Case Studies: Client Accounting

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Like many aspects of a CPA firm's services, bookkeeping and client accounting in general are undergoing a major evolution, aided by cloud-based offerings that help accountants stay connected with clients throughout the year.

While this is hardly new, more firms are discovering that traditional bookkeeping, often on varied versions of desktop products, is no longer what clients want or need from their CPAs. As business needs and functions change -- requiring more real-time interactions and less time and resources for back-office work - so are the products that serve these companies, as well as the expectations placed on their advisors.

The following firms share how they are evolving their bookkeeping and, in some cases, outsourced business process offerings, to meet client needs, and increase their bottom line.


Client service

Firm: Bennett Thrasher / Atlanta

Size: 200 staff

Product: NetSuite

Commencement date: June 2014

On record: Senior manager of client accounting Darla Worsham

Challenge/objective: To "modernize" its existing BPO practice to better serve clients.

Amount spent: "Nominal" outlay for training costs.

Process: The firm had offered client accounting services for 15 years and had been conducting full back-office work for the past seven years, mostly using hosted products. BPO practice leader and senior manager Worsham had served as a chief financial officer and sold and implemented ERP systems. She became familiar with how the cloud and hosted accounting products were evolving and knew this was the direction she needed to help take her firm when she was hired in January 2014.

She was familiar with NetSuite but had not seen what it could do when she began her search to determine the right products her firm should use. "We target companies mainly in the $10 million to $50 million [in annual revenue] range for this service, which is where it really made the most sense for outsourced business services to happen," said Worsham. "I contacted my old VARs that I knew and they mentioned NetSuite, who I knew from years ago. I spoke to them, found out [NetSuite] had introduced a new BPO program and I liked what they were doing and really loved the technology."

She noted that she also liked that the product provided audit trails and proper integrations to what the firm used. She also liked that the product was able to service companies that had multiple entities, since the firm had a large restaurant practice, which often serviced multi-unit franchises.

"When you are doing true BPO, you have to run it like a full internal accounting department, and other products I saw did not allow you to do that as well," said Worsham. "It's nice to be able to go into NetSuite and have it be ready to go; I can have an unlimited BPO program on it too."

Once the decision was made to go with NetSuite, the firm spent the next couple of months with training and integrations, ultimately connecting them to 15 staff users.

She noted that since the firm had been using cloud products (albeit in a hosted environment), training and usage was not that difficult.

Results: The firm currently has "a growing number of clients" on NetSuite in the BPO practice, with a queue of another half a dozen lined up to be onboard.

"It's still the early days for us, but I know clients like the real-time financials, that's what they see and it's a big piece to us," said Worsham. "They see [point of sale] data too that can be combined in their dashboard and they are thrilled."

She was particularly encouraged by the results of a recent restaurant trade show event, where the firm demoed NetSuite, garnering "thousands of visitors" who are potential prospects. "For us this is all about serving our clients, and I think these days if you are an accountant and not using technology to better serve clients you are at a disadvantage," said Worsham.

Next steps: The firm has "hundreds of clients" in its BPO practice to source from and is encouraged to show newer clients interested in the firm's BPO services what they can do with NetSuite.


Break from tradition

Firm: Basis 365 Accounting / Irvine, Calif.

Size: 2 full-time, 5 contractors

Product: Xero

Commencement date: October 2012

On record: Co-founder Michael Doan

Challenge/objective: The firm needed a cloud and mobile product to conduct client accounting and serve clients across the country, as well as a platform that was native to the Web.

Amount spent: Free for accountants to use.

Process: From their firm's inception in 2012, Doan and his co-founder knew they wanted to break away from the traditional CPA model by serving clients more flexibly and virtually, regularly selecting which types of businesses they wanted to serve.

They also knew that, for the most part, they wanted to perform accounting functions for new, growing businesses and needed a product that was also easy for their clients to use.

"There are lots of accounting products that can be hosted, but they don't provide the flexibility we need and that our clients need, and someone still has to maintain it," explained Doan. "You are logging into a host machine and you still have to worry about product versions, which is not a very scalable model, especially when you are mainly serving growing companies."

Cost was also a factor for the firm and its clients, so upon conducting a Web search they came across Xero. Doan said that his initial impression was that it was a developing product with a lot of potential and after seeing an online demo, he decided it "made a lot of sense" for his target client base.

"I liked that in the product they put things in a layman's language that small-business owners can understand. The pricing model is also very favorable," said Doan. "I found that training was also easy; if you know accounting systems, it will be no problem. The toughest part is how to import from other systems, but we worked through it."

Doan noted that some clients came to the firm with no books or records, so it was much simpler to just enter them in Xero. He said that converting clients from legacy systems with historical data takes time, but they were able to give those files over to Xero and have them convert it for free. Doan mentioned that many clients who came to his firm for service were already familiar with the product and wanted to be on it or were referred to the firm by Xero.

Results: The firm currently has 35 clients on Xero and the few contractors the firm has can work from wherever they are, which is in Arizona and parts of California. Doan also noted that using Xero has cut down on software costs "significantly" and reduced overhead. "We can scale our business model and it helps us handle all these clients in real time with minimal staff as well."

Next steps: The firm will continue targeting technology companies and add payroll and tax to their service offerings.


