Diversify To Amplify: Why Accountants Should Build A Bookkeeping Division

accountants-building-bookkeeping-divisions-featured
4-minute read   The answer to this intriguing question boils down to one word: Diversification. In an accounting industry amidst massive disruption, this one word can be the difference to winning or losing the future game. You will find out why below.   SHIFT IN STATUS QUO For the longest time, accountants have been considered ... Read more

A Breakthrough Guide On Capacity Planning For Your Firm

Watch this webinar to learn the three key types of team members you need to build the ideal offshore team.

Speakers:

Nick Sinclair, Chairman, The Outsourced Accountant

Jamie Johns, CEO, Sky Accountants

 

Accountants are really working too many hours. Likewise, for that matter, owners of practices are also working a ridiculous amount of hours. Proportionally, they are also expecting a significant number of hours to be worked by their managers and their staff. Teams are getting absolutely pounded. Thus, there is no semblance of work-life balance. The term nine-to-five becomes nonexistent because of the massive amount of work that needs to get done.

The Undeniable Truth

 


We are seeing a lot of accounting firms paralyzed and their staff are just not engaged and happy because of these huge amounts of work they’re having to get through and most are struggling with capacity. So when we ask accountants if they’re up to date with their client work and if they can comfortably say that when a work deadline comes that they will always meet it and they don’t need to ask for extensions, very few firms could actually do this. A lot of the reason is just that they haven’t mapped out their workflow and they have the wrong people doing the work. In our recent poll, we found that 50% of respondents state that their capacity planning is below standard.

The Obvious Solution

 

 

On average, an accountant within an accounting firm spends roughly 200 hours a year on administration. When you look at that, you go ‘Why?’ when you could put your resources into a global team at a cost of a quarter to even as low as 20% of what that accountant is, take the administrative work off the accountant, and let them do what they’re trained and skilled to do which is accounting. What accounting firm owners don’t realize is that offshoring is definitely a viable solution to what has become a crippling problem for accounting firms at large – the lack of capacity.

The Ideal Team

Before building an offshore team though, accounting firm owners should understand that there are three key types of team members needed. These are three clear-cut roles that when fully understood, combined in a team, and utilized to their fullest potentials can become game changers.

The three key types of team members are the GRINDERS, the MINDERS, and the FINDERS.

Who Are The Grinders?

 

 

Execution is the main function of the grinders. Think of them as the soldiers on the frontline. They are the ones that do all the hard work that’s needed to achieve the business goals of an accounting firm. Grinders are in charge of the nitty-gritty of day-to-day work so to speak.

Here are some examples of Grinders:

  • Accountants
  • Bookkeepers
  • Digital Marketers
  • Social Media Managers
  • Graphic Designers
  • Receptionists

 

Who Are The Minders?

 

 

Operations is what The Minders are really good at. They are in charge of making sure all the systems and processes within an accounting firm are running smoothly. Minders are also the perennial firefighters as they usually get the perilous job of putting out small fires like dealing with problems with clients, repair and maintenance of office facilities, workflow process improvements, and the like.

Here are some examples of Minders:

  • Client Managers or Client Service Coordinators
  • Office or Facilities Managers
  • Administrative Team Members

 

Who Are The Finders?

 

 

Business development and account management are the bread and butter of The Finders. Their highest priority is to look more new clients and more new work from existing clients. Most times they are the owners or partners in an accounting firm. They have high stakes in the growth of an accounting business so they are more often than not at the forefront of creating and ensuring constant revenue streams and increase in profit margins.

Here are some examples of Finders:

  • CEO’s, COO’s, CMO’s, CFO’s etc.
  • Managing Directors
  • Senior Partners

Conclusion

All accounting firms should have a healthy mix of each type of team member. Each one is a crucial cog in the machine that is an accounting business that if at least one of them doesn’t work, the entire mechanism breaks down. With a complete understanding of this aspect of team building, an accounting firm can now start building an offshore team.

 

Here’s an example of the percentages of the accountability each key type of team member holds. As you can see, Grinders hold 70% of the responsibility of getting things done, Minders like client managers hold 50% of the responsibility to get things right, and the receptionist holds 40% of the responsibility to make sure that everyone, from the grinders, client managers, and clients get along. Of course, different accounting firms have different systems, processes, and people so percentages may vary. What’s important to note is knowing who’s in charge of what in streamlining the workflow process and thus increasing capacity.

Gain more valuable industry insights Subscribe to The Ledger now! You can also listen to our podcast series, The Offshore Accountant, to the get inside scoop on the latest industry news and updates.

 


Grow your firm by building your own offshore team now. Call our global offshoring specialists at 1300 896 522. Want to learn more? Click here to discover the blueprint on how to build a global accounting team.


