Post on 01-Jul-2015
description
The Sleeter Group
#Solutions14
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Session P10 –The Building Blocks of Outsourced Accounting
Services –Tom Gawne
1
Thomas R. Gawne, CPA
@ThomasGawneCPA
#solutions14@ThomasGawneCPA
Thomas Gawne, CPA
Director, CPA.com
• 28 years in the tax and accounting technology sector
• Speaker, Facilitator, Consultant
#solutions14@ThomasGawneCPA
Our Topics Today
Outsourcing Technology Trends
Four levels of Outsource Services
Pricing Strategies for the Outsourced Service
Designing Outsource Workflow
Designing your Staff Structure
Outsource Solutions
#solutions14@ThomasGawneCPA
Transforming how firms deliver Client Accounting Services as
they transition their practices to be more efficient and productive
by leveraging innovative new technologies and services.
Empowering CPA’s and businesses for the digital age
AICPA & CPA.com
#solutions14@ThomasGawneCPA
Practice
Workflow
Professional
Services
CPA.com
Services
AICPA Store
LMS
Mobile Apps
Audit
Confirmations
Payroll
General
Ledger
Bill Pay
CPA.com Firm Solutions Portfolio
Training
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1990
2000Today
Transformation of Client Accounting
Today’s opportunity
Cloud-based
Integrated
Paperless
Dashboards
Real-time
Small businesses push work back to firms to focus
more on their business
Role of firms reduced,QuickBooks introduced
to small businesses
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Four Levels of Client Accounting Services
Virtual Controllership
Collaborative Advisory Services –
Virtual CFO
Bookkeeping
Business Process Outsourcing
Advisory
Transactional
Specialize in Client Industry Verticals Healthcare
Not-For-Profit
Technology
Professional Services
Property Management
Government Contractors
Retail
Franchises
#solutions14@ThomasGawneCPA
Geoffrey Moore
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Whitepaper Released
APPS
http://www.cpa.com/conference
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Three Mega-trends
Digitization Virtualization Transformation
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Digital Disruption in Accounting
• Digitization• From Paper to Paperless
• Cloud Computing
• Overcoming barriers of productivity
• Virtualization• From Physically Present to Digitally Present
• Systems of Engagement
• Overcoming barriers of location
• Transformation• From compliance vendor to trusted advisor
• Business Intelligence
• Overcoming barriers of commoditization
Three Mega-Trends that Matter
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Necessary EvilEstablishing the Practice
Expanding the Practice Deepening
the Practice
The Evolution of Accounting Services
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Stage 1 - Necessary Evil
• Paper intensive, Place specificDefining
Characteristic
• Courtesy to clients, no riskReason to Do
• Lack of profitability, digital disruption Reason to Move
On
• Migrate IT systems to the CloudInvestment
Required
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Stage 2 - Establishing the Practice
• Paperless workflowsDefining
Characteristic
• Profitable business modelReason to Do
• Desire to growReason to Move
On
• Online Systems of EngagementInvestment
Required
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Stage 3 - Expanding the Practice
• Online communication & collaborationDefining
Characteristic
• Reach & frequency of service deliveryReason to Do
• Expand into higher margin servicesReason to Move
On
• Business IntelligenceInvestment
Required
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Stage 4 - Deepening the Practice
• Trusted advisor statusDefining
Characteristic
• High-margin project workReason to Do
• Expand into new target marketsReason to Move
On
• New target market initiativeInvestment
Required
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The Evolution of a Practice
A Necessary Evil
A Viable Practice
A High-Growth Practice
A High-Value Practice
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Automation
Commoditization
DifferentiationSpecialization
Optimization
21st Century Darwinian Dynamics
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Why Target Market Focus?
• Clients aggregate into market segments
• Communities with shared interests
• Self-organized around industry, geography, & profession
• Who talk to each other before making buying decisions
• Two lessons from Marketing 101
• Cost-effective growth is impossible without target market focus
• Tipping point dynamics accelerate your success
• Target marketing success factors
• Participate in the segment’s relationship network
• Develop domain expertise relevant to the segment
• Over-deliver to create strong reference accounts
• Encourage word-of-mouth referrals
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Action Plan
• Select a target market focus• Big enough to matter
• Small enough to lead
• Good fit with your skills and interests
• Create “new client” onboarding• Paperless standard
• Systems of record in the cloud
• Document exchanges in the cloud
• Other facilities as needed
• Migrate existing clients opportunistically• Take the early adopters when they are ready
• Eventually end-of-life paper-based services
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Evolving CAS: Change ManagementWhen and How will You Make the Transition?
