Tag: accountant profitability

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The Collaborative Online Model for Small Business Accounting Professionals

Accountants and bookkeepers serving small business clients are facing a growing problem – how to provide services that are valuable to the client in a way that makes it profitable for the provider.  Part of the problem is that small business, while they need quality accounting and bookkeeping services, have a hard time paying for it unless the person doing the work is sitting in the office producing tangible reports and paperwork all day long (and maybe answering the phone while they’re at it).  Accountants and bookkeepers working with a variety of small business clients can’t be profitable when they have to travel to client offices to do the work or pick up and deliver files and paperwork, and they certainly aren’t expecting to be the office receptionist while they’re there.

The solution for both is an online working model, where the outsourced professional and their client can both login together.  Each accesses the applications and data to get their work done, and is able to access when and where they need to.  Online accounting approaches help service providers increase their profitability at the same time they increase their level or range of service provided to clients.  With a collaborative online accounting model, professionals and their clients can work from anywhere at any time, giving both the freedom to focus on what needs to get done.

This doesn’t necessarily mean that the bookkeeping or accounting solution has to be an “online” service, per se.  Looking at the accounting product alone isn’t often the best way to solve the mobility and managed service problem for the client, which is really what “online” for the client is about.  The fact that their service providers (accountants, bookkeepers, etc.) can also work in the system is of secondary benefit to the client.  The worst thing an accounting pro can do is tell their client they have to switch accounting solutions just to make it easier for the accountant or bookkeeper.  It makes sense to improve that situation, but accounting/bookkeeping isn’t generally the entire IT requirement for the business client.

An online working model enables collaboration with team members and providers alike.  Reducing or eliminating the requirement for sophisticated technology solutions is the key element, providing everyone the ease-of-use and security of server-based computing.   The real benefits include centralization of business application management, protection data resources, and the ability to more fully streamline business processes.   For many businesses, the earned benefit is increasing the capacity to do business profitably simply by making the current working model much more efficient and effective.   The benefits are there for both the client is collaborators to experience, and this is where the focus should be – on the benefit to the small business.

Accounting professionals can also seamlessly increase their own opportunity and value by embracing a collaborative online working model.  Through the use of outsourced bookkeeping, payroll services and other providers, accountants can increase or expand the services they offer to clients by seamlessly incorporating them into the overall offering.  An online approach makes this possible, and can position these valuable services as the key to client business success. Working online together, professional service forms and their contractors or outsourcers can work closer than ever before, and the accounting professional is positioned to deliver far more value to the business client.

An online working model improves the profitability of the professional practice, too. The movement of information from one place to another, the restructuring of information from one form to another… these are processes that represent the cost and inefficiency in the professional accounting office.  By working online in client accounting solutions along with the client, firms can reduce or eliminate redundant and time-consuming work that is the bane of the practice. Bookkeeping, property tax compliance work, payroll, HR and benefits administration – these are areas where outsourcing may make the most sense for the practice while enabling accountants to increase the overall value of service provided.

Does your professional practice offer valuable business services like these for your clients? Profitably?

A collaborative online working model can enable your firm to deliver the range of services business clients need most while improving the bottom line for both.

Joanie Mann Bunny FeetMake Sense?

J

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Accounting Professionals, You’re right – your clients don’t care about the numbers.

Accounting pros, what your clients care about is how they’re doing and if they’re on the right path.  Are you helping them understand that, or are you just the guy who works with the numbers to make sure they’re accurate?

Accounting professionals are having a hard time of it right now, with clients demanding more insight and assistance in helping to build value and profitability in their businesses, yet accounting professionals continue to be mired in the details of the numbers.  It’s like the old saying about not being able to see the forest for the trees.  You spend time in the trees, counting trees and making sure the trees are properly categorized, but are you seeing how this group of trees performs compared to others in the forest?  The analogy isn’t that far off.  You see, if there are other trees in the way, or if it doesn’t rain enough, the tree won’t grow and thrive.

This is what it’s like out in the world, where your business is just one of many.  It’s not like you can grow and thrive no matter what others are doing. If they’re bigger than you and take all the light, then you can’t grow.  If they take all the nutrients and resources, you can’t grow.  If it doesn’t rain, you can’t grow.  Somehow, some way, you have to find a way to stand above the others, get the light and the resources and the rain.  Someone in the business should be paying attention to this bigger picture, and it is often the business owner.  Their accounting professionals, on the other hand, tend to remain in the dark, below the sun, counting numbers because the owner isn’t interested in counting.  The owner is interested in growing.

