pick your favorite clients

then get more work from those clients.

by penny breslin
it’s not just the numbers

you cannot do everything all at once for everyone. this group exercise calls on your team to be an integral part of selecting the best clients to approach for back-office support services.

more: top ten types of clients (and 24 more reader suggestions) | eight things to stop doing now | you don’t have to do everything | why ai is not the enemy
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sit down with your team members and identify those clients you like working with now. get their experience of working with these clients. because your team’s collaboration is critical to success, getting their input is vital. the changes that occur will affect them as much as it will your clients.

for a single-person firm, the team is most likely your centers of influence and your preferred apps, so you can do this exercise with that information as your determinant.

make a list of all your clients. enter their pertinent information as you see here in the table below. remember, each person in your firm relates slightly differently to the client and therefore brings a different perspective. encourage this sharing. clients will treat you differently than they treat your staff. if they are awesome with you and indifferent with staff, that is not a good client. or at least it is an opportunity to discover why there is a difference of opinion. is it the client, the staff or perhaps even how the staff is managed?

allow for a nonjudgmental flow of information here. listen and learn about your practice. even with two people in a firm, they will see things differently. the differences can be good or bad, but if you do not know they are there, what are you missing? this also sets the tone that you are really trying to create a team and develop openness with your team. this open tone will trickle down to the client.

the importance of listening to your team

i was consulting with a firm in new mexico and a client was on a speaker phone with several staff members. the client was trying to tell them about an issue where they were having some trouble. during a break, the speaker was not turned off and one of the staff members said, “@#@$ she’s a pain the a@#”…

guess what this rather large, consistently paying, on-time client did? no surprise, she took her business and left that firm. five years later, still tells everyone what she thinks of this firm. this story is not embellished. listen to your people. find the good and the flaws in your firm. you cannot fix what you do not see or hear.

have a discussion with your staff before this exercise begins. make sure you all agree to the descriptions you use for client types. again, make sure they realize honesty will not be a job killer. agree on what is important and what is drama. this is all about how your client interacts with the firm and not about the client’s numbers.

client name	business	accounting software	internal acct staff	work type	client type
timothy	specialty contractor	xero	part-time bkp	monthly financials	hands-on
ursula	restaurant	pos and xero	full charge bkp	monthly financials	hands-on
wanda	mechanic	quickbooks	office manager/bkp	monthly financials	hands-on
lulu	general practitioner	none	office manager /bkp	taxes only	i am too cool for you
pratik	web designer	xero	none	monthly financials	indecisive
carl	insurance broker	none	none	taxes only	last-minute urgent

 

once you have the list from each staff member, merge them and sort them into one list. now you can focus on those clients who fit what you like to do and with whom you all like to work.

look for similarities. as with a franchise, look for instances of repetition where developing systems and standard procedures using technology can save time on the day-to-day work. if you have several clients in the same industry, and they’re enjoyable to work with, you may have the beginnings of a vertical specialization.

some good clients may need work that you personally do not really care for. this may not matter because someone in your firm may like that work. this is also an opportunity to find out what your staff really enjoys doing. one person’s dog is another person’s pony.

once you have your client list and you’ve figured out what your team likes to do and which clients your team wants to work with, you can look for opportunities among those clients. this next step will flow naturally when done in open conversation. by focusing on an aspect of the client that you may have missed, you will learn about additional work you can actually do with this client. remember, it’s always easier to sell additional services to a client who already loves you than to a brand-new client.

we run this exercise about two times a year with our team. these people are deep in the weeds with the client’s financial work and often in regular contact with the client. as an example, one client was having issues with paying bills in a timely fashion. pretty common, i agree. however, the staffer had taken the time to present a cash flow statement during the exercise. she knew the client would benefit from having the cash flow projection report. she did a great job and we presented it to the client as an additional service to assist in load leveling their aps.

doing this exercise regularly has built up pride in the team in finding new opportunities for all of us. team is the operative word. we rarely use the word staff. it’s a team sport and all players are welcome if they become team players and maintain a team player attitude.

an exercise i have seen firms undertake each year is a service level analysis. a service level analysis is a fancy way of saying of all the services we provide, what is this client using us for? are they going somewhere else for other services? you have their p&l, so if there’s a line item for “consulting,” make sure you ask what that line item is for. could you, or should you, be providing that service? a simple matrix like the one below is all you need to get going. and review the matrix at least annually to make sure you’re not missing out on any additional value-add opportunities.

client name:

service	uses us	uses someone else	they should use us
tax	x
bookkeeping		x	x
insurance		x
coaching		x	x
consulting		x (?)

