: Lean Business and the Service Sector

elastic-2Doing more with less is the mantra of today’s business.  Hiring more people or throwing money at a problem is almost never the best way to solve it… even if there are people and dollars to throw.  Businesses are feeling the crunch today more than ever, in some part due to advancements in technology and the emergence of retail and “self-service” service. Once upon a time it was OK to be a fat dumb and happy business, but those days are long gone.  With competitive pressures increasing – and emerging from new sources – just about every business is feeling the need to trim some fat – cutting costs and streamlining processes even as customer demand increases.

Lean and efficient business isn’t of concern just to manufacturing sector, even though that is where you most frequently hear about initiatives relating to process improvements tied to quality management. Professional service firms should also seek to identify areas where cost or time efficiencies could be gained while at the same time preserving (or improving?) quality of service delivery.  Price of service isn’t necessarily the largest factor in meeting the competition, but quality of service for the price and delivering on customer expectation are right up there as top priorities for buyers.

Quick: What do legal professionals and assembly-line workers have in common?

More than either one might think, apparently. After all, the “lean” approach to manufacturing—a concept which rolled off the Toyota Production System, only to be delivered to ailing U.S. auto giants in the late 1970’s—wouldn’t immediately seem applicable to workplaces where the heaviest lifting involves leather briefcases. As for paring resources, such as inventory, down to a minimum—it seems like overkill when applied to pens, yellow pads, laptops and file folders.

But the lean concept long ago roared out of manufacturing and parked its principles in service industries: lean accounting, lean healthcare, lean startups.

http://performance.cfo.com/2015/05/11/the-real-skinny-on-lean/

Professional service firms are being compelled to reduce costs just to compete, and are finding that cost-cutting isn’t all that is required.  Rather than doing more with more people, firms have begun to recognize that getting more done with fewer human resources is the goal – a goal which must be achieved without sacrificing quality of service.  In fact, most firms are now actively seeking ways to increase production and improve service levels, and to do it without increasing headcount and cost.  Client needs are changing and demands for higher levels of service continue to increase as society more fully embraces social computing and DIY.  Technology is impacting how businesses do business, and sometimes is the basis for establishing a new standard by which all competitors are then measured.  

Technology advancements are among the primary drivers moving service firms to explore leaner and more efficient ways of working. As more sophisticated tech and the resultant capability it delivers is made available in the market, more businesses begin to recognize that the “traditional” providers of certain services may no longer be the most cost efficient suppliers.  Competition often emerges from some of the most unlikely of sources, and this new reality is impressing itself upon even the sturdiest of professional service firms who find themselves facing new threats to the status quo. 

Like all customers, legal clients seem to have grown fussier than ever. One study estimates that about 60% of large clients replaced one of their top two law firms last year—citing mediocre service. As is true across industries, the cost of acquiring new clients only heightens the appeal of retaining existing ones.

via The Real Skinny on Lean: It’s out of the Factory and into the Service Sector – Performance.

There is much talk among accounting and legal professionals as to what the “firm of the future” might look like.  Are these firms highly efficient producers of service that rival the lean manufacturers, leveraging insight and innovation to deliver more value? Or are they adopting technology simply for the sake of change?  There is a difference between change and improvement, and not all changes result in the desired improvements to operations, efficiency or quality of service.  For the firms seeking to increase their competitiveness in a rapidly changing market, applying measurements to the various processes the business performs can reveal the secrets to improving not only process performance and product quality, but resultant profitability. https://coopermann.com/2013/03/18/philosophy-of-process-improvement-todays-cfo-focusing-on-operations/

jmbunnyfeetMake Sense?

J

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Trusted Advisor is About the Work, Not the Title

Trusted Advisor is About the Work, Not the Title

Many accounting professionals believe they are THE trusted advisor the client comes to for advice and guidance on business financial matters.  Having fully bought into the messaging about the value of the accounting and tax work, these professionals are feeling pretty relaxed about their client engagements.  They believe the client will come to them with questions and provide the opportunity to deliver advice or work.  And each year  many clients return to get their taxes prepared or financial statements produced, and even new clients may appear.  But the work remains largely the same – financial statements and tax returns, and addressing additional needs only when the client brings it up, which isn’t all that frequently.

happy_clientOn the other hand, there are professionals who recognize that a proactive approach to helping clients results in better and richer client engagements and better-performing client businesses.  These professionals are truly the business advisors to the client – the trusted partners who understand the variety of conditions which impact business performance and care to make sure they are properly addressed.  This advisor not only reports but makes recommendations and provides guidance on certain situations or processes which are essential in the business model.  These professionals recognize that the bookkeeping and operational information collection is not simply a means to an end; these professionals understand that these foundational processes and the information they encompass are the important details which reflect the true performance of the business… details which no summary report can fully describe.

