Software That Makes You Smarter


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Sometimes, CPAs just can’t get past the numbers. “They know financial statements, but they are scared to go deeper,” says John Nix, a partner with Bates, Carter & Co., based in Gainesville, Ga.

So a CPA may look at a set of financial statements and see that the cost of goods sold is too high, but “they don’t know what to do,” says Nix. “They don’t have a methodology for solving it.”

Nix, a former president of the Georgia Society of CPAs, admits that he used to be one of those people who did not know how to help clients dig into their businesses, such as looking at a profit and loss statement, seeing that COGS was too high, and helping the client do something about it.

Partner Insights

It’s still early in the game. But using Accpac’s Comprehensive Financial Organizer software from Accpac, Nix says he now has a tool that gives him the ability to do the what-if calculations that show the impact of changing numbers in a financial statement. And supported by the Mentor Group, which is promoting the use of CFO, Nix says the firm has the methodology in place to actually help the client make changes.

The CFO package “has been very useful,” says Nix. “It gets the business owners to look at the business in a different way, even people who are fairly astute with the numbers.”

Nix says that among the powerful impacts of CFO are the immediate changes that ripple through the financial statements when one number is changed.

“You can show the net changes so you can isolate the one thing you just did,” says Nix. “I have been very surprised at the reaction when people already knew the numbers and they see the impact.”

Nix continues that CFO goes beyond calculating ratios. He notes that some packages may state that a business’s cost of goods sold is too high, but fail to tell the client how to change the cost of goods. Using CFO helps highlight the financial numbers, while working with Mentor Plus helps move into a problem-solving methodology.

“It’s almost a marketing tool,” says Nix, who says the most important thing is to “get in front of clients and get them to talk about their business.”

In one case, Nix’s firm, which has four partners and revenue of $3 million a year, is billing a client $2,500—essentially a retainer—but the total will come to about $50,000 annually. Nix says that many accountants find it difficult to use tools that help them produce more business from existing clients.

“The problem with CPAs is they are scared to go there. They know financial statements. They are scared to go deeper than that. They don’t know what to do,” says Nix.

CFO is part of the Accpac Business Analysis Suite, introduced in May 2002, which includes Accpac Key Performance Indicators to provide benchmarking, and the Accpac Business Advisor to diagnose a client’s business. The list price for CFO and KPI is $1,000 each, plus a $180 annual fee each. Business Advisor is priced at $500 for the license and $80 for the annual fee. All three can be purchased for $2,450.

Accpac is getting an assist from Mentor Plus, a practice development organization based in Pleasanton, Calif., that is using CFO in tandem with its ProfitEquation seminars.

Nix, whose firm is part of Mentor Plus consulting roundtables, says that’s a necessary step because technology by itself is not enough. “Benchmarks are great, but you’ve got to have goals. You have to understand KPIs,” says Nix.

However, Edi Osborne, owner of Mentor Plus, notes that CFO represents a valuable sales tool for accountants. “The clients are blown away. The clients are grateful that there is an accountant who will sit down and discuss their business with them,” says Osborne.

Dueling Twins
CCH also has a plan to enable CPAs to turn financial data into an opportunity for delivering business consulting services. The approach looks surprisingly similar to the approach taken by Accpac with CFO. In fact, it’s basically the same product.

Both CFO and CCH’s new ProfitDriver are versions of a product from InMatrix, a developer based in Melbourne, Australia. In a rather unusual move, CCH has an exclusive license to sell the product to CPAs in the United States, says CCH product marketing manager Sue Torgerson.

“That was in the contract, but Accpac was already there,” says Torgerson. However, CCH has made important modifications, and it also intends to differentiate ProfitDriver through the consulting services that will draw upon the expertise about CPA firms CCH’s tax and research operations.

There is one difference. ProfitDriver comes in one package that includes the analysis tool and the KPIs for sale at $2,250 plus an annual maintenance fee. Also, CCH bets that the consulting services sold as part of the offering will make a difference.

“We have a number of CPAs who will help customers implement the product and change their processes,” notes Torgerson.

The product, introduced in March, has not had as much field-testing as has CFO, but a group of firms tested the products, including Olsen Thielen, a 140-person firm with offices in Minneapolis and St. Paul, which was one of the beta testers.

The initial results look good, says Lisa Dunnigin, a manager with Olsen Thielen Technologies Systems, who has been promoting the software’s use.

“We picked a handful of clients we want to run through the program. Our goal is to use this to increase the amount of consulting we do with our clients,” says Dunnigin.

Dunnigin says that three partners and a manager have been trained to use ProfitDriver. While firm members can see the potential, the firm has to resolve issues such as who is responsible for entering data. Most importantly, partners must be trained to develop and close business opportunities.

“We need to train the partners to be comfortable [enough] to sit down and do the analysis with the clients,” says Dunnigin.

CCH has solved part of the problem for entering data—it has a bridge that brings the financial information from CCH Engagement and CCH ProSystem fx Tax.

Like Nix, CCH and its proponents see a major benefit of such tools stemming from the ability to have accountants and clients meet more often, with a way of providing the opportunity to solve problems That same trend towards CPA business consulting has drawn another veteran accounting firm supplier into the market.

CaseWare International, the Canadian company that produces Idea and Working Papers, also had clients who had been talking about the functionality in CFO. So the company has launched its CaseWare Scenarios, an add-on to Working Papers, which, like CFO and ProfitDriver, analyzes the data from financial statements.

“This is definitely a new area for us to go into,” notes Karen Plant, product manager for Toronto-based CaseWare. Scenarios pulls data out of the financial statements handled by Working Papers, enabling the numbers to be subject to analysis from about 15 drivers.

“We have ratios that are calculated and you can actually change the ratios,” says Plant. The software provides dynamic calculations so that users can set goals—for example, the amount of working capital they desire for their companies—and see how the other financial statement elements produce that amount.

Plant believes that Scenarios will be used to generate consulting engagements from existing clients. And for those who do not implement changes recommended by the accountant, the accountant can show them, “Had you done what I had asked you to do last year, here’s where you would be now.”

The single-user license is priced at $199, and a license for up to five users is $599. Additional users can be added for $99 each. Scenarios is also being released in Australia and the United Kingdom. But Plant sees one element she believes is crucial to the product’s success—someone in the office to promote its use. “If you don’t have a champion in your office, it’s very difficult,” she says.

Plain English
SageWorks, based in Raleigh, N.C., takes a different approach with its Web-based ProfitCents software, which is being offered by a number of software companies, including AccountantsWorld, Intuit, BNA, and Creative Solutions.

The War Horse

Despite all the talk about convergence and exception reporting, much analysis still takes place in the tried-and-trusted Excel spreadsheet. There are tons of data sitting in Excel models, data that gets shifted back and forth from other applications.

That's one reason that InformationActive, based in Ottawa, Ont., has introduced ActiveData for Excel, a tool designed to add 80 features to Excel, and to enable users to analyze data at the workbook, spreadsheet, or cell level from within Excel.

“It's a twist on Idea,” says Michael Pluscauskas, president of InformationActive, who was the lead developer for Idea, the data-extraction and analysis tool that is marketed by CaseWare.

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