Case Studies: Client Accounting Services

Register now

Of all the professional developments made possible by the Internet, the ability to interact with your clients and their systems in real time, no matter where you are, has to offer some of the greatest opportunities for accountants.

This power has led to new forms of outsourced CFO and client accounting services, with firms leveraging the speed and constant integration of cloud-based accounting platforms to help clients run their businesses better. We spoke to five firms that are exploring this new type of relationship to see how it’s working for them and their clients.

Keeping the wheels on

Firm: KBL

Size: 15 staff, 3 partners

Product: GrowthForce

Commencement date: 2014

On record: Partner Richard Levychin

Challenge/objective: Providing CFO support and controller-level services to rapid-growth companies that need growth management beyond pure accounting.

Process: KBL has been offering outsourced accounting services for roughly three years, and using GrowthForce for bookkeeping and controller-level services for about 18 months. While KBL currently serves as the front office, offering advisory and client-facing work, “what we’re looking to do is front office and back office, outsourcing the finance and accounting function in partnership with GrowthForce,” said Levychin.

Currently, “We’re getting companies that are growing rapidly. ... Their accounting and finance platform was not managing their growth and the wheels were going to come off — they were going to grow themselves out of business,” he explained.

KBL’s first step in meeting with prospects is conducting a technical assessment engagement outlining the problems they observe in their accounting processes. “What that does is create a written roadmap that serves as a starting point for issues that are in the company’s finance or accounting department,” Levychin explained. “We usually capture a minimum of 70 percent of the issues … . While working through the engagement another 30 percent come flushing out.”

If the client chooses to engage after the assessment, KBL gets to work “re-engineering the company,” Levychin said. The firm offers different models based on client needs, ranging from bringing in GrowthForce to handle QuickBooks integrations (as that isn’t KBL’s specialty) to hiring the client’s auditors and then managing the entire audit process. On the outsourcing front, the firm uses GrowthForce to handle bookkeeping and management reporting, so Levychin can offer CFO support services, and they bring in Insperity for outsourced HR.

KBL currently has eight clients on GrowthForce, with most using the full outsourced accounting department platform so Levychin can focus on their CFO and controller-level needs.

Results: KBL has been happy with the success of the current model. The firm is now exploring offering back-office services through a white-label solution with GrowthForce. “You should always position yourself as the front office,” Levychin said. “When it’s just the front office, it’s a more high-profile and a profitable area. You can identify issues and billable projects at a higher rate.”

Labor constraints also cut into margins, he added. “The thing is, we’re in New York City — we’re not going to get the same labor rates GrowthForce is getting in Texas.”

KBL has been able to scale up its services dramatically with the outsourced model. “We, as a firm, are 15 people. ... We can’t do CFO services and controller services as economically without GrowthForce as a partner offering the bookkeeping and accounting platform.”

Next steps: KBL is in the process of mapping out what a white-label CFO and controller platform would look like with GrowthForce. “The client doesn’t care if you’re giving a part of it away to someone else, as long as you’re telling them how to use it,” Levychin said.


Scaling for success

Firm: Habif Arogeti & Wynne

Size: 14 staff in the BPO practice

Product: NetSuite

Commencement date: May 2015

On record: Director of client accounting services William Estes and CEO and managing partner Richard Kopelman

Challenge/objective: To provide premium outsourced services for businesses.

Process: After months of market research and analysis, the firm began drawing up the business plan at the end of January to establish its vision: packaging outsourced services with technology to create scalable solutions empowering businesses to thrive.

“That was key: Making sure it was actually scalable,” Estes explained. “With the research I did for a couple of months, the one constant in most failures was that it wasn’t scalable, and that has a lot to do with the technology. That’s why we went toward NetSuite.”

On NetSuite’s platform, HA&W created the outsourced accounting model for its existing practice expertise, which ranges from startups to multi-subsidiary international companies. All the clients the firm has onboarded so far were existing HA&W clients who have “been wonderful early adopters,” Estes reported. Though the practice is still very new to the firm, those clients are “seeing improved efficiencies in the way they process [days sales outstanding] for [accounts receivable].”

Still, BPO is “something that’s not easy to enter into,” Kopelman cautioned. “We did market research and interviews with over 50 companies over months. It’s a very difficult thing to figure out how to get it right and we continue to tweak it every day. It’s a long process, so you have to make sure you’ve planned appropriately.”