Having more direct participation in clients’ financial systems is a highly successful component of practice building, helping the firm to mine opportunities that may be hidden in current or new client engagements.  This does not mean that the accounting professional becomes part of client operations or workflows.  Rather, it suggests that the accounting professional understand these aspects of client operations and assist in the development of necessary controls and processes involving data collection or validation.  It may include the implementation of KPI and benchmarking solutions to help identify problems and map improvements, or it may involve the installation of a solution to improve the importing of orders and other transactions into the system, improving the efficiency in processing the information while at the same time reducing the potential for manual data input errors.

Regardless of the depth of direct involvement in client systems, professionals can more fully benefit from every client engagement by providing some level of training, consulting or supporting service in addition to compliance and reporting work.  Services may be aligned toward helping clients set up or support their own in-house bookkeeping and controllership responsibilities, or they may be more suited to providing real-time guidance and review of client business performance data. Either way, the quality of the financial information derived is generally far better and requires less work to adjust and report on.

The key is recognizing that the work involved – whether it is through training, regular process and data reviews, or more direct participation – is not intended to simply streamline reporting on outcomes.  The work the trusted advisor performs is intended to help the client save money and improve business and financial performance, and the practice is rewarded with higher value billable services and a much increased opportunity to engage the clientele in other efforts.

jmbunnyfeetMake Sense?

J

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State of the Union: The Irrelevance of Good Accounting?

State of the Union: The Irrelevance of Good Accounting?

financeI’m a little concerned, and any professional in accounting and finance who works with small businesses should be just a little concerned, too.  Why?  Because there is a belief out there that some nifty software and Internet Of Things (IoT) approach to finance will ultimately eliminate the need for a small business to work with skilled, trained accounting professionals.  Remember the marketing slogan introduced by Intuit with QuickBooks – the one that suggested that, “if you can write a check, you can do your own books”?  Most accountants will tell you that it is not true, and the ability to operate a product like QuickBooks does not magically turn poor accounting and bookkeeping information into good business data.  In fact, it most frequently enables bad information to turn into bad business decisions – quickly.

DIY bookkeeping solutions have been around for a while, so why the distress about it now? Up until this point, it hadn’t been so overtly stated to small business owners that having less-than-great accounting data is very much OK, and that the role accounting professionals play in small business finances is more of a burden than benefit.  Consider the statement made by President Obama in his recent State of the Union address:

“Let’s simplify the system and let a small business owner file based on her actual bank statement, instead of the number of accountants she can afford”

If I’m an accounting professional, I am pretty steamed up about that statement because I know how screwy business accounting data gets when the work is done by folks without the proper training.  Incorrect or improper accounting treatment can make a big difference when it comes to filing those taxes mentioned…. and not in a good way.  That transaction on the bank statement… Is it a cost of goods sold or a regular business expense? Is it an asset or supply item? Is it a reimbursement or revenue?  Is the payroll deduction before or after taxes?  Is that even a viable payroll deduction item?  These questions and more arise frequently in a small business, and the treatment for these items is improper as often as not.

There is a big value in what a trained accounting professional can offer a small business owner, and the value often translates to eliminating unnecessary tax burdens and the delivery of accurate reporting – both of which are really important when it comes to actually trying to grow a healthy and sustainable business.

Small businesses are often considered to be the fuel powering our economy.  Doesn’t it make sense for us all to recognize that smarter businesses are likely to be more successful, and that more successful small businesses means growth in the economy?  The importance of good fiscal and financial management and reporting – in business and in government – is not something to minimize, and suggesting that it takes no intervention or skill to do the job properly reflects poorly not only on the person saying it, but on the entire establishment.

jmbunnyfeetMake Sense?

J