Accounting is about numbers, but growing a successful business is about numbers and strategy.  Historically, the numbers tell you how the business has performed up to this point.  Adding in the elements which speak to strategy, you can then look at what your potential performance will be in the future, and then make the necessary adjustments to make sure that the potential is realized.  The accounting professional acting as a small business CFO must be prepared to help business clients look beyond the numbers to their meaning and what they say about the business today, factoring in elements relating to business strategy and market forces to reveal what they indicate about the future.

Accountants, it’s time to recognize that you are the only ones really worried about the numbers.  Business owners just want to understand what the numbers mean and what they can do about them.

Reducing costs and managing expenses and cashflow is critical, yes, but how many business owners actually know what they’ll be up against when looking for financing, or a buyer? Or do they even realize that they’re not on the path they wanted… building something valuable they can leave to the kids? Sure, the cashflow may be there, and they’re taking a healthy monthly salary… but does that really tell the entire picture or show them where they’re likely to end up? No, it doesn’t, and every accounting professional knows that truth.

While it’s true that bad accounting data turns into bad decisions really fast, it’s also true that too many accounting professionals THINK their client’s don’t care about what the numbers SAY just because they don’t care about the numbers. I would suggest that maybe small business owners care far more than their accounting professionals recognize… and they care about building value and not just accurate digits.  This is one of the reasons why KPI dashboards, dynamic reporting tools, and business valuation solutions are so popular among small business owners – they are able to have a conversation with their business data that their accountant isn’t having.

Can self-help reporting and valuation tools be useful to business owners? Well, that’s sort of like asking if trying to figure out what you’re worth (or not, as the case may be) will hurt your business.  Information is power, and every business owner wants to believe they have the power to succeed in their own hands.  Just because they’re not having this conversation with their accounting professional doesn’t mean they’re not thinking about it.  Maybe they’re just not asking and the accountant isn’t offering.

Accounting professionals, go ahead and continue to monitor KPIs and crunch the numbers and show cash flow (real cash flow, not just today’s bank balance). But if your client had 1 hour per month to actually spend working ON the business (on the forest), trying to make sure their business is heading where they originally planned to go with it, wouldn’t it be a good idea to show them where to spend that time?  Yes, it would, and adopting the use of realtime reporting and analysis tools for business clients can help do that.

Data dashboards and decision-support solutions are important tools which help business owners understand their businesses better.  Rather than viewing these tools as dangerous or competitive, accounting professionals should view financial analysis, business valuation and KPI reporting tools as something they can use to help build value in the information they develop, rather than trying to convince clients that the value IS the information and not the guidance it suggests.  The data won’t make the tree grow, it’s the guidance that feeds it.

Make Sense?

J

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Bookkeeping and Benchmarks – Getting the Numbers Right

I am a big fan of business analytical and reporting tools.  I very much believe in using industry benchmarks as a means to understand various aspects of business performance as it is compared to others.  I feel strongly that this type of information is essential at all stages of the business, and is useful for planning and forecasting as well as in daily business management.   There are a lot of tools available now which provide KPI (key performance indicator) reporting, dashboards, and industry comparisons.  The thing that none of these tools provides is an assurance that the underlying data is any good.

For data-driven reporting and analytical tools, the reliance upon customer- reported and accumulated benchmark data is both the benefit and the problem.  Drawing upon actual customer financial data is what makes the reporting solution useful – reflecting the realities of the business as they are revealed in the accounting data.  The problem is that the data will often be flawed in some manner due to the lack of accounting knowledge of the user.  Particularly when small business owners take it upon themselves to perform their own bookkeeping work, there is a large potential for the information to be incomplete or erroneous, or at least not truly reflective of the business finances.

It is essential that accounting professionals be involved in the accounting process to ensure the accuracy of the information presented to any analytical and reporting solution, thus improving the quality and value of the information.  Further, I would suggest that accounting and business professionals would look to these types of tools to assist in the identification of issues or conditions which exist in the business requiring attention.  Business owners would get far greater value from the services of their accounting professionals, and accountants would deliver a much higher level of tangible value to their clients.

