For many CPAs, outsourced accounting or business process outsourcing work is not entirely new, but now more firms are discovering cloud-based accounting systems that allow them to be more collaborative with their clients, as well as adding a previously unrealized revenue stream by being a virtual back office.
As a result, more CPAs are establishing full-time BPO practices and, in some cases, building their entire business around helping other businesses grow while not having to focus on any back-office work. Below are four examples of how firms are utilizing available cloud-based offerings to bring in more revenue, better serve their clients and -- just possibly -- change the face of accounting.
The aggravation is gone
Firm: Redmond Accounting Inc. / Menlo Park, Calif.
Size: 5 staff
Product: QuickBooks Online (Intuit)
Commencement date: November 2011
On record: Founder Laura Redmond
Challenge/objective: Had a successful QuickBooks business but wanted to use the online product to be more mobile and help save time.
Amount spent/costs: $27 a month/$3,200 a year for all clients.
Process: The firm had been doing outsourced accounting work since 2005 and, admittedly, "worked with whatever [accounting system] clients were using." Redmond had tried QuickBooks Online back in 2008, but went back to using the desktop product because the Web version "didn't quite do everything we needed it to do at the time," specifically downloads for banks and no integration to the third-party applications it wanted to use. The interest in the Web product had not waned, and a few years later she saw the improvements she wanted in the product and decided to move clients over to it. Since she and some of her staff were so familiar with QuickBooks and the online product, learning it was not difficult, nor was getting clients on it.
Results: Redmond is the outsourced accounting department for 10 clients ranging in size from $500,000 to $6 million in their annual revenues, all of whom Redmond claims see the firm as a partner and trusted advisor. "Today we are driving the solutions, we are making the suggestions and we are the experts," she said. "Our clients see us as more of a 'we' because we are doing this together and it's not like their books are down the street or miles away at someone's office."
Redmond also likes that QuickBooks Online is an automatically updated product, and she and her staff do not have to think about technology or what version or other products her clients are on.
"If you are doing outsourced accounting and managing the GL yet your clients are not, or if you have the books and they don't feel they have control, they won't feel like you have taken their books away on QBO," said Redmond. "Also, we don't need to deal with the technical side of supporting desktop software anymore. Alongside of that was the time, labor and aggravation of syncing third-party apps on a desktop product; that's gone too. I still love QuickBooks desktop, but there's work involved and we can be more mobile these days."
Next steps: The firm is looking for more "pain points" for clients that it can automate, as well as building customized work screens for its clients.
'It's about the client'
Firm: UMBCPA LLP / Walnut Creek, Calif.
Size: 11 staff
Product: Intacct (Intacct Corp.)
Commencement date: July 2011
On record: Founder Jeff Unalp
Challenge/objective: The firm wanted to serve more and larger outsourced accounting clients and needed a more collaborative product to do the work.
Amount spent/costs: $1,000 a person for certification, $50 per accountant to use (first three accountants free), plus $2,500 a year.
Process: Unalp had been doing outsourced accounting work since 2006, but it was only for one client and on a "clunky" product, and he only used it because the client was on it. After a few years he decided he wanted to do this kind of work for other clients but needed a better product to do so. He also came across a larger client who did not want to utilize a hosted product or have anything on a server, yet wanted to save money and have a robust product at the same time.
Unalp heard of Intacct and took a look at it along with this particular client, who received a demo. He claimed that everyone was impressed but still wanted to compare it with other products on the market; after doing so, they found that Intacct was the right choice.
"We found reports were easier to use than anything out there, and since cost was also a factor, they were a bit less comparatively," said Unalp. "I don't have clients that need everything right now, and with Intacct you can build things out that you need and choose best of breed."
"The real key thing I would advise for a small firm that wants to do things this way is that by the time you get trained and get the first client done, it will be about three to six months, but once you get the training, make sure you are going to do the work right away," said Unalp. "If you have a client or clients ready to go, then get the training; otherwise you can utilize Intacct more to sell and service the client."
Results: A year after switching to Intacct, UMBCPA's overall revenue increased 20 percent. Next year they expect that number will grow to 50 percent. On the initial client they brought over to Intacct, the firm is saving 20 to 30 hours per month due to more efficient data processing. The firm is also working on the efficiencies and automation they have built with Intacct to add clients without adding staff. In addition, the management team has more time to sell services, focus on business development and work with other clients on strategic issues. The firm currently has 11 outsourced accounting clients and is expecting a couple more before the end of the year.