CHASM
EARLYMARKET
TORNADO
MAINSTREET
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Three Proven Approaches• Visionary
• Go ahead of the herd for competitive advantage
• Spend big to secure top-notch team & great support
• Drive change from the top down
• Pragmatist
• Go with the herd to reduce risk
• Spend moderately to secure market-leading solutions
• Manage change around specific use cases & bellwether teams
• Conservative
• Go after the herd to reduce cost
• Spend frugally to secure basic services
• Manage change around vendor-led training sessions
No right answer—your call
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Key Takeaways
• Model for Evolving a CAS Practice• A Necessary Evil
• A Profitable Practice
• A High-Growth Practice
• A High-Value Practice
• Enabling Technology Investments• Digitization
• Virtualization
• Transformation
• Change Management Strategy• Visionary
• Pragmatist
• Conservative
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Four Levels of Client Accounting Services
Virtual Controllership
Collaborative Advisory Services –
Virtual CFO
Bookkeeping
Business Process Outsourcing
Advisory
Transactional
Specialize in Client Industry Verticals Healthcare
Not-For-Profit
Technology
Professional Services
Property Management
Government Contractors
Retail
Franchises
#solutions14@ThomasGawneCPA
BeforeTransactional
TodayAdvisory
Changing Landscape
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Key Drivers of the Movement to the Cloud
A New Era of Capabilities:
• Collaboration
• Business Intelligence
• Anytime, Anywhere Access
• Scalable, More Efficient
• Simplified IT Infrastructure
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Bookkeeping/Write-Up
Jan Dec
Client
Firm
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Bookkeeping/Write-Up
• Who’s Involved?
• Client and/or Accountant Firm’s Clerk
• What data is available?
• Transactions, bank statements, etc.
• Key Deliverables
• Bank reconciliation, general ledger, profit & loss,
financial statements
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Bookkeeping Services Value
•Reconcile your bank account
•Generate an income statement
•Generate a balance sheet
•Clean up the general ledger
Value is compliance, historical value
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Business Process Outsourcing (BPO)
Jan Dec
Client
& Firm
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Business Process Outsourcing (BPO)
• Who’s Involved?• Client or Accounting Firm’s Clerk or both
• What data is available?• Bill and receipt real time transactions, real time
reconciliation
• Key Deliverables• General ledger, profit and loss, pro forma
information
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Business Process Outsourcing (BPO) Value
• Simple, easy business processes delivered
through the cloud
• Provides greater security and internal controls
• Smart client/accountant collaboration
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Who’s Involved?
Virtual Controller
• Client
• Accounting Firm Controller
• Additional BPO staff
Virtual CFO
• Client
• BPO staff
• Virtual Controller
• Virtual CFO
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What Data is Available?
Virtual Controller
• Day to day financial
information
• Budgeting
• Forecasting
Virtual CFO
• Real time financial
reports
• Key Performance
Indicators
• Consultation on future
business scenario
planning
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Key Deliverables
Virtual Controller
• Financials: actual vs.
budget (target)
• Forecasting
• Dashboards
Virtual CFO
• Prospective financial
management insight
• Consultation on evolving
market conditions and
trends
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Provide Key KPI Dashboards
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Virtual Controller Value
• Direct day to day insight delivered to keep
connected to the business
• Experienced financial professional “in the
trenches” ensuring cost containment and
revenue growth attainment
• Ensures quality controls are in place and
functioning properly
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Virtual CFO Value
• Future oriented financial insight delivered
• Experienced financial professional providing
guiding the organization equipped with proper
information
• Provides insight to ensure entity meets future
growth goals
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It’s getting more complicated...
Transactional
Using technology to
support transaction
processing
Workflow
Build digital
workflow and
standardization in
processing
Digital CPA
The operating model of the TRUSTED BUSINESS ADVISOR
It’s not just about technology!
What is your strategy?
“Digital Trusted
Business Advisor”
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How do you calculate your
value price?
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Variations in pricing services
• Cost “plus” pricing
• Fixed Pricing
• Results Pricing
• Value Pricing
What is your pricing strategy?
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“Most business owners regard their
accountant as their number one business
advisor – a status rarely applied to their
banker, their insurance advisor, their lawyer, or
even members of their own family!”
David W. Cottle, Bill What You’re Worth
#solutions14@ThomasGawneCPA
Rear View Mirror vs. Front
Window Approach
• Prospective vs. historical value to clients
• Change perspective and advise forward thinking
How does this change the value of your services
in the eyes of your client?