Results: HA&W surpassed its entire (admittedly modest) 2015 goal in 60 days, making the new practice a “tremendous success story” according to Estes.

Implementation included large initial workloads as they brought accounting processes — and all their attendant inefficiencies — in-house, “transitioning to a more efficient model and leveraging NetSuite technology [to convert] an entire business processing operation for a business established for decades in a matter of days or weeks. The volumes in workload are the biggest learning curve we’ve had. But it smooths out in a relatively short period of time.”

The firm has a dedicated BPO partner manager at NetSuite that helps with day-to-day operations, overall relationships, and assisting in closing deals and evaluating whether the prospect is a good fit. NetSuite also provides a “very good” BPO partner program, according to Estes.

“Probably the most important advice is learning when to say no,” he added. “We’ve said ‘No’ to more than have said ‘No’ to us, because we really want to make sure it’s a long-term relationship and continues to be a long-term commitment to one another. A tremendous amount of work goes into this on both sides. It’s a disservice to be engaging if it’s not a good fit.”

Next steps: HA&W will continue growing the business and plans to double the BPO team, Estes said: “The challenge when launching something like this is firm culture, and partner buy-in is pretty critical, and extremely challenging in public accounting—getting broad firm partner buy-in.”


Beyond the shoebox

Firm: Anders CPAs + Advisors

Size: Two staff

Product: QuickBooks Online

Commencement date: 2013

On record: Director of outsourced CFO/accounting Scott Hoffmann

Challenge/objective: Provide outsourced CFO and accounting services, ranging from an entire accounting department or CFO role to portions of those services, like accounts payable or payroll.

Process: Anders’ outsourcing practice is still in its infancy, currently serving under 50 clients, with the firm really only ramping up these services over the last year.

The firm, which Hoffmann said has always had the traditional “shoebox approach,” faces a cultural shift with the new practice: “What we’re doing is technology-based, with 24/7 real-time accounting, so closing the books, the old proverbial ‘at month end’ is somewhat meaningless to us — that’s the goal.”

While right now that “us” is Hoffmann and one staff accountant, “That’s what’s so cool about this technology — you can leverage the daylights out of it, keep bringing on these clients, and you don’t have to build a lot of staff.”

The firm is using QuickBooks Desktop and Online, but the goal is to convert most clients over to QBO, he said. “While desktop can do some things QuickBooks Online can’t from an efficiency standpoint, QBO allows us a lot more advantages in hooking up the apps.”

Results: Hoffmann has found major benefits in those app integrations and the expanding QBO ecosystem, flipping him from a skeptical QBO user a year ago to one of its biggest proponents today: “If I want to find an application specific to an industry, I can probably find one, and chances are it’s going to hook up to QBO.”

Clients’ most-requested apps align with those most popular in the QBO ecosystem, with payments processor and expense report solution Tallie among the most integrated at Anders.

“On occasion, I’ve taken on clients on other accounting platforms, which has made it difficult to be efficient and leverage,” Hoffmann shared. “With those clients, it takes probably twice as long to do the same work.”

As someone who began in public accounting and then served as a CFO for private and public companies, Hoffmann observed, “Most companies still have no idea this world exists, and they’re relying on accountants to help them with that … . My goal is to expose those shoebox clients to this technology. Some will always like to have their shoebox, and that’s O.K. — there’s a place for them.” But, he added, “I’m sold on it.”

“If I knew about this technology four years ago, as the CFO of a food management company, the things I could’ve done, the money I could’ve saved,” he said. “We were putting together a seven-figure ERP program for 80-plus locations. With the technology today, I could spend less than $50,000 and have something so much better and so much more seamless than what we had back then.”

Next steps: Hoffmann’s practice will continue selling the value proposition to clients, often through gradual progression. “With most clients, unless they’re in technology or a startup or progressive, they’re probably not as willing to bite off the entire apple, so we tend to do things in steps,” he said.

Moving forward, Hoffmann will be communicating these advantages through greater use of social media messaging and marketing.


Starting up with startups

Firm: Upsourced Accounting

Size: Five staff

Product: Xero

Commencement date: 2011

On record: Co-owner Ryan Baker

Challenge/objective: Provide real-time accounting collaboration with clients with no geographic restrictions.

