pressure to deliver more value – Page 5

January 14, 2013October 28, 2015

Re-defining the role of the accountant, or going back to the good old days?

I grew up in a small town in Oregon where my parents ran a “business accounting office”. Many of the businesses in and around town were my dad’s clients, and we all got to know each other pretty well. Dad, you see, wasn’t simply the accountant, and the people working for him weren’t just bookkeepers. Dad was the business advisor, purchasing negotiator, collections agent, and anything else the client needed that he could provide. He fought for lower worker’s compensation insurance rates, got better prices on truck tires, and in general helped his clients with just about every aspect of running their businesses, including getting more customers and managing growth.

I had always believed that this approach, a consultative approach where the professional was intimately familiar with the business and proactively worked from inside the organization, was what all accounting professionals did. This proved to not necessarily be the case. Over the years, I have found that many accounting professionals focus primarily on the historic reporting of activities in the business, rather than actively helping to improve client business operations and performance on a daily basis.

According to one source, describing the differences between a CFO and an accountant: “CFOs are focused on working inside the business helping it generate wealth – ensuring proper capitalization, fostering the right banking relationships, addressing compliance issues – focusing on the company as a whole. Often CPAs tend to be more focused on specific tasks. Is the year-end audit done? Is the tax return done? …While both are vital to a business, a distinction we see is that the CPA’s dominant focus is historical – looking back to prepare tax returns and financial statements. The CFO, though, needs to be a forward-looking, integral part of the management team”.

It has become a reality that many accounting professionals are somewhat disconnected from their clients, a result perhaps of removing themselves from daily bookkeeping and other tasks. Recognizing the disconnect, many firms are now taking steps towards rebuilding those intimate client relationships by offering services which address more operational and strategic aspects of the business. These firms are offering “CFO Services” to their clients in addition to the standard offerings of financial statement and tax preparation. They have recognized the need become closer to the client business, delving deeper into the intricacies of the operation in order to find areas where improvements may be made and necessary controls instituted.

Accounting professionals seeking to increase the value of the services offered to clients should give strong consideration to what the client recognizes as valuable. Historic reporting is necessary, but finding ways to fund budgets, controlling expenses, helping to guide cash investments and taking steps to improve profitability are how a consultative accounting professional delivers real value to the client, building up the basis for long-lived and mutually beneficial business relationships like the ones my father once built.

Make Sense?

Joanie Mann Bunny Feet J

Small Business Owner to Accountant: Make Accounting Valuable to ME

January 11, 2013

Trends Impacting Every Business | Forbes.com

You think good accounting isn’t a big factor in getting business credit? Consider this tidbit from Intuit’s CEO Brad Smith, from a recent article on Forbes.com:

Two-thirds of Intuit’s QuickBooks customers were declined a loan due to poor FICO scores and other credit measurements. In the Loan Finder trial, a business could opt-in to allow banks to use QuickBooks data to evaluate if a prospect was a credit risk. As a result of this additional data, the banks provided several hundred new loans with an average of $10 million dollars.

Accounting professionals… isn’t this something you could be helping your clients with?

Read more about helping make small businesses bankable

Make Sense?

Read more about how accountants need business intelligence, too
Read more about how there’s no fear and loathing in accounting
Read more about the pressure on accountants to deliver more value and intelligence to their clients
Read more about Data Warriors: accounting in the cloud

January 7, 2013August 9, 2013

Dashboard Reporting Tools: Gauging Accounting Relevance

Dashboard reporting tools can be of great assistance when accounting professionals want to help their clients understand how the business is performing. In most cases, these tools do a good job of showing owners the details of the profit and loss or cash flow reports, presenting the information in a way that non-accountants can understand. Many accounting professionals have turned to these reporting solutions to increase the value of the accounting work performed. After all, if the client can’t really understand the P&L and the Balance Sheet, then the reports won’t do them much good.

While simplified graphical reporting solutions are beneficial to the business, providing more insight into historical business performance, they don’t do much for the client on a daily basis if the accounting data isn’t up to date. Accounting professionals should recognize that these dynamic reporting solutions, tools which can provide business owners with real-time information on business activities and performance, can go a long way towards increasing the relevance of the accountant’s involvement in the client business.

Accounting professionals today are fighting battles on several fronts, and remaining relevant to the client is one of them. This isn’t too surprising, given that many accounting professionals see their clients only at year-end when the tax return needs to be prepared. In some cases, the business owner doesn’t even remember the name of their accountant – they just know they went there last year at tax time. This arm’s length relationship between the accounting professional and the business clients leaves a lot of opportunity on the table for both parties.

When accounting professionals aren’t closely involved with their clients, they risk losing the client to a more attentive, consultative professional. Many firms believe that the low profitability of bookkeeping and processing daily work for clients means that they should focus only on “higher level” opportunities, yet business owners will tend to seek advice from those who work with them on a regular basis, and who understand the issues that challenge growth and profitability.