 

have the conversation with your client

there may be some modicum of trepidation when approaching the client about these additional services. accountants are too often reluctant to ask their clients to pay more – sometimes substantially more – to provide additional services. you will often find that the client was looking for just this type of help and was unaware you can even provide the service. i have had a few experiences with prospects calling me for some work and when i ask them why their current accountant is not doing it, they had no idea the accountant could. “we never talk about it, and my accountant really just does this one thing for us,” they often say. “we never considered asking them.” if the prospect who called me is open, i call their accountant and let them know they need to speak with their client.

for some clients, offering to take on their bookkeeping is a huge weight off their shoulders. think of things this way: you have a gardener because it takes a lot of time to keep your lawn and garden in tiptop shape. someday you may do this work yourself but for now it’s worth having someone else do it. perhaps you take your car to a mechanic when it’s time to change the oil. you can do this yourself, but it can get messy and is time-consuming. you no doubt send your children to school, where trained teachers provide a safe learning environment while you work. many families home-school so it is conceivable that one could choose not to outsource this, but if you send your kids to school, you outsource their education. in fact, any of these functions can be done by most any person. yet for reasons of efficiency and effectiveness, we just choose to outsource them.

similarly, many clients could do their own tax return, but they choose not to. they value your proficiency and professionalism, and you provide that all-important sense of security that the work is done correctly. to do tax work, you follow a procedure and numerous processes. every return may be unique in its numbers but the process to complete it and file it is all the same.

now consider what happens when you take over the accounting or bookkeeping. compliance dates occur just a few times a year. the bulk of the work is allocation, which is the one thing ai is promising to take over. getting all the transactions correctly recorded is not really deadline- or compliance-driven. adding back-office services to the services you provide is a way to add revenue while smoothing out the peaks in workload for your team.  plus, it’ll likely make your tax season infinitely less stressful because your clients’ books are clean.

some clients won’t immediately see the value of paying more to keep their books updated all year. be honest: how many of you do the bulk of your clients’ bookkeeping at year-end because that is when the client gives you bank statements? when you are willing to work this way with your clients, it becomes a primary reason that allocation and reconciliation is not important to them.

educating these clients about the value of regular accounting has to be done in terms of “wiifm” or what’s in it for me? improper allocation can cause some great angst and possibly money if it’s not caught when a business owner applies for a loan, runs payroll, submits sales reports, submits a 1099 or files a year-end tax return.

here’s an all-too-common example of why good numbers are valuable to your clients. a local baker had been working with a cpa to do his taxes. the cpa went off the books sent by the business owner and never asked any questions. then the baker decided to outsource his bookkeeping to us. our team discovered that his income was overstated because of many duplications. the business owner did not understand the steps in reviewing bank feeds. the result was that he had been overpaying on taxes. now we’re going back two more years so he can get those overpaid taxes back!

because of the perception of little perceived or immediate value to this function, there has lately been a flood of tech firms that say they are using ai to do all the bookkeeping at a fraction of the cost of hiring a human to do the work. ai can do the allocation and reconciliation fairly well. but to think that there are not humans behind that “ai” doing some of the guesswork is to be fooled by marketing.

you have an advantage that these tech firms do not have. you have the relationship, you have the context and by working with ai you can make it right and make it fast. then you can take the next step that ai can’t bring to the client: clear and clean actionable measurements that you can present in context, and that can help the client grow or achieve their goals, whatever those goals may be. in doing so, you change the view of what was previously considered a low-value, unneeded function to an essential, strategic function that helps them achieve their goals and can ensure they don’t overpay on taxes. good numbers allow for actionable events to occur with higher potential for good outcomes. to be of greatest value to your clients, you need a relationship beyond debits, credits and an annual tax return.

how many of your clients know you are capable and willing to perform bos types of services?

over a three-month period, 10 new potential clients came to me for this type of service because they did not even consider asking their accountant. think about this, and answer the question again.

if you want a great example of how to have the conversation with your client, read the chapter “tuesday” in edi osborne’s book firm forward. this book is told in the form of a story about a small accounting firm that makes the decision to move into advisory services and is an excellent introduction to providing additional services to clients.

work in action

when picking the type of client you like to work with, the best option is to start with those businesses in similar fields. here are some examples from firms i’ve worked with.

restaurants: a firm in boston had chosen to work with restaurants. they had two clients with high-end restaurants who approached them about taking on more of the managerial reporting function. one of the restaurants had two locations. they wanted to use quickbooks; however, their pos system did not integrate.