Process: Virtual accounting firm Upsourced Accounting has been a cloud-based, Xero-only shop since its inception. With clients in 13 to 14 different states, collaboration comes via Xero’s discussion box, periodic Skype meetings, and the recent adoption of chat messaging app Slack.

The firm’s primary service is outsourced accounting, though it also provides bookkeeping, financial statement preparation, and payroll setup assistance. Upsourced can assist with the budgeting and forecasting needs of its main verticals. The firm’s Columbus, Ohio, location also helps attract startups with its vicinity to growing startup hub Cincinnati. The firm grows with those companies until they’re large enough to need a CFO.

When the firm first takes clients on, the process varies based on their previous accounting system. Once clients are converted to Xero and their transactions pulled into the system, Upsourced “gives them as much visibility as possible to their transactions.” Upsourced familiarizes themselves with how clients spend and deposit money and what their invoices look like, meeting (usually virtually) with them a month later to offer more detailed advice.

Results: Xero supports Upsourced’s mission to centralize clients’ financials for key collaboration, while customizing the experience via specific integrations and add-ons. “They have built a pretty good central accounting engine that doesn’t do specific things great but has specific add-ons we can use with Xero’s add-on marketplace,” Baker said. “It’s almost a kind of build-your-own accounting system.”

Xero is also an ideal fit for Upsourced’s client base, for “which we’re talking hundreds of transactions, not thousands.”

Next steps: Upsourced will continue targeting that client sweet spot. “Over the last couple years, we’ve narrowed down into the kind of business owners that benefit most [from Xero] and find more of those.”

While the firm has served “a little bit of everything,” including e-commerce and manufacturing, “I think we’re going to focus on two verticals: professional service markets and recently funded startups,” Baker said. “We have to figure out how to market and grow. We’ve found that even though we are a virtual firm, we have a presence [in Columbus] that does result in leads coming through. The best way for us to grow is traditional marketing in our current community.”


Inside and out

Firm: Cordia Partners

Size: 50 staff and a number of independent contractors

Product: Intacct

Commencement date: 2012

On record: Partner Mitchell Weintraub

Challenge/objective: Leveraging the people-processes-technology model to deliver outsourced accounting.

Process: Cordia has two lines of business with Intacct, serving as an outsourced accounting partner and, more recently, becoming a value-added reseller. Cordia’s outsourced accounting clients are primarily not-for-profits, government contractors and technology companies.

Cordia’s outsourced accounting practice began when the firm did in 2006, but they partnered with Intacct three years ago based on the software provider’s endorsement from the American Institute of CPAs, its “unbelievable reporting tools,” and their training resources, Weintraub said.

Cordia typically brings on clients who have had problems in the three areas of people, processes and technology — high turnover in their accounting departments, using “old or small technology,” and having trouble producing financial statements.

The implementation process begins with Cordia learning the client’s business before setting up the chart of accounts and Intacct’s system to meet their specific needs. “We go into the situation, implement Intacct, and help them re-engineer their business processes,” Weintraub said.

Results: Weintraub touts Intacct’s flexibility, reporting capabilities, cloud heritage and support. That agility includes the software’s full integration with and ability to link to other popular apps like Tallie, Concur and Nexonia.

The Intacct partnership also provides some internal benefits. “In my business, my challenge as an MP is to get and keep great people,” Weintraub added. “Our folks are eager to learn Intacct — 25 people have gone through Intacct training and many have gone through the sales and implementation training.”

Next steps: Cordia will continue onboarding clients, a process Weintraub said is aided by the AICPA seal of approval: “When and the AICPA endorse it, it’s very easy when speaking to a prospect or client and they ask you why you chose Intacct.”

More specifically, Cordia will focus on growing partner connections and going to market with an integrated Salesforce CRM and Intacct solution. “We want to be able to further build out our processes and our workflow around the Intacct/Salesforce model and expand and build out our relationship with their application partners,” Weintraub said.

The firm also plans to expand to other verticals. “There are a few other industries that we’re targeting, where we know Intacct has great depth,” he added. “Another reason we chose Intacct was the solid industry clusters they support.”

The first of those on Cordia’s radar are the technology and family office sectors.

For reprint and licensing requests for this article, click here.
Technology CAS