bonus: a case study of how not to do things.
by penny breslin
it’s not just the numbers
accounting businesses have historically provided a range of “after-the-fact” compliance services including year-end accounting and tax return preparation. many firms also provide “write-up” services, which involve the recording of business transactions based on documents generated by the client, such as invoices, checks, deposit slips and documents provided by third parties, such as bank statements and payroll reports. write-up work is typically done once a month, after the fact.
more: why ai is not the enemy
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today, major innovations in technology are giving accountants the opportunity to expand their services and to provide much more comprehensive, timely and useful information to their clients.
one area of expansion is offering clients a complete back office support (bos) manager, which can include:
- assuming responsibility for a client’s accounting function
- having the client outsource most, if not all, of the mechanical and review aspects of allocating transactions, to the accounting business
- processing data efficiently
- producing reports that are accurate, timely, meaningful and actionable to the client
- providing more and better advice
my purpose is to help you move your firm into the arena of bos services – a service far more satisfying and rewarding than that of mere “scorekeeping.” scorekeeping is basic bookkeeping and accounting. scorekeeping establishes a baseline from which to jump into value-add advisory services. the former must occur in order to provide the latter. both you and the client need to know where the numbers are on any given day or hour. you both need to be able to trust that the numbers in the accounting file are accurate and provable. today’s cloud applications and ai make all of that easier and faster. they give you the time and headspace to do more for your clients.
when you combine human knowledge with ai, you can expand those basic scores from a client file to provide what the industry calls “advisory services.” what’s the definition of advisory services? talk to 20 different bookkeepers or accountants, and you’ll get 20 different definitions.
the free dictionary defines “advisory service” in this way:
noun 1. advisory service – a consulting service in which a cpa develops findings and conclusions and recommendations that are presented to the client for consideration and decision making
the stock image the dictionary has is an overhead shot of three men at a small table with paper in front of them. very dated! also, it is presented as a noun. advisory services are not a static person or place but it is a thing – hopefully not along the lines of thing one and thing two. in contrast to scorekeeping, providing advisory services means taking an active role in your clients’ businesses. and a key to providing advisory services successfully is that the client has to also keep up their end of the bargain.
case study: constant contact is a must
i was at the dog park one sunny afternoon and a relatively new client gave me a call. it was a cpa who had used my company to perform outsourced bookkeeping services for his own clients. considering it was late afternoon my time and knowing his time zone, i figured it was rather important that he had placed a call. he was hopping mad. and not at me, wow okay, what’s up? he was upset and wanted to make sure i could fix this problem so it would not happen again.
he had gone to see a client with the intention of providing information and help on getting a forgivable loan through the paycheck protection program (ppp), tax planning and dealing with loss of revenue because of covid-19. well, everyone was seeing a drop in business, were they not?
when the cpa arrived at the clients’ office, during covid? that was my first thought. i had many thoughts as i listened to the cpa tell the story of what had happened, and what he wanted me to guarantee would not happen again.
he arrived, ready to help with his ideas on expense management, and no doubt a sincere purpose to support the client in this time of need and stress. however, the client told the cpa that he was not in need of a ppp loan, but rather that he urgently needed some tax savings advice because of the increased revenue during covid-19. how much of an increase? the client had an increase in sales of $1.2 million. the cpa was, in his words, “embarrassed.”
why did he not know this? why was he not told the client actually had a third-quarter jump in revenue? this cannot happen. he needs to know what is going on with his clients!
now my dogs were chasing balls, other dogs were running, playing, barking and the sun was shining and all i could think was, “awesome for the client. this client has one of the businesses that thrived under this weirdly morbid time.” i told the cpa that once i got home to my office and could talk to him in quiet i would call back.
what was wrong with this scenario? first of all, i was an outside consultant and was held responsible for a client’s internal process. a consultant can only suggest and not actually enforce. that comes, sorry folks, from the top down. by now, reader, you are already formulating what you would have done prior or after as the manager of the client.
i remembered this client clearly. when we originally got the file, we had to do a manual year-long reconciliation on quickbooks desktop. as most of us have heard repeatedly, we were told that their client had a good bookkeeper in-house, so there was no need to control the qbw file.
we got a backup sent to us and we reconciled the prior year so they could do the 2019 taxes. we got the ok to use prior historical references for allocation and completed the recons in about eight hours. we sent the file back along with our standard query sheet listing what we had done, what we felt we did not fully understand, a year-end balance sheet, p&l and tb, and included a list of all our caveats as to our concerns. what did we get back? crickets!
two months later, i got the call at the dog park. i was considerate and made recommendations when i returned his call in private. what i thought was, “dude! why did you not at least look at the client’s current quickbooks file before going into that meeting? and if you did not have access, why not? if the file was not updated by the onsite bookkeeper, ask why.”
this would have been a perfect scenario for the cpa to value-add with real actionable advisory information and perhaps expand his service model with the client. i made a small attempt to broach the cpa on this, but was met with the standard, “my clients won’t do that.”