Drive Six Figure+ Revenue To Your Firm In 2018

Speakers:

Nick Sinclair, Founder, The Outsourced Accountant

Jack Blayney, Account Management Team Lead, Receipt Bank

The Outsourced Accountant is committed to improving the accounting practice. As part of our Growth series, we aim to fulfill several objectives:

  • Link technology and people
  • Make specific processes more automated
  • Have the right people do the right work

 

The webinar’s main thrust is to provide expert insights on how bookkeeping and improved accounting practices can address key issues plaguing firms.

The Outsourced Accountant is focused on growth as a direct response to feedback from our clients and our target market. The insights obtained from these responses are then used to support accountants so they can improve their practice, scale the firm and, hopefully, improve work-life balance and their overall quality of life.

 

“If you aren’t set up for the major changes that are happening, like the privacy legislation, then it may be too late by the time these things are implemented.”

Nick Sinclair, CEO of The Outsourced Accountant

Topics covered in this webinar include:

  • Key issues affecting accountants
  • Automation and its impact on bookkeeping
  • What leading firms are doing
  • Future of automation
  • Bookkeeping structure (traditional and cloud-based)
  • Building a bookkeeping division

What Are The Key Issues Affecting Accountants?

They are crushed with workflow and capacity

Accountants are busiest during this time of the year because we’re a few months away from tax season. That means more work. Add that to the compliance work that bogs them down on a regular basis.

 

Drive Six Figures Revenue To Your Firm in 2018 Key Issues

 

Accountants are neck-deep in emails and calls, according to data we’ve acquired. Add that to other issues like meetings, calendar management, reporting and handling client issues, and you’re left with time-strapped accountants who can’t focus on client-facing activities.

We’ve uncovered the three reasons why clients leave:

  • Reactive advice. Firms don’t have their workflow under control and that results to accountants always “being too busy” they don’t get to talk to their clients. They avoid ringing up clients in fear of getting additional work.
  • Poor responsiveness. Compliance work can make accountants too busy to respond to client’s enquiries, which is not good because clients demand more; they want real-time accountants who can address their concerns when they need it.
  • Trusted referral from a competitor. Today, due to technology, clients can easily switch accountants if they feel their demands are not being met. A competitor who’s doing better in terms of proactiveness and efficiency.

 

Important: 89% of businesses consider client experience to be a primary differentiator. Are you actually delivering something that differentiates you from your competitor?

Watch: Nick on being proactive and not reactive.

Read: How to become a real-time accountant

Watch: Changing customer expectations

Watch: Are You Always Available To Clients? 

Our findings show that most accountants are sitting in front of their computers responding to emails and calls and issues, and they are not actually doing work that is based on their charge out rate. They are not adding value to their clients.

Accountants have really low contact time

Accountants spend too much time on compliance. Low contact time leads to inefficiencies. Compliance work can produce a domino effect, which ultimately results to accountants being unable to add value for their clients.

We found that partners and firms are so swamped with work they no longer have time to do client-facing tasks. These tasks are what actually drive profit.

 

Drive Six Figures Revenue To Your Firm in 2018 Low Contact Time

 

Accountancy firms are spending a significant amount of time just reconciling transactions. They are occupied with managing and processing the finances and chasing clients for paperwork.

These figures show that firms are stuck with compliance work instead of client-facing activities. We aim to implement processes that take the burden of compliance off the accountants so they can pay more attention to adding value.

 

“Compliance is really necessary but it’s not sexy.”

Jack Blayney

Technology overload

There is plenty of technology available for accountants that can help them automate their tasks and, eventually, strip off significant amount of time spent on compliance.

The problem is many firms are swamped with too many software it’s unclear how their IT stack can help them. There are hundreds of them out there it’s become overwhelming.

 

Drive Six Figures Revenue To Your Firm in 2018 Technology Overload

 

Firms need to take a look at their current IT stack and identify how they’re actually utilising it.

Based on our findings:

  • 25% to 30% are overwhelmed by their IT stack
  • 36% said they know what they need but haven’t implemented them yet
  • 10% said they have a seamless IT stack

 

Firms that can successfully identify these key issues and find ways to go around them stand to benefit from the following:

  • Reduced partner hours
  • Improved revenues
  • Enhanced efficiencies
  • Improved cash flow
  • Additional services offered (business advisory)
  • Increased referrals
  • Improved staff engagement and retention

Bookkeeping And Automation

Bookkeeping has evolved from being a mere transaction reconciliation process to a valuable core service that’s used to provide vital insights to financial advisory.  

Key takeaways:

  • Bookkeeping is the first part of a process and firms need to own it from start to finish
  • Cloud technology has made the transition a lot easier
  • Technology has made traditional reactive accounting services more proactive
  • Both parties can see client data in real-time
  • Accountants can make forecasts with pinpoint accuracy
  • Firms can easily transition clients to a mobile and paperless process
  • Bookkeeping comes before accounting and, now, more firms are adopting it because it makes the end-of-year work faster and easier
  • Firms that add bookkeeping to their services

What Do The Leading Firms Do?