"It's a renaissance moment for the accounting industry and a great time to be an accountant," said Unalp. "Using Intacct has made us more efficient, I have more time to do other things for my clients and my practice, but where it's really helped is where I can do CFO-type reports. It's helped me to be able to cut the numbers the way I need to cut them and present them, and dive in where I need to."
Next steps: All of the firm's staff was recently brought up to speed on the Intacct system, and as of Jan. 1, 2013, the firm's books will be on Intacct, as will "a very large client."
"With our own books on it, everyone at the firm will touch it, which I think is critical to drive expertise on the product," said Unalp. "We have the capacity to grow from 11 to 25 [outsourced accounting clients], but right now it's essential for us to identify best practices. At the end of the day it shouldn't be the technology that you stumble over; it's about the client and that's why you use what you use."
Redefining a firm
Firm: Gray Consulting Inc. / Atlanta
Size: 4 full-time employees
Product: Xero
Commencement date: Late 2009
On record: Owner Simon Gray
Challenge/objective: Wanted to become more of a "cloud-based" firm and needed to use more products and services to support that goal.
Amount spent/costs: Free for accountants.
Process: The firm had mainly been utilizing PC-based products, but as a "Mac power user," Gray was on the lookout for more products that would work well on a Mac, particularly those that were Web-based. One night while browsing different blogs on cloud-based accounting systems, Gray came across people discussing Xero, and read a few articles about the product as well. He then reached out to the company for a demo and was surprised to speak via Skype with the vice president of the company, who not only demoed the product but was open to suggestions from Gray on how it could be improved.
"That interaction to me was huge and I got hooked quickly," said Gray. "They made the product so easy to use, you can download transactions from the bank and see right away what you can do for reconciliations, which is really what I needed for my clients."
Gray didn't waste time getting signed up on the product and moving some existing outsourced accounting clients onto the system; he was even "gifted" half of his initial clients by Xero, which already retained a database of businesses in need of area accountants for reconciliations and other accounting work.
Results: The firm is still in the process of switching clients over to Xero from the desktop-based accounting product they were using, and in some cases had to let them go, but having Xero according to Gray has helped to redefine the firm.
"We're at the point that if we have clients that have problems switching over, we can no longer serve them; we're very focused on doing this this way," said Gray. "Before, we were using a system that had to be updated every year and buy all the plug-ins that we needed separately and had to scale and learn a lot of information just to get a task done. Now I've become a business consultant able to serve my clients from anywhere. Accountants used to be brought in last, but now we play a bigger role."
Next steps: Gray has a goal of doing accounting work for approximately 50 "solid" corporate clients that he can help grow for many years, and said that he's "not concerned about quantity but the quality of the work." As for working with Xero, Gray stated that, "It was great to get clients from them, but regardless of what products you use, accounting systems are still software and you have to have accountants behind it to man it; they still need to make sure it all runs the right way."
Adding value for clients
Firm: McGladrey
Size: BPO practice -- 30; tech practice -- 395; total firm -- 4,900
Product: NetSuite
Commencement date: October 2011
On record: Managing director of BPO practice Jim Cashin
Challenge/objective: McGladrey had offered cloud-based business process outsourcing for a few years, but a year ago the firm -- the fifth largest in the country -- engaged with one global entity that had multi-language and multi-currency requirements and decided to look outside what it had been using.
Process: As an Intacct business process outsourcing partner, the firm had been utilizing that cloud-based platform for some years for much of its business process outsourcing work, but given the size and specific needs of one particular client, it was suggested that NetSuite might work better. The firm is a NetSuite value-added reseller and had a team familiar with the product, so training was not difficult. The BPO team were able to serve the international client's needs in a shorter time than it would have taken otherwise, which can be three to four months between training, implementation and getting a client onto the system.
"Because we are a full-service provider, we can implement and train our accountants to do the BPO side of the business," said Cashin. "Historically, through McGladrey we have done some kind of outsourced accounting work, but we never had the opportunity to standardize on a platform and make it more streamlined, dashboard-centric, and eliminate the redundancies that typically occur in write-up work. Doing business analytics work really adds value to the client and that was key for us."
Results: "Using NetSuite not only provides us with more options, but it opened up more international doors, as well as the size and sophistication of the client," said Cashin. "Being a global firm, we get more of these requests as we look at international BPO work."
Next steps: McGladrey currently has a dedicated team of 30 professionals that focus solely on BPO, and is about to launch a national BPO practice.
"We see BPO as a high growth area and we see the need to advise and provide this to clients as a huge opportunity for us," Cashin explained. "We've invested heavily in Intacct already, and more recently with NetSuite on the ERP side, and can see this only growing though BPO. We'll implement the right solution for the client, so when I think about BPO I don't think about product, I think about what we're able to do."
