Analyze This


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Software Tools Turn Data into Services.

David Pontrello believes that analytical software helps his firm provide services that differentiates it from other accounting firms. And he’s working to spread the gospel of that tool, the Business Analysis Suite from Accpac International, throughout the firm to the more than 120 people who work there.

“It’s hard to convince anybody that your audit is any better than another firm’s or that your tax work is better. It’s easier to prove you understand their business better,” says Pontrello, director of business development for Dopkins and Company, a CPA firm based in Buffalo, N.Y.

Partner Insights

Pontrello, the software’s primary user and advocate, uses BAS as a selling tool. “You sit in front of a prospect and instead of saying, ‘This is our proposal,’ we make it a differentiation of what we do and what Joe CPA down the street can do,” he continues. Dopkins also uses BAS as a relationship-building tool. Dopkins explains the results of the analysis of a company’s financial statements in person instead of simply handling clients the printed data. Pontrello says that approach, by deepening the relationship, makes it hard for clients to switch to another service provider. He also uses it to identify areas in which clients can be exposed to other services offered by the firm’s ten different revenue-generating departments.

BAS, which has been on the market for two years, has three components: the Accpac Comprehensive Financial Optimizer, an interactive diagnostic tool, the Key Performance Indicator, and the Accpac Performance Health Test. And the system was built with practicing accountants in mind.

“I think the profession realizes that it needs to have a dialogue with clients and build rapport,” says Geni Whitehouse, Accpac’s Vice President, Accounting Alliances, who is in charge of promoting BAS to the accounting community. “It’s designed to produce a look to the future. We have been remiss in that.”

The system has garnered 200 firms as users since the launch. The company is also working with resellers.

CFO is priced at $1,000 per user with $180 for maintenance, while KPI is priced at $1,000 and $180 per user. CFO lets users manipulate data to produce what-if results. They can also set goals to enable them reach desired financial performance levels, and to create budget and forecast reports. KPI performs comparisons between user-selected financial models, lets them change the data to enhance the models and provides benchmarks results using data from organizations of a similar nature or by comparing industry norms. The Business Health Test enables firms to conduct an assessment of a client’s business that generates a Business Health report that analyzes possible outcomes and makes recommendations.

How ProfitCents Reports Results

ProfitCents, the analysis software package marketed by Sageworks, generates what the Raleigh, N.C.-based company says is a plain language report that helps businesses understand their operations.
For example, reports have a section on Liquidity, which it explains as follows: Generally, what is the company's ability to meet obligations as they come due?; Profits and Profit Margins, Are profitability trends favorable in the company?; Sales, Are sales growing and satisfactory?; Borrowing, Is the company borrowing profitably? Fixed Assets, Is the company using fixed assets effectively?; and Employees, Is the company hiring effectively?.
The software scores each of these sections, comparing the current year to the prior year. In a sample, case, the Sales section was scored at 73.33.
ProfitCents also automatically generated the following comment about sales. "There has been a rare and positive result in this area. The company has increased sales at the same time that both employee and fixed asset levels were lowered. The implications are quite positive. Simply, the firm is driving more sales through fewer resources. This almost always makes the firm more effective (and profitable) over the long run. It is interesting to note that the results here are clearly positive even though the sales gains were somewhat modest." The report recapitulates the financial statements under the Raw Data section, displaying the current and prior income statements. Finally, the system issues a Benchmark Scorecard, which shows the measurement of each financial ratio and its distance from the client's benchmark. For example, in a sample, the present current ratio is .86 while the benchmark target is 1.60 to 2.60. The scorecard calculates the distance between the actual and target ratios and explains their meaning.

Whitehouse says the way the suite operates fits the way accounting firms do business. “It’s a repeatable process. It’s a service offering so it’s something they are very comfortable providing,” she says.

Looking Ahead

A major goal of these analytical packages is to provide accountants with tools that enable them to change the way they practice. It’s the often-repeated dictum that CPAs must turn from recording historic information to a future orientation. It’s the difference between a bean counter and a business advisor.

Sageworks’ ProfitcCents has been making headway in the market as a variety of vendors have begun offering it to their users. So far, the Raleigh, N.C.-based company has struck deals with AccountantsWorld, Creative Solutions, CPA2Biz, Intuit, and BNA Software.

ProfitCents, and its new Web-based companion, ValueCents, both perform analyses that yield ratios and recommendations that accountants can turn into advice for clients. Outside of the desktop versus Web-based differences, the major difference between the two is that ProfitCents performs analysis of data from private companies while ValueCents manipulates public company data.

“The text and metrics are a little different but the platform and the technology is the same,’ says Sageworks president Brian Hamilton. “The concept is certainly the same. We are going to take numbers and generate text from those numbers.”

The public company numbers come through Multx, which gets its data from the Securities and Exchange Commission in an XBRL-based format. XBRL, eXtensible Business Reporting Language, is the XML-based language developed by the AICPA and promoted by a broad-based consortium of companies. It enables data to be pulled from the financial reports submitted to the SEC and to be imported into spreadsheets where it can be manipulated and analyzed.

“Basically, instead of having to key the data into a spreadsheet, it can be thrown into our engine and we generate a report to the customer right on our Web site,” says Hamilton.

The company charges $199 per year per seat for accounting firms for ValueCents. Sageworks has a different price for other kinds of users.

Wegman, Dazet & Co., a New Orleans-based CPA firm, began using ProfitCents in January and has quickly grown to see the product as one that satisfies current clients and will help generate new business.

“Clients like the product. It seems to open a lot of dialogue. It’s easy to understand,” says Karen Rupp, a CPA who has championed the use of ProfitCents among the nine partners and the 30 staff professionals. Rupp says clients love the scoring system, which rates the results of analysis. But the presentation also presents the firm with opportunities to build client relationships.

“We don’t simply present the report,” says Rupp. “We talk about the client goals for the year and what dangers they face.”

The reports generated by the software have helped the firm obtained loans from banks. Banks take the financial statements and generate the same ratios that are provided by the ProfitsCents report.

Trained professionals find the software easy to use. “You import the data and you get the report in ten minutes,” she says. Software has been used by professionals at all levels, generally by “whoever is in charge of the engagement,” Rupp says.

Ratios, Ratios, Ratios

A more basic set of tools is marketed by the BizWiz Consulting Group, a Calgary, Canada-based company. President Brian Lund says the plan is to continue a low-cost approach as he develops his company, which also offers pay-for-performance consulting, and is developing related print publications.

“I have a basic WalMart philosophy,” says Lund. “I’d rather have a broad distribution and a cheap price.”

The BizWiz line of business ratio analysis programs starts with RA8 Basic, priced at $25, a program that calculates eight common ratios, provides three years of comparisons, and generates a three-page printout. The software measures the quick ratio, current ratio, average collection period, inventory turnover, debt-to-equity ratio, return on assets, times-interest earned, and program margin. It’s something of a dollar per ratio per program thereafter with the newer RA50 Preferred calculating 50 ratios for $50 and RA75, with 75 ratios for $75 all the way up to RA150 for $150 planned for introduction next year.

The current top of the line, RA125 Wizard, offers more complex reports. RA50 to RA125 also generate white copies that firm can brand with their own logos in place of the BizWiz Consulting log. Lund note the RA100-Troubleshooter is meant for small businesses and consultants. It is being packaged with a set of 400 questions and a reissue of The Financial Troubleshooter book by Joel G. Siegal, Jae K. Shim, and David Minars.

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