  • CEOs act as leaders and are not on the tools
  • Promote work-life balance
  • Have effectively mapped out their people strategy
  • The process, IT stack and people are all sorted properly
  • Enjoy three to six times revenue on their staff unlike others that only get twice the revenue for a higher cost per employee
  • The right people are doing the right job at the right costs
  • Accountants have enough time to spend with clients
  • Real-time access to data for both parties
  • High staff engagement
  • Increasing NPS scores and inbound referrals
  • Low client attrition rate
  • Increased profits

The Future Of Automation

  • Robots cannot replace accountants.
  • Simple, repetitive tasks can be automated for improved productivity.
  • Accountants will always be required for face-to-face contact with clients.
  • Receipt Bank aims to make their partners custodians of data: responsible for ensuring data integrity, improving efficiency and automation.

The Bookkeeping Structure

 

Drive Six Figures Revenue To Your Firm in 2018 Bookkeeping Structure

 

There is not much different between workflows of the traditional bookkeeping workflow and cloud bookkeeping workflow. The same things need to be done. The difference, however, is in the manner in which it is done.

What happens when you move to cloud bookkeeping?

  • Information becomes digital
  • Technology will automate manual tasks
  • Firms are able to create smoother workflows

 

The Outsourced Accountant Case Study

We conducted a survey and found that less than 20% of our clients are actually using Receipt Bank. This is concerning because it means these firms are not maximising the staff they have, which also means they are not supercharging their businesses.

What are the accountants’ concerns with automation?

Accountants and bookkeepers that charge per hour are worried that technology will get the work done quicker, which means their hours are reduced. Reduced hours mean reduced income.

These days, the bookkeeping ratio (number of clients per bookkeeper) is low. This can be traced back to not using cloud technology.

  • It’s currently around 1:10 million
  • Receipt Bank partners are aiming for 1:30
  • The best so far is 1:52

 

As processes become more efficient, with the help of tools like Receipt Bank, we want the number to start rising because that will be a key indicator of growth: more clients and more revenue.

Technology enables accounting and bookkeeping firms to really add value at a higher scale for clients. This will mean the firm will become extremely profitable because they have extremely satisfied clients.

A couple of key takeaways:

  • Have an offshore team complement your local efforts
  • Combine technology and people

 

Assessing your proactiveness with clients

We ran a poll during the webinar to determine a firm’s proactiveness. The results showed that approximately 80% of the attendees are highly reactive.

This is a result of issues with workflow and capacity.

Identifying The Trusted Advisor

Accountants should be the trusted advisor. However, in the current landscape, the bookkeepers are emerging as the ones clients trust most. Here are the reasons:

  • Bookkeepers have access to client data 24/7
  • Bookkeepers are frequently in touch with clients
  • Bookkeepers acquire valuable data and insights
  • Bookkeepers are starting to provide management reporting
  • Bookkeepers are embracing technology and using it to move to a more advisory-style business

 

These present an opportunity for accounting firms: start bringing in bookkeeping services in-house.

 

Drive Six Figures Revenue To Your Firm in 2018 Trusted Advisor

 

Benefits of having your own bookkeeping division:

  • You can further enhance the trust with clients
  • You can control the relationship because you’re doing both the bookkeeping and accounting
  • Clients will have no reason to leave

Building Your Own Bookkeeping Division

 

Drive Six Figures Revenue To Your Firm in 2018 Bookkeeping Divsion

 

  • Utilise technology and what you already have from your client
  • The average fee per person generated is really low
  • You can save 30% to 50% of time on annual tax and compliance work
  • Bookkeeping revenue is always twice or thrice more than what accountants get for compliance work
  • With the help of technology, you can get 30+ clients per employee
  • You can use it as an effective lead generation method
  • You can generate a revenue of five to ten thousand per bookkeeping client
  • Having a bookkeeping division will strengthen and improve client relationship

 

Conclusion

To enhance workflow, improve efficiency and drive revenue to your firm, it’s important to consider important factors:

  • Key issues that affect accountants
  • Technology and its impact on the accounting practice
  • Traditional bookkeeping and cloud-based bookkeeping

Understand that clients leave for various reasons:

  • Reactive advice from accountants
  • Poor responsiveness
  • Trusted referral from a competitor

Bookkeeping has already evolved to become a core accounting practice that drives revenue. And there’s no reason for accountants to fear automation because robots cannot replace accountants. Accountants will always be required for face-to-face client interaction.

Just the same, bookkeepers play a vital role in the practice because they:

  • Have access to client data 24/7
  • Acquire valuable data and insights
  • Are already providing management reporting
  • Use technology to shift to an advisory-style business

To get industry updates, expert tips and best practices for your accounting practice delivered straight to your inbox, sign up to The Ledger by clicking here.


The Outsourced Accountant is the leader in dedicated outsourcing for accounting firms. We help firms become more efficient and scalable  through insightful content like webinars, podcasts and articles.

To learn how to build a successful global offshore team and  improve workflow, download our ebook here. If you’re experiencing capacity restraints and looking to scale your firm, call our offshoring specialists today at 1300 896 522.


FREE 1-ON-1 CONSULTATION