how to make sense of their various channels.
by jody padar
radical pricing – by the radical cpa
clients use the client technology stack to run their day-to-day businesses. the stack they use depends on their niche or vertical. for example, law firms use clio, while e-commerce businesses rely on webgility, among others.
more: digitize clients for standardization | six steps to creating a standardized practice | value pricing requires defining your clients | stop selling time | three critical factors drive the value pricing trend | stop looking for talent that does not exist | advisory work must be priced by value, not hours
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the next tech layer is data aggregation. all the data feeds will land here, and you can determine what to do with and how to organize this information based on kpis or other metrics around which you’re building their business success.
the following tech layer is their general ledger, which will communicate with the accounting firm’s cloud accounting service, usually either quickbooks online or xero. in the general ledger, there will likely be an accounts payable system, such as bill.com or melio. additionally, there will likely be a payroll service and maybe a sales tax service.
accountants will look to the general ledger to make sure all the data came in correctly and the metrics look good. in the accounting services tech stack, you’ll find the work product: bookkeeping, write-ups, no-touch tax returns, financial statements and data-based kpis. these products standardize and encompass a lot of the accounting output. there will also be accounting advisory services based on all the provided information including the reports and compliance deliverables.
standardization will vary greatly depending on the industry. because medical practices rely on many disconnected processes, let’s explore this as a sample.
say, for example, your job is to create a holistic and streamlined system to help them run their business. before you work your magic, most medical offices have the following disjointed characteristics:
- quickbooks online or another accounting software
- insurance billing system
- payroll system
- a myriad of manual processes
- office manager or a site manager if they have multiple locations
- multiple checkbooks
- a bookkeeper or someone who has been assigned “to do the books”
- inventory system depending on practice type
these disconnected systems add complexity. your job is to help them understand profitability and create a singular system around accounting.
an ideal connected system would rely on the following:
- financial visibility: from insurance reporting to p&l, they need real-time transparency.
- cloud-based accounting: they will want portals and dashboards to display all relevant information, and you can serve them remotely with near real-time reporting.
- control of funds: you will probably have them running on an outsourced accounts payable platform, which allows you to control funds and manage their cash.
- relevant kpis: these are critical when considering a medical practice because specific industry averages are used to measure and compare their profitability and efficiency.
part of the holistic solutions medical offices need include standardizing operating systems. they also need help identifying redundancy if they have multiple offices with multiple partners and help with reporting by location, service line, etc.
medical offices usually remain independent until joining a larger medical institution when retirement becomes a consideration. this means there is often a personal financial segment to the work, as well. the doctor or doctors who run the practice will likely need wealth management and other advisory services.
medical practices are an ideal niche for some accounting firms. they are fairly consistent, service-based organizations with specific rules and standards dictating how certain things, such as insurance billing, are done. they do not have a huge amount of inventory to track or a messy supply chain. they are also financially capable of carrying a monthly accounting fee in line with your value. financial capability is an important detail if you are interested in niching. focus on an industry that can afford you.
2 responses to “four considerations when standardizing client tech stacks”
roger rotolante
a fine article listing the possible layers. the solution is that most of the layers are time shifted when they are outsourced.
in order to bring the accounting system to real time keep every process in house. this will allow quicker detection of errors but cost more. the fact is that business do not use a system analyst to design the initial stack . the layers are purchased by persons who like the ringing bells and fancy dashboards. they do not consider integration of data as a goal because they are not trained in data science. they know nothing about accounting systems, finance, taxes and data reporting. therefor nothing is integrated or orchestrated .
kevin dorey
thank you for this article. i work with a few clients that use disconnected systems like in your medical practice example and have struggled to find solutions that solve the problem without creating new ones, especially at scale. for instance, how would you provide real-time transparency from the insurance billing platform to the general ledger? whats an example that solves this paint point? i haven’t found a software solution that accurately integrates the invoicing and subsequent payments. if i were to import the invoices generated, i would then have to manually update them for insurance adjustments, write-downs, and payments. for this reason, i only provide cash basis financials for clients like these and reference data points from the invoicing platform in my monthly reports, and constantly highlight the fact that revenue is cash collected, not services rendered. i would love to do what your article suggests and find a tech stack that could provide these clients with real-time accrual basis financials for management.