Accounting firms go virtual
While 100 percent virtual firms are not yet the norm, today there are enough in operation to set valuable examples to those who want to take the plunge — or at least move in that direction.
With cloud-based software and technology being as advanced as it is in 2019, software is actually the least of a virtual firm’s worries. Instead, they return to the problems of communication, culture, and appropriate recruitment. How do you create culture when no one’s in the same room? How do you hire self-starting staff that recognize this is a real job, and not a free vacation? Four firms answer these questions, and more, below.
Sanity and profitability
Firm: Catching Clouds
Size: 19 staff
On record: Co-founder and chief e-commerce geek Scott Scharf
Overview: Catching Clouds was conceived by Patti Scharf in 2010 when she attended an accounting conference and saw, from the discussions had there, a major opportunity in the cloud. Patti is a CPA, while her husband Scott has an IT and telecom background. They hatched a plan to create an accounting firm completely in this new thing called the cloud, and Patti would be the accounting brains while Scott would provide the technology know-how.
The firm was founded in 2011, and in 2012 onboarded its first client — an Amazon seller. That set the stage for Catching Cloud’s client base, which today consists of many high-level e-commerce sellers. These clients require a high level of specialized knowledge on the part of their accountants, so Catching Clouds has created a nice niche for itself in that industry.
Catching Clouds started as a family affair. Beyond the Scharfs, Patti’s relatives were the firm’s first employees. When Catching Clouds hired its first non-family employee, he lived in the mountains 45 minutes away from the firm’s base in Parker, Colorado, about 25 miles southeast of Denver and right on the edge of a more rural region of the state. Working virtually made a lot of sense for the organization, as commuting in mountainous and snowy regions can be a hindrance to recruitment, and for staff, to finding jobs.
Scott did this interview from New Zealand, where he, Patti, and their children were spending several months. Employees of Catching Clouds can work from anywhere in the world, as long as they are responsive and get their tasks done.
All employees at Catching Clouds are full-time with benefits, and the firm offers a unique but increasingly popular vacation policy that gives staff unlimited time off at their discretion. “We don’t track time,” Scott explained. “We expect people to be adults. We track results, what has to get done daily, weekly, monthly — as long as that’s done, it’s fine.”
More flexible in the beginning, the Scharfs did tweak their policy on the window of working hours over time as they realized colleagues and clients expected to get responses during or close to traditional windows of time. After one employee, a consummate night owl, started responding to emails increasingly in the middle of the night, creating a lag in communications, the Scharf’s had to require employees to make sure they were responsive to messages at times that at least overlapped with the “traditional” working hours of 9 a.m. to 5 p.m. (with adjustments for time zones — Catching Clouds has clients all over the globe).
Thought Catching Clouds manages its clients virtually, the Scharfs are vigilant about the value they deliver and their relationship with clients. “The key value we deliver isn’t doing the books,” Scott said. “That’s critical, but we have regular monthly meetings virtually with our clients to help them step aside from the business, shut down the distractions, and make them look at the numbers. We walk them through the balance sheets, P&L, graphical dashboard, and we point out key information — that is our value. Many clients want to skip those and I call them up and say it’s OK, but I say they’re not getting the value they could be getting.”
Another unique thing Catching Clouds provides is education through its YouTube channel, “Catching Clouds Academy.” For the last year, Patti has been regularly uploading videos on topics ranging from how to manage sales tax as an online seller, to the minute definitions of accounting terms for their clients.
Recruitment: The staff lineup at Catching Clouds consists of e-commerce controllers, who are CPAs; management-team accountants; staff accountants; and one sales tax expert.
“We are always focused on efficiency so our current staff can continue to do their work in 40 hours a week or less,” Scott said. “Our focus is efficiency, and doing it through automation.”
Catching Clouds uses an online job listing tool, which costs $99 a per month, that posts its listings on a range of different websites; the firm also uses Denver-local Craigslist, as the online classifieds website is very popular for jobs in the area. Scott and Patti receive between 50-100 applications per job listing, and filter them down to five or six final candidates to interview.
