how summit cpa group is pioneering virtual cfo services

grunden and hale, as pictured on their firm’s website, summitcpa.net

 

summit cpa group goes from local to global by breaking the traditional cpa business model.

by ian welham
the accounting success podcast

in fort wayne, ind., jody grunden and adam hale of summit cpa group are carving out a niche in virtual cfo services. since 2002 the firm has grown from one accountant to 16 and reached $3 million in annual revenue (projecting $4 million in 2017) – adding two to four new clients a month.

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all this is achieved with staff members who never come into the office, working with clients they’ve never met in person.

the firm operates on a flat fee model, with all fees paid in advance. various members of the staff meet with every client (virtually) 2-3 times every week. and they never have to write a help wanted ad, because their work-from-home model attracts so many job applicants.

at first glance, the summit cpa group might seem a radical departure from traditional cpa practices. but for jody, offering virtual cfo services was a simple idea born of frustration.

“i coach my kids in hockey, and hockey is the wrong sport to coach if you’re a cpa because you’ve got to work a ton of hours during busy season,” says grunden. “i didn’t want to work a ton of hours. what i tried to do was to come up with a program that would spread out my time.”

it took grunden a few years of trial and error to develop the formula. “we had traditional tax clients that we’d meet once a year. we turned those clients into a monthly client and didn’t charge them anything upfront. we just said, ‘hey, we’re going to meet with you monthly,’ and we started meeting with them monthly. they really liked the monthly touch. it was easy to increase their fee once they saw the value that we were giving to them.

“then, those clients started asking, ‘hey, we would love for you to meet with us more often,’ so that’s when we went to weekly. they loved it because we were more of a strategic partner with them versus a simple vendor at the end of the year that they talk only about taxes.”

today, jody’s staff interacts with clients even more frequently. each client is assigned a team of 3-5 summit cpa team members. one serves as primary cfo; then there’s a backup or secondary cfo that attends financial statement meetings. next is a tax manager who takes care of tax planning projections and oversees the tax return. and finally, two accounting team members serve in support roles.

the primary cfo talks once or twice a week directly with the owners of the company or upper management. the accounting team often talks daily to the company’s bookkeeper, whether internal or external.

services include cash flow management, accounts payable, accounts receivable, kpi’s, hiring and firing decisions, banking relationships, tax projection, and forecasting. in effect, summit functions as the company’s accounting department.

annual client fees range from $18,000 to $90,000 depending upon the types and levels of services clients require.

by positioning themselves as cfo’s providing full accounting and back office services, grunden’s firm has virtually eliminated competition from traditional accounting firms. prospective clients no longer compare them to what other accounting firms charge. instead, the comparison is against what it would cost in salary and benefits to hire an experienced full-time cfo. as a result, summit is able to command significantly higher fees while looking like a lower-cost option.

“our fees are very minimal compared to what clients would actually have to incur, especially if they’re on the east or west coast, hiring a qualified accountant – somebody who really knows what he’s doing,” notes grunden. “with us, they get, not just one person, but five people working behind the scenes on their account. i think the value is so great that the price is really not even thought of. initially yes, but after we’ve been with them for a few weeks or a few months, no.”

another wrinkle grunden added was upfront billing.

“one day we decided we didn’t want to be a bank anymore. we want to be treated as a team member, not as a vendor. [so] we bill our clients’ bank accounts every monday for that week. we’ve had absolutely zero pushback since we implemented that [policy]. obviously, cash in advance is better than cash six months down the road or three months down the road or not at all.”

as a tradeoff, clients are not expected to make a long-term commitment. “just like any team member, we can be fired tomorrow if the client wants to,” says grunden.

meetings are held via gotomeeting or other digital platforms such as sococo. since 2008, summit has been working mainly with digital and ecommerce businesses because they know these companies are comfortable doing business online.

while summit clients prefer working virtually, summit staff members were initially reluctant. three years ago, when firm growth produced a shortage of workspace, grunden floated the idea of working from home to his accountants.

“for about a year i talked to the team about it. accountants hate change. i could see the blood rising every time i talked about it. i thought, ‘well, i give up. we’ll keep the brick and mortar [building] and we’ll figure it out.’ i kicked everyone out of the office for six weeks. we did construction on the entire building and created really nice offices with tvs and all this cool stuff to make it nice to work in the office. six weeks later, when i said, ‘hey, come on back in,’ i had about six people come back in. everybody else loved working from home. they forced themselves to figure it out. out of the 30 people we have, i have four people who work in the office right now. the office is a very lonely place to go to.”

while many cpa firms struggle to find and keep good people, grunden is swamped with job applicants interested in working from home and controlling their work schedule. summit receives up to 10 resumes a day from qualified prospective employees. having a virtual office means his talent pool has expanded well beyond fort wayne.

“we try to pay national averages, not just fort wayne market averages,” states grunden. “flexibility is one of the key things people look at when they come to work with us. they don’t have to commute . . . they don’t have to buy all the work clothes . . . the fact that we’re not working a bazillion hours . . . they just love all aspects – especially millennials.”

summit cpas typically work 40 hours a week. they can work more hours if they want to, but they need to get approval first. they can also work less if they’re efficient. during tax season, hours may go up a little, but not significantly. grunden explains why.

“the nice thing about working with a client on a regular basis is that the tax return takes not very long at all. it’s pretty simple because we already know how much the client is going to pay in taxes before the end of the year. i would say we’ve probably had maybe three people work overtime during tax season. they maybe worked 50 hours a week – probably closer to 45 to 50. a majority of the people didn’t work overtime at all.”