Accounting professionals who recognize the value of providing regular bookkeeping services to their clients also recognize the value of working closer with the client, providing useful and actionable information rather than historic data long after-the-fact. These professionals are more likely to reap the rewards of “higher level” engagement opportunities from the client, because they help to identify the need and are able to support it with real data and insight earned through regular involvement with the business.

Make Sense?

Read more about how accountants need business intelligence, too
Read more about how there’s no fear and loathing in accounting
Read more about Data Warriors: accounting in the cloud

December 19, 2012September 17, 2013

Accounting Professionals: Is Your Value Tied Up in The Accounting Software?

Subtitle: when all you have is a hammer…

There was a time, not so many years ago, when it made sense for an accounting firm to take the position that all clients must use the firm’s preferred accounting software product or they would not be clients. For these firms, the concept of standardizing transaction entry and data processing across the client base made sense, and provided a means to create maximum efficiency in handling the bookkeeping and accounting processes. Typically, firms handling small business clients would select Intuit QuickBooks for client use, and offered QuickBooks training, QuickBooks transaction processing, and use of QuickBooks add-ons to support the model. With Intuit QuickBooks “owning” the small business market for accounting software, it made sense for accounting professionals to leverage the popularity of the solution to the benefit of the practice.

As cloud-based solutions and online application services have emerged (including QuickBooks Online Edition and Intuit Partner Platform – IPP – integrations), many accounting professionals have simply continued with the philosophy of applying QuickBooks (the hammer) to every client engagement. These firms focus on the software as a basis for delivering what they believe is value in the engagement. In short, these professionals focus their value in the use of the product (licensing, installation, training and support), and in their data entry skills (efficiency in entering and reviewing transactions in the product), rather than in the greater value of business intelligence, insight and actionable advice.

The new challenge facing many professionals – the reality of the current market – is that there are myriad solutions and approaches available to address client bookkeeping and process needs which work really well, and it is not always a good idea to try to turn a client using one of them into a “nail” just so you can hit it with your favorite hammer – QuickBooks. With Freshbooks, Wave Accounting, Xero and other solutions which handle various business accounting or bookkeeping requirements quite well and for an attractive price, small business owners are more frequently electing to implement applications outside of the QuickBooks product line even as their accounting professionals are continuing to promote QuickBooks for everyone. The reason business owners are electing to use these other tools is simple: they work for them.

In reality, this issue has existed in some form for a very long time, and was perceived to be primarily in markets where technology adoption and use is low for various reasons. The truth is that a lot of small business owners find ways to accommodate their information management and record keeping needs, and they use whatever approach works for them and what they want to accomplish. Sometimes the approach involves Internet solutions and online applications, and sometimes it does not (Excel spreadsheets with stapled piles of receipts are still quite popular and in widespread use by SMBs and Entrepreneurs). When that small business elects to engage the help of an accounting professional, the last thing they want to be told is that they have to make a big change to how they get things done. It’s fine for the accountant to provide guidelines for when information will be made available to support getting the accounting work processed, but it is not necessarily okay to dictate immediate changes in software and systems supporting the business daily operations. In a lot of cases, the accounting professional simply has no real basis for the requirement to change, other than to support their own efficiency (which is the wrong basis for making a client change their systems). It’s that silly cost-benefit thing. If it costs the client a lot (change always = cost), and the client does not perceive or experience an expected benefit, then it makes no sense for them to make the change.

Consider a professional accounting firm in Los Angeles, California. This firm serves small businesses, and has a pretty significant market available to sell to. LA is a market where technology adoption is high and broadband Internet is cheap and reliable, so this firm has elected to use a product-based focus (e.g., the QuickBooks approach) in qualifying clients and crafting engagements. Clients must conform to the solution set and the workflow in order to participate with the firm.

Now, consider a professional accounting firm in Elkton, Oregon. This firm serves just about every business in town (population 195) as well as businesses from a few nearby towns. Broadband Internet service is sketchy at times, and provider options are few. This rural area of Oregon is not known for being particularly “high tech”, and computers and software and online application services are not among the things many of these business owners focus on or even care about. The accounting firm serving this market is not focused on what accounting solution the client uses (or not), and they aren’t pushing to have all their clients purchase and install the same accounting software so that the firm’s processes can be more efficient. Interestingly enough, this firm is likely doing better work and probably developed a closer and more intimate relationship with their client than those who have fully “standardized” the client base. The reason is that the firm, whether out of necessity or out of desire, recognizes that each of their clients may have unique needs, and it is up to the firm alone to create maximum efficiency in meeting them. Further, delivering personal service and useful insight instead of simply providing the work product has allowed the professional to more fully reveal their value to the client.