Access in real time

Firm: Bader Martin / Seattle

Size: 80 staff

Product: QuickBooks Online (Intuit)

Commencement date: Fall 2013

On record: Principal and director of accounting services Stephanie Ritchie

Challenge/objective: Wanted real-time access to a client accounting system for staff and clients. Plus, the firm found hosted products were cost-prohibitive, and the hosted products that the firm was using had worked, but not as well as they wanted.

Amount spent: None; clients pay for subscription.

Process: The firm had a client accounting practice for some years and used hosted versions of QuickBooks to do the work. Over time they found it to be cost-prohibitive since clients had to buy the software license and pay a monthly fee. Ritchie was aware of QuickBooks Online, as were many staff in her department as they were all ProAdvisors, but had felt that, until more recently, the hosted version of QuickBooks did more for clients.

The department's needs had changed and they wanted to have access to client records at any time and conduct more real-time work, making a pure online platform more necessary. Client needs and expectations were also changing, according to Ritchie.

"Lately, when we spoke with clients that were on our hosted platform they were looking for a change; also we had more clients coming to us already doing their own record-keeping on QBO and inviting us on since they preferred us to having a full-time bookkeeper," said Ritchie. "It started to make more sense for us to check out the online version again. We see ourselves as innovators and like to move where things are headed; if it's a good idea, then we will usually consider it if it allows us to provide better service."

Intuit had also reached out to the firm through its new Accountant & Advisory Group, which aims to help transition firms and their clients to the online product.

Ritchie admits that there was "a bit of a learning curve on the initial ramp up" to the online version, but it did not take long since there was minimal set-up.

"You can get to different features in multiple ways so it was a challenge to figure out all you can do and where they are," she said. "Migration for the first few clients was a bit bumpy, but after that it was smooth sailing from the desktop to QBO. Some clients had concerns about what to do if they didn't like it and wanted to go back, and although we had not had anyone do that, I took one off for a business close and that was easy."

Results: The firm currently has four staffers serving 40 businesses on QuickBooks Online, with most of them joining in the last six to eight months.

Ritchie claims "clients love it" because their records are updated more frequently. The firm is also pleased because in terms of staffing and flexibility they can access the system from the office or anywhere and have less staff to work with multiple clients.

"The best part is that we don't have to ask, 'What happened a year ago?' In fact, there's less questions to ask over all," said Ritchie. "We also don't worry that clients won't book year-end entries because it's done and we can see it. Any time we can close out the books and get the information to the tax department earlier is really invaluable."

Next steps: Ritchie said that the firm is starting to take advantage of more QuickBooks Online features and looking into some of the add-on apps, including Avalara, T-Sheets and


An entrepreneurial move

Firm: Armstrong, Backus & Co. / San Angelo, Texas

Size: 70 staff

Product: Intacct

Commencement date: June 2013

On record: Partner Brad Fry

Challenge/objective: The firm wanted to have a full-service BPO department and a product (or products) to complement it, without much overhead.

Amount spent: $5,000 annual fee.

Process: The 50-year-old firm had a traditional write-up and bookkeeping practice at one point, until clients began doing their own bookkeeping.

However, they noticed that that is changing, and growing businesses were finding it more efficient to outsource back office functions, opting instead to focus on building their companies. The firm, in particular, was seeing this happen in their most lucrative client base - the oil and gas industry.

The American Institute of CPAs', which aids marketing for Intacct, had reached out to Armstrong Backus at least a year prior to the firm's selecting the product to aid its BPO practice, and after much discussion the firm decided to make a move to work with the provider in the spring of 2013.

"We have people here doing [accounting] for 30 years and some newer partners as well. I said this is a way we can establish procedures [for the BPO practice], the software will provide the service and it is an entrepreneurial move for us to make," said Fry. "I also said if we don't take advantage we could miss opportunities. They said go, and we started getting people trained up. Working in real- time is a new era for us and it has been an education for partners and clients, to be sure."

Fry said that he started training with three staff and some managers to give them a working knowledge of the product, and with online training, began to onboard clients in Intacct.

"Intacct support was there the whole way; they take feedback from their customers and work on what needs improvement. We knew going in that it would be an evolving process," said Fry. "We started putting clients in the system right away since we had the book of business. There was a three-to-six-month transition where we didn't put everyone on so we could learn together. We absorbed that cost because we didn't charge clients in that time, but it worked out for the best."

Fry also noted that when there was an issue or customization to work through, the firm was able to send it to Intacct to work through and the response "was pretty quick."

Results: In addition to averaging $50,000 to $75,000 in monthly billings for the BPO practice, offering this level of client service has been "a tremendous boon to the tax practice" as well, according to Fry, since he finds that the firm is now working with clients throughout the year.

"We took a department from infancy to full staff and we are up 50 percent in fee volume in this department from a year ago," he said. "Ultimately it has allowed us a pedestal to become the advisor. Clients don't want to know about what they missed about last year, they want to see where they are going and what they need to do to get there. BPO [business] has already outpaced our audit practice and I see it even being on par or out-pacing tax over time."

Next steps: Although it is not the only product the firm works with as part of the BPO practice, they plan to continue working with Intacct and focusing more on diversification in their client base. Specifically, the firm plans to target family business units and grow other industry sectors as well.

"We have become the gatekeeper for clients -- we tell them what they need and even help with succession planning as well as identify areas of risk," said Fry.

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