If the accounting professional is not regularly discussing business issues and conditions with the small business client, the client can use their own tools to attempt to gain the insight.  HOWEVER (note the big letters), any small business owner who tries to do their own books and use their own decision-support tools is likely to run into problems. While it is true that some accounting professionals are not offering the level of guidance and insight (“value intelligence”) that some analytical and reporting solutions might try to offer a small business user, suggesting that the DIY reporting tool is useful when coupled with DIY accounting is questionable at best.  Why?  Because most small business owners and untrained bookkeepers do not know how to perform proper accounting.  And bad accounting data turns into bad business decisions really fast, even with the coolest-looking reporting tool.

badaccounting

What’s the bottom line?  The participation of a qualified accounting professional is necessary to make sure business bookkeeping information is properly accounted for, even and especially when great tools and solutions designed to help small businesses get their work done are being used.  The accounting professional is necessary to make sure information is classified correctly, connected and associated with the proper supporting information, and that the data is complete.  This is a lot of work if done on a regular basis (which it should be) yet many accounting firms don’t even offer the service, or offer it affordably.

Accounting professionals working with small businesses, look at it this way: it makes more sense for you to engage a contract bookkeeper and make a bit of money on the work they do to serve the client than it does for you to

a) lose the client to an accountant offering bookkeeping services, or
b) charge the client to re-write up the information, which isn’t really profitable for you and isn’t as valuable to the client

Serving larger businesses may provide firms with an ability to be more selective of the services they offer, but small business accountants need to take an entirely different approach.  Small business accounting professionals need to be full-service providers and help clients get the complete range of services they need, including daily bookkeeping.

Accounting professionals helping their small business clients get complete service – from basic bookkeeping to insightful planning and advice – that’s the benchmark for high value accounting in the world of small business.  It’s the only way to make sure the numbers are right, and that the business owner is looking at the right numbers.

jmbunnyfeetMake Sense?

J

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Getting out of IT Jail

Getting out of IT Jail

I have a friend in the accounting/technology industry that spends way too much time on his business in-house IT.  He’s always futzing around with servers and workstations, fixing corrupted data files or PCs that won’t launch applications, and setting up remote access so he can work at home (which he never actually does because he’s at the office fixing IT issues).  More often than not, when I try to get time to chat with the guy, his response is “I’ll have to call you later; I’m in IT jail”.  As a side note, my friend is Doug Sleeter, a recognized leader in the world of small business accounting and among QuickBooks accountants, consultants and advisors.

My friend works a lot with different solutions and technologies designed to make it easier and more effective to get accounting and business information collected, processed, stored, and reported.  He reviews tons of different solutions each year, and looks for those he believes can truly make a positive impact in the life of a business owner.  My friend also, as he puts it, “eats his own dog food”, meaning that he actually puts into place many of the solutions which he finds to be beneficial so that he can experience their benefit in his own business.  His proven experiences then translate to support for the solution in the market.  People need to know that a solution will actually do what it is supposed to do, and many wait for someone else (someone they trust) to go first so they can use the customer feedback to help them make a decision.

My friend clearly recognized the growing value of cloud solutions and how implementing cloud-based services to solve specific business problems might be a more effective and affordable way to address growing business needs than with traditional ERP models or installed software approaches.  Using different tools that work together (his term for this is “chunkify” 🙂 ), even very small businesses could now affordably address the various operational and financial information management needs which exist at some level in all businesses.  Following along with his previous commitment to use and not just talk about these things, he began the process of selection and implementation of various cloud-based applications, tools and integrations for his desktop QuickBooks software.

No battle plan ever survives contact with the enemy.  thesis on Military Strategy, German Field Marshal Helmuth Karl Bernhard Graf von Moltke 

It was going great.  Application services subscribed to were working as expected, and all sorts of information was fairly seamlessly flowing to and from QuickBooks.  And then, it happened – his bookkeeper moved away and wasn’t able to work in the office where the accounting software and data were housed.  Take a deep breath. Okay, so back to the remote access thing, and more IT jail.

He worked diligently to create remote access for the now-remote bookkeeper, and remote desktop service worked OK, but it was “a pain to keep working, and it never could give the type of performance we were trying to give her”.  Go figure, the one piece of the puzzle left in the office was the one making everything else more difficult and costly.  He was in IT jail once again.

The final step was to get the QuickBooks software and company data out of the local network and in a safe and secure and fully-managed environment.  Particularly since QuickBooks is (in this case) the centerpiece of the business accounting system, it became essential to place it in an environment where it would be maintained, monitored, and protected by people who specialize in that sort of thing.  My friend, like most business owners, just didn’t have the time and resources to have the level of IT and management that an outsourced commercial service provider could offer.