The truth of the small business accounting market is that there are more businesses like those in Elkton than in LA. Accounting professionals should consider whether they are in a position to “filter” their client opportunities based on use of certain software products and online solutions, or if they will accept that business clients come in all sizes and shapes – with various needs and wants and self-developed methods of getting things done – and that the firm is willing to embrace them as they are and work with them.

Make Sense?

December 13, 2012March 26, 2019

Small Business Owner to Accountant: Make Accounting Valuable to ME

Accounting services should be useful to a business owner, providing valuable insight into the business performance and activity. Accounting professionals believe their services have value, but find it difficult to express that value when selling their services to prospective clients.

The problem is that most professional accounting firms believe that what they sell is accounting: accounting services, tax preparation, audits, etc. While this may be the essential list of functions they perform on behalf of business clients, accounting, per se, is not what the professional should be selling – at least, not if they want business owners to buy.

You see, accounting is dumb and boring – a necessary evil of doing business for most business owners. Accounting is what happens to paperwork at the end of the month. Business owners don’t want to know about accounting. They want to be able to sleep at night. Business owners want to be able to know what they need to do to keep the business moving along. They don’t want to have to check the bank account balance every morning. Business owners simply want to know what they need to do to get the results they’re looking to achieve.

Accounting professionals – don’t talk to your clients about how great your accounting is, or about debits and credits. They don’t know and don’t want to know. Good accounting is expected from you; it isn’t a selling feature. Talk to your clients about the picture the data paints about their business, and about how you can help them to meet their needs and help them achieve their goals. That’s a value proposition that says something.

Make Sense?

Joanie Mann Bunny Feet J

*Note: this short article is the result of a recent conversation with my good friend and a consummate professional, Penny Breslin of MoneyPenny LLC. Penny and I both work with a lot of accounting professionals and the “song remains the same” no matter where we look. Accounting pros continue to be challenged in communicating the value of their services to business clients, and it’s all because they continue to talk about accounting (thinking anyone cares). Go figure.

December 7, 2012January 3, 2018

Accounting Professionals Should Help Business Clients Help Themselves

Accounting professionals are being challenged as the perceived value of the services they traditionally provide to business owners is diminishing.

Where the accounting professional was once viewed as valuable and integral player in the development of periodic business financial reports and the preparation of the annual tax return, many small business owners are now realizing that this post-facto activity delivers limited value to them on a daily basis.

These business owners are more frequently turning to cloud solutions and online application services to provide them with constant access to the information they believe will help them manage their daily operations, and are often implementing the solutions without the knowledge or participation of their public accounting professionals.

Access to real time banking information allows a business owner to see activities relating to deposits and payments, yet fails to reflect pending receipts and payments. Anyone familiar with managing a checkbook understands this reality, and so do many small business owners, so they find ways to keep track of those undeposited funds and near-term receivables, as well as the outstanding checks for bills paid.

With a small business, cash is king, and managing the cash flow is often the greatest daily concern of the small business owner.

After the fact reporting and an annual tax return, no matter how accurately and professionally prepared, will not help the business owner manage their cash right now.

Business owners are seeking to obtain more frequent and in-depth information about their businesses, and are taking steps to obtain it.

Accounting professionals serving these clients, while facing shrinking profit margins on current offerings, are not stepping in to take advantage of the opportunity to regain their position as the adviser and consultant to the business client.

As a result, business owners are getting their “business intelligence” from other sources, even further diminishing the value of the accounting professional’s involvement.

Accounting professionals must recognize that highly useful and valuable tools exist now to help small business owners understand their businesses better, and which provide a level of education and guidance to help them make the various decisions they may face.

Rather than viewing these solutions as competitive to the value of the accounting professional, accountants should embrace and adopt the use of these tools with their clients, and evolve the professional practice to helping ensure that the information presented in those solutions is always up-to-date and accurate.

By using these solutions to help educate the client as to the variety of situations which may arise in the business, the accountant significantly increases their opportunity to identify new areas of service where they may deliver a higher level of tangible and ongoing value to the client.

Make Sense?

Re-defining the role of the accountant, or going back to the good old days?

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Trends Impacting Every Business | Forbes.com

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Dashboard Reporting Tools: Gauging Accounting Relevance

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Accounting Professionals: Is Your Value Tied Up in The Accounting Software?

Subtitle: when all you have is a hammer…

Share this:

Share this:

Accounting professionals are being challenged as the perceived value of the services they traditionally provide to business owners is diminishing.

With a small business, cash is king, and managing the cash flow is often the greatest daily concern of the small business owner.

Accounting professionals must recognize that highly useful and valuable tools exist now to help small business owners understand their businesses better, and which provide a level of education and guidance to help them make the various decisions they may face.

Share this: