how to operationalize new services that find or save clients’ money.
by bill penczak
even during normal times, “found money” solutions are great door openers for new clients and a great value-add for your current clients.
more: re-thinking today’s firm with five global leaders | 5 things your firm should do differently this summer | do you have the guts to beat the covid crisis? | how to inoculate your firm against covid competition | ‘found money’ delights clients | the three r’s for beating the corona crisis
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these solutions are different from traditional audit and tax work in that they are opportunities for companies to retrieve monies they’ve paid in the past, or are ways for companies to lower the cost of a function, process, or service for which they are already paying.
such solutions include:
the net operating loss carryback from the cares act: thought dead after the tax reform act of a few years ago, the cares act revived nols from the 2018, 2019 and 2020 tax years to be carried back to the previous five tax years (beginning with the earliest year first). the cares act also suspends the 80 percent of taxable income limitation through the 2020 tax year. this carryback can mean an immediate refund of prior taxes – the ultimate in “found money.”
r&d credits: there are many firms that provide nothing but these services, many times on a contingency fee, which presents no risk to clients and lots of upside to the provider. it’s surprising what can be construed as research and therefore qualify for tax credits.
salt refunds: the labyrinth of state and local tax regimes can spin the head of the most seasoned tax professional, and i’ve always admired salt professionals for their knowledge and penchant for detail. since its inception three years ago, one middle market client firm’s salt group had identified $25 million in savings for the firm’s clients (and new clients), so there’s real opportunity in that space.
client accounting services: firms with which i’ve spoken in different parts of the country indicate they can
- save clients 40-60 percent from what they’re paying their in-house finance department,
- provide more efficient monthly closing,
- provide better management dashboard reporting and
- improve segregation of duties.
in normal times, this was a great value proposition. with clients looking to save every dime, cas has never been more viable.
if your firm is not providing these services, there’s no better time to do so. as i said in a recent linkedin post, nimble is the new smart. while some firm leaders will wring their hands in a pseudo-handwashing ritual, waiting for the economy to improve, the top-performing firms are taking actions to kickstart client solutions that truly make them financial first responders.
but where should a firm begin that process?
here are some guidelines for taking a found money solution to market:
1. the tone from the top. there’s an old sicilian saying, “the fish rots from the head down.” for any new firm initiative to garner success, the managing partner must make it clear to the firm, especially the partner group, that the “found money” solution (i.e., the aforementioned solutions) initiative is a full-bore commitment for the firm, and that everyone in the partner group will participate. this doesn’t have to be a draconian mandate, but explain to very smart but often change-averse partners that such solutions will generate new revenue, provide true value to clients and serve as a way of embracing your current clients. even the most jaded curmudgeon can’t really argue those points.
2. a sense of urgency. how many times in your firm does the partner group discuss a new initiative, only to find it languishing months or years later? offering found money solutions to your clients now could be the difference in them making payroll later. by their nature, cpas are a circumspect group, but you cannot let that caution get in the way of action. therefore, it’s incumbent on firm leadership to set a reasonable launch date, and hold your people to it. this “bias toward action” can be a competitive advantage upon which you can capitalize.
3. account planning discipline. larger firms that are successful in going to market know the value of a formal process to examine current clients or prospects to understand:
- their business needs beyond audit and tax compliance
- the buying dynamics, i.e., who are the real decision-makers
- the relationships your firm has with their various client counterparts
the gold standard for account planning is from miller heiman, which involves a thorough process that allows for a deep dive into the three aforementioned points. this process at one point was used by three of the big four firms. a more nimble approach to account planning involves facilitated meetings with partners who may be providing the found money solutions and partners who own the client relationships. a starting point might be for partners to identify five clients who may be experiencing industry tumult, cash flow or balance sheet issues, or some other logical criteria. it would be wise to include the senior managers in the process, as they will have a deeper understanding of the day-to-day operations at the client.
at a minimum, each partner should be required to make at least three introductions to current clients or prospects for the firm’s found money solutions. on average, you should be able to close 50-70 percent of them, resulting in new revenue. and even if a new engagement doesn’t ensue, the fact you’re even thinking of your clients and looking for ways to help them will help foster a stronger relationship.
4. reward, recognition, and celebration. you will gain better traction over time by providing a way to reward, recognize, and celebrate the successes resulting from this initiative. call out individuals who demonstrated leadership and initiative. keep a tally of the savings or recovery the firm uncovered, like the $25 million in salt savings example i used earlier. those data points are not only good fodder for the firm’s website and social media, but a demonstration to the firm that the initiative is real, and actually producing benefit for your clients.
5. postmortem. this call to action can serve as a beta test for how your firm can mobilize the hands and brains of a lot of really smart people into real action. yes, the firm will have to examine potential risks, downsides, and time issues that are usually the death knell of anything new in a cpa firm. but an honest assessment of what did and didn’t work, and a transparent discussion with the partner group about the findings will go a long way to constantly improve the firm’s ability and desire to launch new initiatives.
we are in unusual times, and the firms that act boldly now will reap greater rewards for their clients, their people and their partners into the future. i’ll leave you with a chinese proverb that captures that essence: “the best time to plant a tree was 20 years ago. the second best time is now.”