“Because we’re results-oriented, early on we hired people who just did not work out,” Scott said. “We now have a new dashboard and checks and balances to make sure things are getting done, so people don’t get overwhelmed with too many clients, or nothing to do.”
Up front, the application to work at Catching Clouds consists of a series of questions designed to evaluate whether the applicant is a good candidate for working 100 percent remotely. For instance, the questions ask how the position is a good fit, what cloud accounting tools the applicant has experience with, how the firm can support the applicant in their goals, where the applicant wants to take their life and career, and what is getting in the way of those goals. That last piece is key, as a large number of remote workers choose to take such work because of family and home goals and obligations. There is no penalty — professionally or otherwise — for people who “take time off to be mom or dad,” Scott said.
Challenges: “Humans are complicated,” Scott said of communication within Catching Clouds. “Whatever emotional state you’re in, you’re receiving the message that way. It’s always a work in progres, though for most part the team is communicating as efficiently as possible.”
Staff at Catching Clouds are encouraged to change the mode of communication if it is going off the rails — for example, to jump on the phone if an email is unclear. Scott is also a stickler for email subject lines, and good writing skills. If a job application has bad grammar, he’ll trash it immediately — in a virtual firm, there is less room than ever for bad communicators.
But, “Because our work environment is calm, people have time to write things out well and clearly and calmly,” Scott said. “That’s a big boon.”
The Scharfs are also fiercely protective of their staff. If necessary, “I’ll fire clients on the spot,” Scott said. “We take care of our team first. The company is priority. We take care of them, and they take care of clients.”
Every piece of communication pertaining to a client is automatically stored in a client folder, so anyone who touches that client can access it. Catching Clouds tries to avoid communication gaps with this type of transparency.
Another challenge the firm has overcome over the years is how often the staff meets in person. Monthly get-togethers soon became too much for staff to commit to, particularly for those who live far from the chosen meeting point at the Scharf’s home. Now, the firm meets at least every quarter for a social activity, and Scott and Patti meet smaller groups of staff at different times to stay in touch with their lives, both socially and professionally. This helps foster a positive culture.
Finally, Catching Clouds is also beginning to put on small “con” in the style of the larger technology user conferences, but scaled down for just their employees.
The future looks like: Catching Clouds is big on automation. A core piece of its tech stack is Zapier, a tool for connecting apps and automating workflows. Connected tasks set up in Zapier is called a “Zap,” which Patti provides a rundown of on Catching Clouds Academy.
“We care about sanity and profitability first,” Scott said. “We always want to continue to grow, but I don’t want a 50-person firm, and I don’t want 1,000 clients. We’re very much a high-touch organization. We want to continue to automate, add more value, and provide more and more insight — we just want to do it sanely with the least amount of people. I expect to be one of those companies that when the bots come and all the bank feeds and transactions actions are automatically done, we’re not going to even blink. We’re just going to say, ‘Thank God we had six Zaps doing that work.’ We’re hoping to plateau at 20-25 people, and all the rest is investment in automation and tech.”
Not so leisurely
Size: 36 staff
On record: Founder and CEO Marjorie Adams
Overview: Virtual firms tend to grow and change as quickly as technology does, because they are more reliant on tech than regular brick-and-mortar operations. Fourlane is no exception, and because CEO Marjorie Adams has had a few conversations with Accounting Today over the past two years, this change will be apparent to readers who go back and view her profile and listen to her podcast on the AT website. In one year, Adams added 16 staff to her firm, as Fourlane started offering services in new states, and she aims to have a total of 50 staff by 2020. Fourlane operates in 10 states today.
Fourlane faces the same issues any expanding practice has to face: For every state it ventures into, the firm, which provides QuickBooks and Acumatica consulting services as well as a range of bookkeeping and accounting services, thoroughly researches sales tax exposure, state tax exposure, and HR exposure. What’s different is that rather than having to learn how to manage employees remotely, Fourlane is already a pro at tracking work and creating firm culture from afar.