1. the bos, working with his firm’s bookkeeper (bkm), set up a new quickbooks file for both restaurants using the same coa (chart of accounts).
2. both restaurant companies had office managers who would do the data entry of the daily sales summary to the quickbooks file.
3. the quickbooks licenses and data file for each restaurant was moved to an application service provider (asp) where the firm had a dedicated server with all their software.
4. the bkm set up both restaurants on bill.com and did the first quickbooks sync.
5. the bkm designed the daily sales summary and memorized the transaction so the office managers were sure to enter every summary the same way (the restaurant company with two locations used the class feature in quickbooks).
6. the bkm went onsite and used zoom to train the restaurant staff on how to access the asp, enter the data into quickbooks, how to use bill.com for approvals, and wrote the procedures to the client manual (we use onenote for this function) on the dedicated server. this ensured everyone would clearly see all the steps and procedures for the two restaurants.
7. the bkm oversees all reconciliations and report creation, handles all calls from the restaurant’s office managers. the preparer (prp) does the bill.com syncs. these tasks are all on the firm’s web-based workflow.
8. the bos has scheduled meetings with the restaurant owners to discuss cash flow, the second restaurant build-out for one of the companies and other risk management issues. because this process was standardized, the headaches went away for the restaurant owners. the bos service is supporting the transition of one restaurant to franchising. these meetings are also scheduled in the firm’s workflow.

after doing this for two restaurants, the bos firm has decided they can now take on more restaurants. they feel very confident that this is going to work well for them, and they are already experiencing the value of becoming the restaurant bos for their target venues. referrals are coming in the door.

contractors first, then property managers: a two-person bos firm with four bkms in philadelphia used the same methodology. they are managing 250 quickbooks/qbo  clients and 50 xero clients. they focused on contractors as their first vertical. after two years, they began a new vertical with property management companies. for this firm, daily data entry is done by a three-person team in chennai, india, during the evening on their dedicated u.s.-based server. this allows the bkm to work with a larger pool of clients efficiently. their bos packages run the gamut of monthly reconciliations, time-sheet entry, accounts payable, accounts receivable, job costing, payroll and even document organization for their clients. in 2016, they purchased a second office as well as expanded their customer base to a company with offices in california, nevada and canada.

oil field inspectors: a san francisco firm was hired to process an oil field inspection company’s back office work. this company had inspection projects all over the globe. with a five-person staff of inspectors, no one was in the office to manage the day-to-day data entry of accounting and project costing. using intacct, the bos took over full bos managerial accounting. each person on his internal staff had a function. bill.com was linked to intacct. all invoices were managed via bill.com and the owner could pay bills from the field in dubai. the in-house bkm and intacct specialist trained the inspectors in the project costing function of intacct. he then oversaw the review of the data entry and performed invoicing. the bos has a bi-monthly meeting with the owner. this meeting is usually a virtual meeting.

at present, four more companies are utilizing the same staff for this type of work in intacct. the smaller clients are all on quickbooks in the asp environment or qbo, syncing to dext and with a quickbooks professional advisor as the bkm. one bos, four team members, all using collaborative workflow with clients, all billed at a flat monthly rate to a specific service level agreement (sla). and by the way, there are items that occur off the scope of engagement that are billed separately at the consultant rate and these off-sla tasks occur often.

non-profits: a large national accounting firm, located in dallas, saw that their non-profit clients were struggling with the expensive cost of the bookkeeping the firm was providing. they asked us to look at their procedures and see if we could find a better solution. two days, eight people and 35 steps was a costly mess. after a review of their internal processes, we were able to cut out multiple steps and redundant checkpoints. large firms sometimes lose sight of the forest for all the trees.

the first step was to define which clients would work well with the new system. next, we selected  a candidate out of their staff who was willing to take on the new technology. this turned out to be the most difficult part. the candidate chosen was obvious. however, figuring out compensation took some definite change management. this firm held its internal cpas to quotas on hourly billing, but the majority of this work would be administrative management. once a new compensation matrix was accomplished and the technology was put in place, the first client was transferred to the new methodology. this took what appeared to be a very long time, four months. the data entry work for this was outsourced to india. the india team had more working knowledge of the newer software technologies than the dallas-based staff. at the end of four months and, as the supervisor in dallas said, one typo, the next two clients were set up and running within a month.

in all these examples, the firms focused on a vertical group of clients whose similarities lend themselves to similar software requirements and similar procedures with small nuances that could easily be handled. this allowed the bos to focus on the managerial finances and build a relationship with the clients. they took small focused steps with trusted clients and built dedicated well-trained teams of experts in the field, then they expanded.

posted on october 27, 2022