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Five Factors that Affect your Prices
• Demand for your services
• How easily you can be replaced
• Ability
• Return on investment of resources
• Courage to demand what you are worth
David W. Cottle, Bill What You’re Worth
#solutions14@ThomasGawneCPA
Factors Affecting Value
• Special capabilities, skill and professional expertise
• Degree of risk and responsibility assumed
• Value of services to the client
• The amounts involved
• The results obtained
• Priority and importance of the work to the client
• Acceptability of the price (for both)
David W. Cottle, Bill What You’re Worth
#solutions14@ThomasGawneCPA
The Virtual Controller/CFO Value Struggle
• Most firms struggle to bill at the level of Controller
or CFO
• Median National for Controller $90K (Glassdoor)
• Median National for CFO $145K (Glassdoor)
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Steps in the Prospect-to-Client Process
Qualification of prospect / analysis of existing client opportunities
Ongoing ServicesPhase 4
Monthly recurring virtual accounting and Controller/CFO services
(Firms are charging $1500-$10,000+ monthly fees for this)
Short Term CFO/Tech ConsultingPhase 3 Data File Clean-Up, Staff Training, Management Report Package
Preparation, Process Implementation (CFO)
Client Needs AssessmentPhase 2 Initial Client Needs Assessment (firms are charging between $2,000-6,500+ for
this). May be accompanied by financial clean-up and/or other services.
Prospect QualificationPhase 1 Prospect Questionnaire
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The Client Needs Assessment process can be used in different ways, each with tremendous benefits.
• Helps ensure taking on “right fit” clients
• Helps them implement the improvements summarized in the “before-and-after” comparisons
Client Needs Assessment
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Pricing Your Value
• Difficult areas to master is pricing Client Accounting
Services
• Set a monthly value-packaged fixed fee for the
ongoing services
• Billing system in place that provides timely,
accurate and relevant financial information
regarding your current operations
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Cost-Estimating Tool
Recommend a Job Estimating Worksheet including
• Average # of transactions per month
• Labor costs
• Contingency/“Scope Creep Buffer” of _____%
• Annual training/development fee for special skills required –
____%
• Additional fees that need to be accumulated to provide
superior service to the client
• Additional mark-up based on savings you will be providing to
the client vs. their prior solutions if they have been paying
significantly more in the past.
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Re-evaluating the Timesheets
Once you have restructured your billing practices and moved
to a fixed fee, you may consider reducing or eliminating the use
of timesheets.
Common steps toward that goal include:
• Measuring profitability with existing and with new clients in
each key process area for a 12-month period
• Running a “Pilot Program” of eliminating timesheets for a
small number of clients for 4-6 months
• Expanding this practice to more clients over time, with
ongoing periodic sample testing
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Value of Your Fee
Your fee will come down to how well you understand the value you will provide to your client.
• worth of the skills of each person from your firm that will be involved in the engagement,
• your commitment to ongoing training and education,
• the fee you need to earn to feel positive about working with that client for the long-term, even during the stressful times in the engagement.
“Cheap” does not ever need to be, and generally cannot successfully be the model/approach for a superior practice.
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Selling the Value
Our firm is different… For the growing, profitable client, we are the Trusted Advisor and the “in-the-trenches,” MVP on their team.
We will be a key contributor to their continued growth and long-term success, and we do not undervalue what this is worth!
We realize and accept that we are NOT the right fit for every client. We are always prepared and content to walk away from a prospect.
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Designing Optimal
Workflow
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To Transform Restaurant Accounting
Restaurant Group
Consistent Processes
Cash Control
Consolidated Financials
Multi-Entity Reporting
Full Financial Visibility
Cloud Based Systems
Today: Disconnected Systems Ideal: Connected/Holistic
QuickBooks
POS Payroll
Manual Processes
RestaurantManagers
Many checkbook
s
Several locations
Bookkeeper
Inventory
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STEP III:Shipping manually checks stock for filling orders across warehouses
Order-to-Cash: Before
Data entry/re-keying
Lack of controls
Manual tracking of inventory
Errors/inaccuracies
Fragmented, cumbersome reporting
Process Problems Revenue loss
Auditing issues
Extended DSOs
Customer dissatisfaction
Inventory carrying cost
Business Impact
STEP I:Sales entersorder in legacy system
Step IV:Accounting re-enters order information into legacy system for invoicing
Step V:Accounting manually reviews customer accounts for accuracy and collections
STEP II:Sales operationsprocesses order through shipment
Systems with limited functionality
Data silos Spreadsheets
Patchwork of:
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Procure-to-Pay: Before
Data entry/re-keying
Lack of controls
Manual tracking of vendor performance
Errors/inaccuracies
Fragmented, cumbersome reporting
Process Problems Purchasing variance
Auditing issues
Discounts not recognized
No true vendor relationship
Inventory out of stocks
Business Impact
STEP I:Purchasing manually creates P/O
Step V:Vendors get paid with no visibility between accounting and purchasing
STEP II:Receiving manually matches purchase order with packing slip
STEP III:Accounting matches vendor invoice to purchase order
Systems with limited functionality
Data silos Spreadsheets
Patchwork of: Step IV:Accounting obtains proper approvals for paying vendors
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Example: Current Workflow
Current A/P Process – Vendor
Invoices
Current A/P Process – Patient
Reimbursement
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Example: New Workflow
New A/P Process
Vendor Issues Invoices for
Goods/Services
Invoice Received at A/P Processing
Center
Invoice Scanned to Bill.com
Invoice entered into Bill.com
DisbursementIssued
Check clears and the bank or e-payment reference number noted in system
Invoice approved by the Site
Manager for Payment
Invoice approved by finance for
Payment
Recommended Vendor Invoice Processing
A/P Vendor
Client
Site Manager
Asst. Controller
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The Standardized Practice
• Consistent/standard Chart of Accounts (COA) as one package price.