Employees at Fourlane engage virtually every step of the way, from recruitment, to training and orientation, to daily work. Before its recent growth, Adams and other firm managers would have regular on-camera meetings with staff — but since adding more staff and expanding into more states, Adams has increased the frequency of on-camera meetings to ameliorate potential miscommunications and misreading of tone in textual conversation, be it on e-mail or the firm’s messaging platform (an integral piece of any virtual firm).
On top of more virtual meetings, Fourlane also switched from their previous office messaging platform to a more robust one, Slack, that integrates with a large suite of apps. Having a capable messaging system is integral to the firm’s communications success.
To meet its growth goals for 2020, Fourlane has also adopted a business tracking platform by EOS Software called Traction. “Everyone reports against one or multiple metrics, and that way we know if people are staying on track for their numbers, goals and responsibilities,” Adams said of the platform. “I’m CEO and 100 percent owner. When you go from one level of management to hiring managers and having two levels, it’s very scary to trust that the whole base of the company is still doing what they’re supposed to do. Having those metrics and everyone reporting to them and complying with them … gives immediate feedback that they’re doing well.”
Recruitment: As Adams started to expand Fourlane, she had to significantly revamp her HR and hiring practices. She continues to retain the outsourced HR firm she has worked with for years, but she hired an in-house HR director (whom she has never met in person!) to have an expert “combat the misconception about working from home.”
As Fourlane grew, job sites that advertised themselves as a sites for “leisurely” jobs started picking up the firm’s job postings, resulting in Adams receiving hundreds of applications from potential accountants who thought she was offering an “easy,” phone-it-in type of job. Her new HR director helps wade through those resumes and explain to potential hires that this is, indeed, a real job — they just do it from home.
“We talk about it internally, sometimes,” Adams said. “Our families sometimes think, ‘Oh you work from home, it’s easy.’ I’m on the phone 10 hours a day — I just don’t have to commute, and get to hug my son at lunch.”
When a new accountant comes on board — after all-virtual interviews — they have orientation on Day One. Fourlane tries to hire in a pattern where no new staff member is going through video orientation alone; there are always at least two new hires at a time to “make it a little bit more fun,” Adams said. When hiring for sales, it’s important to Adams to hire at least two at the same level at a time to foster healthy competition in that department.
New hires get an introduction with the trainer who will onboard them, and that trainer takes them through the wiki article on what their training will cover. New hires also get homework about which they can provide feedback and ask questions. All new hires get five different practice projects to work on, after which they finally get access to a live client file.
Challenges: Besides growing pains and finessing of the recruitment process, communication is always an evolving challenge for Fourlane. From the start, Adams created a culture of positive intent within the firm’s communications strategy — that is, if ever a message seems curt or negative in any way, the first response of the recipient should always be to assume positive intent. Clarification can come afterwards if necessary. Operating completely virtually leaves a lot of room for communication gaps, so Adams makes sure to pre-empt those as much as possible.
“We say over and over again to assume positive intent, but often when people come on board here they think they know QuickBooks really well, but they then see there’s so much more they have to learn,” Adams explained. “Being comfortable in that state is … uncomfortable. If you can’t see people, see the smile when people say, ‘I know this is hard.’ That is a challenge, but we’re constantly working on it. Little tweaks that we’ve made are moving things in positive direction.”
The future looks like: “I’ve learned that even at the most senior level, people still need guidance, organizational skills, calendar management, and so on,” Adams said. “I’m sitting in both of those roles (management and administration) but I’m very much not good at making sure those to-dos from a discussion get done. In the EOS Traction world they call it an “integrator” — someone who leads and manages the management team, but not the dreamer, the visionary. Transitioning from being both to letting go a little bit because I have to is very hard.”