See The Sleeter Group’s  QuickBooks and Beyond article Still Addicted to Desktop Software? Get it Hosted in the Cloud

Intuit even recognized that businesses needed a better way to run and manage their QuickBooks desktop software, so they created an accredited hosting program to allow service providers to offer application hosting and license management services to QuickBooks users.  My friend now uses one of these providers to host his QuickBooks and other desktop applications.  He still has all the integrations and features he had before, but isn’t required to spend time and productivity fixing hardware issues or software installation problems.  His software is installed, maintained, and actively supported by IT professionals who are focusing on nothing more than keeping his systems up and running.

In his own words, “the hosting move offloaded us from having to mess with providing access, and at the same time it improved performance and delegated the IT management”.

For a time my friend and his business went without a high level of IT management and support, but now he completely recognizes that he needs it and is finding it to be well worth the cost.   Now he’s got his own “get out of jail” card.

Make sense?

J

In case you didn’t know it, both Intuit and Sage have programs for service providers, providing authorization to host and deliver small business financial software products to direct customers.

Get information on Intuit’s Authorized Commercial Hosts for QuickBooks here, Get information on Sage hosting partners here.

If you need assistance deciding how to get your applications and business online, or selecting and implementing with a service provider, we can help.

Read more: Cloud Hold Out No More: QuickBooks Desktop Editions in the Cloud

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Remote access to client bookkeeping comes in many forms because clients come in many forms

There are a lot of conversations in LinkedIn and other groups, where bookkeepers and accountants are discussing their various methods of accessing client QuickBooks data and applications remotely.  While these conversations are quite helpful for some folks, there are others out there that simply get confused due to all of the possibilities.  There are many ways to work remotely with QuickBooks clients, and there are a lot of different situations where one approach may work better than others.

The key to remember here is that REMOTE ACCESS MATTERS.  Time and distance is the enemy when it comes to outsourced bookkeeping, and whether you like visiting your clients or not, having remote access to their data can be the key element in providing the highest level of service and value possible.  Remember when PCanywhere became available, and we were all excited because now we could use a modem to dial directly in to the client PC?  OK, maybe I’m talking to a crowd that’s too new to remember that excitement, but believe me, remote access is something all outsourced accountants and bookkeepers have been looking for.  Now that really good options are available (a lot of options), it makes sense to get a better understanding of what you can and can’t do with various remote access approaches.

First, when you’re looking at any true SaaS solution (true being a relative term, but here we mean an app service that was built for the web and is offered as a subscription model), consider that the solution exists only on the web, and that when a business subscribes they are generally subscribing to a single company data set.  Unlike QuickBooks desktop, for example, where you can have numerous company data files, QuickBooks Online and other SaaS solutions generally build a single company data file associated with the subscription.  When you want to access different companies, you may have to log in as a user of the company you’re accessing.

If you’re an accounting professional, there may be an edition or approach that allows you to connect to multiple client accounts, but then again, there may not be.  So be prepared to have to log in as each individual client to access their data.  When this becomes the situation, what’s the difference between one client having QB Online and one using Xero, Wave, FreshBooks or Kashoo?  None, really, other than the fact that you need to get to know all of the solutions a bit.  As a bookkeeper or accounting professional, this shouldn’t be so much of an issue, as debits and credits and basic accounting theory doesn’t change with the accounting software (basic “accounting theory” isn’t really available for redefinition).

The other thing to recognize about these solutions is that the data belongs on the web with the app, so it’s not like you’ll be copying the data file to your PC to work on.  You might export the data to another solution, but you won’t be using the SaaS solution offline.

If the client isn’t using a SaaS solution, then it is likely a desktop solution, where the application is installed on their local PC.  This type of solution – QuickBooks desktop editions being the most popular and easiest example to work with – gets installed and runs from the PC.  Data may be stored on the PC or on a network hard drive, but the program is running locally on the user’s computer, and is using resources on the local computer (memory, processor, etc.).  There are only a few ways to make this type of application into something you can access remotely, and one of them is by using a remote control approach.

Remote control is where one computer connects to and controls certain aspects of another.  This is like the old dial-up approach, using PCanywhere-type applications to control one computer from another.  These days, the Internet rather than a dial-up phone connection is the preferred method, and there are web service providers which “broker” the connection and communication between computers, providing added features and layers of security.  Using a remote control solution (examples are LogMeIn or GoToMyPC) simply allows the user on one computer to control the keyboard and mouse, and view the display, of a remote computer.  It doesn’t matter what is running on the remote, so a bookkeeper could use this approach to access a client PC and QuickBooks desktop applications and data, or even to connect with the client so they can log in to QuickBooks Online or Xero together.