Premium fees for a custom COA
• Standardized services by industry vertical and by type of service
• Standardized Internal Management Reports/Services
• Procedures Manuals for each client
• Service Order Requests for services outside of the engagement agreement –
retainer always on account for these requests and for “concierge” services
• Dedicated client-service staff to provide top client experience, while sheltering
our production staff
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Solutions
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• Principles
• All Digital, all in the cloud
• Designed for timely “prospective” insight
• Collaborative
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• A/P – Bill Pay
• A/R – POS
• Payroll
• Inventory Control
• Accounting – G/L
• Document Management
• Tax System
• Other Industry Specific
• Bill.com
• Industry Specific
• Paychex, ADP
• Industry Specific
• Intacct, Xero, QuickBooks
• Sharefile, Box, etc.
• CCH, Thomson, Etc.
• As needed
Signature Functions Signature Solutions
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Workflow Effects
Digital Core Transaction Capture
Information & Insight Delivered Prospectively
Intelligent, Timely Business Decisions Made
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Collaboration Solutions
• Video Conferencing – Skype, Zoom,
etc.
• Web Conferencing – WebEx, GoTo
Meeting, etc.
• Social Media – Linked In groups,
Twitter feeds
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Management Tracking - Solutions
• Workflow Management – XCM
• Contact Management – CRM
• Internal KPI trackers
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Staffing
Strategies
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Staffing Strategies
• Outsourcing approaches
• Client/Accountant collaboration
• Workflow standardization in the cloud
• Education Training Approaches
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Assembling your Team
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Skill sets
Client
• Bookkeeper
• Accountant
• Business Owner
Firm
• A/P, A/R Payroll
• Accounting Manager
• Implementation Services
• Virtual Controller
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Outsourcing Strategies
• Outsource Client Accounting Services (7216)
• Implementation services such as cpa.com
Professional Implementation Services
• Leverage other firms to offer BPO, Virtual
Controller, Virtual CFO
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Accounting Services Today
• The Opportunity
• Ride the wave of demand for outsourcing
• Leverage cloud technology to achieve productivity
• The Challenges
• Commodity practice
• Low margins
• Hard to scale
• Hard to upsell to higher value “virtual CFO” services
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Firm Value Chain
Input Data
Assemble & Verify
ReportAnalyze & Interpret
Advise & Consult
Higher Value & Future Focus
Lower Value & Historical Focus
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Defining Your Service
76
Input Data
Assemble & Verify
ReportAnalyze & Interpret
Advise & Consult
#solutions14@ThomasGawneCPA
Four Levels of Client Accounting Services
Virtual Controllership
Collaborative Advisory Services –
Virtual CFO
Bookkeeping
Business Process Outsourcing
Advisory
Transactional
Specialize in Client Industry Verticals Healthcare
Not-For-Profit
Technology
Professional Services
Property Management
Government Contractors
Retail
Franchises
#solutions14@ThomasGawneCPA
Resources
#solutions14@ThomasGawneCPA
Reference Material
• “Accounting Services: Harness the Power of the Cloud”
• A Whitepaper based on research by Geoffrey Moore
• “The Power of Real Time Financial Data & Analytics to Penetrate the
Restaurant Niche Market”
• A case study whitepaper by Dixie McCurley of Trusted CFO
Solutions available at CPA.com
• “Leveraging the Cloud to Start or Grow a Vertical Niche Practice”
• A Whitepaper by C. Keith Willis CPA.CITP, Cohen & Company
available at CPA.com
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Staying Connected
• @CPAcom
• @ThomasGawneCPA
• @PetePotsosCPA
• @pwhitmo
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Thank You
Enjoy the remainder of the
Conference!