In light of this, Adams is searching for someone to take on that role of management so she can focus more on the big-picture stuff like Fourlane’s partnerships with Intuit and Acumatica. The new manager has to be able to manage “up,” as well; in other words, manage both the staff, virtually, as well as managing her and her expectations as CEO. This staffing move will be key to Fourlane reaching its 2020 growth goals.
It’s a discipline
Firm: Thrive Business Services
Size: 7 staff
On record: Co-founders Gayle Goldman and Randi Rose
Overview: Gayle Goldman and Randi Rose had been best friends for more than 15 years when, in 2014, they partnered to start Thrive Business Services. Rose was an accountant, while Goldman’s background was in QuickBooks training and consulting.
Similarly to Patti Scharf of Catching Clouds, Goldman and Rose attended a conference — in their case, Scaling New Heights hosted by Woodard — that gave them the idea for the firm. Brad Smith, CEO of Intuit at the time, spoke about the roadmap for QuickBooks Online, which spurred the women to “make the big leap to being fully virtual during that conference.”
As Goldman and Rose recall it, Smith said that Intuit was creating an ecosystem much like Apple where there would be myriad apps that would work with QuickBooks Online and make integrating applications easier.
“In that moment it was clear for us: Either we get on board and lead the pack, or become less and less relevant,” Goldman said. “We converted our own books to QuickBooks Online because we knew we had to walk our talk and by the end of 2015, 80 percent of our client base was with QuickBooks Online and we were 100 percent cloud-based.”
“Randi’s a mom, and I’m not,” Goldman said. “Ideally we wanted to have a business where our employees could clock in at 10:00 AM and out at 3:00 PM, with some “me time” before work or “before mommy time” afterward. That became foundation for our company. We have really great people working for us. Most are parents and they appreciate that they get to clock in at 10 — whatever time that is, in whatever time zone — and out at 3. We don’t give clients their cell numbers so clients don’t get to text them at all hours of the night.”
The 10-3 window is very important to Goldman and Rose, in contrast with the philosophy of “work wherever, whenever.” Customer experience is paramount, so it’s vital that clients know exactly when a bookkeeper is available and when to — and when not to — expect a response.
Before Goldman and Rose set up their virtual firm, they did deep research into questions surrounding how to find software that talked to each other; how to secure the client’s information in a cloud environment; how to we make the virtual firm idea scalable; how to manage work-life balance when everything is accessible 24/7; how to we manage a team when they can’t just walk by their desk; how to maintain transparency while still protecting privacy; and much, much more.
Still, though, “While there were things that we could anticipate having had experience with brick and mortar businesses, there were discussions, breakdowns and challenges we never anticipated until we were 100 percent virtual,” they said.
Recruitment: “Some of the basics still apply,” Rose said of hiring staff. “Can they do the work? What is special about them? How well will they fit with the team and culture? How well do they work remotely in terms of time management and communication? What are their values and are they a match for ours?”
One way Goldman and Rose use to filter out applicants that will likely not work out, is they ask potential hires for a picture of their workspace. “We look to see, in our opinion, if this is a workspace of someone who works remotely 30 to 40 hours a week successfully,” Goldman explained. “Are we comfortable with their workspace? Our staff work with three monitors so we look to see if the candidate has two or three monitors. We also screen for the number of clients they have managed at one time. Our ideal candidate has managed 15 to 20 clients at one time and has worked remotely for over a year. Working from home — it’s a discipline.”
Thrive Business Services’ tactic for staff success is to make sure new hires have already had experience working remotely. Because the firm is small, this takes some pressure off the training process.
Goldman and Rose also describe their firm as “high tech and high touch.” Apropos of this ethos, they ask applicants about what software they’ve used in the past. If they’ve used much of the software in Thrive’s stack, that tells the co-founders that the recruits are likely to be “current and embrace technology.”