Some bookkeepers work with their clients, showing them how to do things and connecting to client resources in order to get work accomplished.  Others connect using their own resources or accounts, and work concurrently with the client.  Still others may export data from the client solution into their product of choice, not even working within the client application at all except to make adjustments and data exports.  It all depends on the collaboration model you and the client have going, and it is unlikely that any single model or approach will work for the entire client base.

QuickBooks hosting introduces a bit of a wrinkle in the concept, but not much of one.  Really, hosted QuickBooks desktop editions should be viewed to be not less and not significantly more than a QuickBooks Online or other SaaS approach.  If the client would benefit from working online (most client would), then having them host their QuickBooks desktop applications and data with a hosting provider makes sense.  However, just because the client is hosting their QuickBooks doesn’t mean that you should immediately assume that you’ll have access to their applications or data.  Like with a SaaS solution, you’ll likely have to have an account to log in with, and that account could be a separate login allowing you to work at the same time as the client, or the account could be one that is shared with the client and where only one of you can log in at the same time.

Since a hosted solution is accessed online just like a SaaS solution is, you don’t have to have the software installed on your own PC, and you only need an Internet connection to access the application and data at any time.  A major difference of working with a hosted solution is that you could possibly have the application installed on your PC, and could copy the data from the host and work on it offline.

With all of the options available, accountants and bookkeepers have realized that the selection of client collaboration approaches depends on a number of factors, and that professionals may end up applying an unlikely combination of solutions in order to address meeting various client preferences as well as their accounting needs.

Make sense?

J

Read more about hosted QuickBooks desktop editions

Read about the race to find the secret sauce of hosted application services for small businesses

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Why is asset management important to a business?

Why is asset management important to a business?

Knowing how efficiently you manage and use business assets to drive revenues and generate earnings is essential to understanding how to increase business value.  While various dashboard reporting tools and solutions designed to monitor receivables, payables and cash flow are helpful in addressing daily decision-making needs, the question asked most frequently by business owners is actually one of overall business value and how to increase it.

chartBusiness value is generating sustainable cash flow.  If you run a highly efficient business, the more top-line growth you deliver, the more cash flow you enjoy.  For capital-intensive businesses (either through the need for capital equipment or working capital), growth can actually lower your cash flow and diminish your business value.   To understand which side of the equation your client resides, accounting professionals will often look at the return on total assets calculated over time, dividing the operating income for each period from the P&L by the appropriate period values of total assets from the balance sheet.  The resulting metric describes how efficiently assets are applied to creating earnings.

Understanding the return on total assets helps business owners understand whether or not the business has to spend more money in order to grow the same volume of earnings.  A higher number indicates the business uses its assets efficiently and effectively to drive revenue, while a lower number demonstrates a higher cost of growth.  Accountants and business advisers should be monitoring this metric for their clients, helping to identify which path to profitability and growth makes the most sense for that particular business.

The numbers will vary with different business types, so comparing client performance to others in the same industry can provide a great deal of strategic insight.  The “return trend” may also be benchmarked against the competition and peer businesses.  If the business is utilizing assets more efficiently than competitors, it can represent a significant business advantage.

Accounting professionals need to take a proactive approach to working with clients, and make use of the historical information they’ve developed to deliver business insight and intelligence to help them more profitably move forward.  While every business needs a tax return completed, they also need help understanding how to increase profitability and overall business value. Knowing that there are several ways a business can increase profitability, you can help your client understand that driving more sales and improving margins is only part of the story.  Businesses can also improve cash flow and their return on total assets metrics by decreasing the base of business assets, disposing of excess equipment, or simply by doing more with less.  By doing this, business owners will drive up their business value and create more options for their future.

Make Sense?
Joanie Mann Bunny FeetJ

Special thanks to Matt Ankrum of BodeTree for helping me get this right.  We don’t all have the years of experience or expertise to “just know” what the right answer is, and sometimes we know the data is telling us something new, but we’re not sure what it means or what to do about it.  BodeTree is the tool advisors and consultants can use to not only identify items that need more attention, but to understand what actions to take to make the necessary adjustment or improvement.