The interview process is entirely virtual and involves discussing the culture of the firm, assessing their proficiency in QuickBooks, and seeing whether they have the ability to discuss projects in layman’s terms for clients — again, communication being very important to the success of a virtual firm. The final interview is done by Thrive’s manager, and Goldman and Rose said they weigh what their team thinks of a candidate as heavily as their own opinion.
Challenges: “Technology changes so fast, sometimes it can be hard to keep up,” Goldman said. “We pick and choose our software very intentionally based on what is the best solution for us at the time, and transitioning is not always easy.”
Another challenge, as alluded to above, is facing problems they never could have anticipated. “Managing a remote team has required a lot of out of the box thinking.”
“I think being 100 percent virtual has required an additional level of trust in our team because there are certain things that are easier to see (observe) when you actually get to see someone every day,” Rose said.
One of the ways the co-founders have tackled the issue of team culture is setting up weekly video meetings for all the staff — currently being a team of only seven, this is not unwieldy to manage. This meeting is the team’s “water cooler” time. Each week, one team member is responsible for bringing a question to the meeting, whether it be work related or not at all — on the day of this interview, the question had been “If you could give your time to volunteer for any organization, what would it be and why?” These meetings have helped Thrive’s team get to know each other, feel more cohesive, and is what the women mean when they say they are high tech (virtual meetings) but high touch (communicate often).
The future looks like: Thrive Business Services is expanding its services beyond bookkeeping to business advisory services. Goldman and Rose are clear that their bookkeeping services aren’t traditional; they really provide controller services.
“We really are working with clients’ businesses to see their goals, end game, exit strategy,” Rose said “We work with the client, their CPA, their business coach and business manager if they have them. We consider ourselves a very important part of that team.”
Committed to the idea of work-life balance, Rose also wants to expand into providing more education, training and development to clientele on that front.
“Being able to see how the next generation assimilates information and gets trained and developed — We are on the cutting edge of that.”
Bigger talent stays home
Firm: Supporting Strategies
Size: 400 staff across 70 franchised locations
On record: Founder and CEO Leslie Jorgensen
Overview: When Leslie Jorgensen started Supporting Strategies, it was just her. But when she started hiring her first few employees for work-from-home bookkeeping positions, she got resumes from CPAs and MBAs. It was then that she realized how in-demand remote work was, and that she could hire bigger talent if she remained totally virtual. So, she started building virtual infrastructure and processes from her very first employee.
Almost a decade after founding, Jorgensen decided to franchise the virtual business model she had built in Boston. Today, Supporting Strategies has 70 locations across the country, each managed individually.
Jorgensen supports her franchisees with proprietary workflow management software that Supporting Strategies developed, called WorkPlace. The firm also uses a number of third-party software and apps in conjunction with WorkPlace.
While almost every interaction, whether between staff or clients, is virtual, there are times when the stars align and staff have in-person meetings with clients. Jorgensen was quick to note that in-person meetings are just the icing on the cake, however, and are by no means necessary.
“We do believe that real-life relationship-building is key, which is why we pursued franchising the way we did,” she said. “Local leaders get in their car, get engaged in the local business community in that way. That’s the only part of of our business that isn’t virtual.”
Recruitment: The vast majority of Supporting Strategies’ staff are part-time employees.
“This isn’t necessarily a good position for someone who is looking for a big career move,” Jorgensen said. ‘We’re geared towards individuals where their role in an organization is one piece of the puzzle of life, and who want to take advantage of work-life balance. That’s important.”
On the other hand, Jorgensen was quick to note that this is not a disposable part-time job. She clearly delineates that a job at Supporting Strategies is a part-time value proposition that fits into the “strategy of many parts of life.”
A large percentage of Supporting Strategies staff are parents. Others are folks in their “second act,” or those who don’t feel ready to retire yet and want to wind down toward that end. Others have events in their lives that require them to take a step back from full-time work. Still others like to travel, or have partners who require them to be itinerant.
While employees are free to make their own hours, working at Supporting Strategies cannot be anyone’s second job. Most work does need to be done during regular business hours, and staff need to be responsive. The firm tries to match staff and clients that are within one or two time zones.
Jorgensen said there is no reason anyone ever has to meet in person. All staff training is virtual, with an online video training the firm developed. New hires are assigned a manager who orients and supports them as they get up to speed.
“It can be somewhat daunting to start a new job virtually,” Jorgensen said. “It’s nice to have a human being that will interface with you, welcome you, walk you through everything and make you feel a part of that same culture.”
The workplace WorkPlace platform allows managers to track staff work. All client information and email communication runs through the software, and each manager has a dashboard with an overview of clients, tasks, staff hours etc.
Challenges: “The biggest challenge to running a virtual firm is to get at the team-building and culture piece,” Jorgensen said. “The process of getting the work done is pretty straightforward. But how do you get around the fact of going from one person to hundreds? How do you develop a culture, sense of team, belonging, value, given that some folks are all over country?”
The answer: “Go out of your way to be creative.”
For instance, the week before our interview, the Boston office send out a recognition email with a small gift that congratulated staff for the completion of 1099s. Another office holds a virtual Halloween costume happy hour, and everyone shows up on video in costume and with a cocktail in hand.
“My best practice is to be proactive with team members to let them know that you want to provide to them what they think is most important — going on a trip, having to get to their kid’s game, whatever it is.” Jorgensen said. “Those are reasons people took the job, so you have to be out front and often saying that you care about those things for that staff as well.”
The future looks like: “I remember thinking, ‘I wonder if this is ever going to be more than me?’” Jorgensen recalls. “Maybe we can get to 10, then to 50, and now to 400. Now we really want to get to a hundred franchisees. Then I’ll say a new number when I get there.”
Supporting Strategies has built a highly scalable infrastructure and strategy. There is “no limit” to growth, and “no shortage of clients that could use our services,” Jorgensen said.
“With all this increased use of cloud accounting tools, the market is just getting bigger for us. So many people call to say, ‘I have a staffing change, I want to outsource the entire accounting department.’ It is often a small or a new business, and lots of them don’t want or need to have an in-house accounting department.”
As well as value for clients, Jorgensen is proud of the value she adds to her staff: “I remember meeting the child of one of our team members who lives in a very rural part of New Hampshire where, when she needed to go to physical office, it was a huge commute to support her family. The child said, ‘I want to thank you because now my mom can make every single one of my games.’”
Case study analysis: The technology stack
All firms featured here had a similar approach to both their software and hardware stack. Common among all was a requirement for at least two screens, one of which is usually a portable laptop. Fourlane will provide a third screen if someone requires it. Catching Clouds is hoping to “light-size” the high-end laptops it provides to something similar to a Chromebook, which doesn’t run desktop software but only works online, once their staff are weaned off Microsoft Excel and start using an online version only.
As small as it seems, the numerical keypad is a key consideration when buying laptops. The keypad is a must for accountants, but laptops with those included are large and cumbersome. A USB-attached keypad is the solution for many.
All virtual firms have extensive stacks of apps for document management, billing, and a host of other tasks and services. All firms interviewed here use online accounting software (none use desktop).
One tech component that emerged as key was a robust workflow or practice management solution with a usable dashboard, and with some capability to monitor task and project progress. This allows managers to manage remote staff effectively.
The other key component was an inter-office communications platform with a range of capabilities. Again, it might seem like a minor consideration, but the availability of emojis and gifs, as well as well-integrated third-party apps, can be key to communication when all staff are remote.
Two firms interviewed specifically mention softphones, a variant of what’s also known as Voice over Internet Protocol, a service that provides an Internet-based phone number that can be turned on and off and routed to physical cell phones or landlines if desired. Softphones eliminate the need to provide landlines or secondary cell phones, and they also allow staff to maintain a psychological work-life balance by simply turning the number completely off when they walk away from the computer or finish their workday.